What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-08-08 · 208 added, 134 removed, 421 unchanged (45% of the section changed)

3 unchanged sentences

(amounts in thousands, except per share data)

June 30, 2023

September 30, 2023

December 31, 2022

1 unchanged sentence

Cash and cash equivalents

Accounts receivable (net of allowance for expected credit losses of $ 442 and $ 118 as of June 30, 2023 and December 31, 2022, respectively)

Marketable securities

Accounts receivable (net of allowance for expected credit losses of $ 429 and $ 118 as of September 30, 2023 and December 31, 2022, respectively)

Prepaid expenses and other current assets

22 unchanged sentences

Issued and outstanding:

37,566 and 37,280 shares at June 30, 2023 and December 31, 2022 , respectively

37,839 and 37,280 shares at September 30, 2023 and December 31, 2022 , respectively

Additional paid-in capital

7 unchanged sentences

(amounts in thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Product revenue

11 unchanged sentences

Other lease costs

Restructuring

Impairment and restructuring

Total operating expenses

1 unchanged sentence

Interest income, net

Other expense, net

Other income (expense), net

Loss before income taxes

Income tax (expense) benefit

Income tax expense

Net loss per common share, basic and diluted

4 unchanged sentences

(amounts in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Other comprehensive loss:

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive loss, net of tax:

Unrealized losses on marketable securities

Foreign currency translation

5 unchanged sentences

(amounts in thousands)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Additional paid-in capital

2 unchanged sentences

Total stockholders' equity

Balance at March 31, 2023

Balance at June 30, 2023

Issuance of common stock under stock plans, including tax effects

Stock-based compensation expense

Unrealized loss on marketable securities, net of tax

Foreign currency translation

Balance at June 30, 2023

Three Months Ended June 30, 2022

Balance at September 30, 2023

Three Months Ended September 30, 2022

Additional paid-in capital

2 unchanged sentences

Total stockholders' equity

Balance at March 31, 2022

Balance at June 30, 2022

Issuance of common stock under stock plans, including tax effects

1 unchanged sentence

Foreign currency translation

Balance at June 30, 2022

Six Months Ended June 30, 2023

Balance at September 30, 2022

Nine Months Ended September 30, 2023

Additional paid-in capital

5 unchanged sentences

Stock-based compensation expense

Unrealized loss on marketable securities, net of tax

Foreign currency translation

Balance at June 30, 2023

Six Months Ended June 30, 2022

Balance at September 30, 2023

Nine Months Ended September 30, 2022

Additional paid-in capital

6 unchanged sentences

Foreign currency translation

Balance at June 30, 2022

Balance at September 30, 2022

The accompanying notes are an integral part of these Consolidated Financial Statements.

2 unchanged sentences

(amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

3 unchanged sentences

Foreign currency losses

Unrealized losses on marketable securities

Amortization of (discount) premium on marketable securities

Operating lease right-of-use asset amortization

13 unchanged sentences

Cash flows from investing activities:

Purchases of marketable securities

Purchases of property and equipment

21 unchanged sentences

The Company is currently focusing on protein detection, but its Simoa platforms have also demonstrated applicability across other testing applications, including detection of nucleic acids and small molecules.

The Company also provides contract research services for customers through its CLIA-certified Accelerator Laboratory.

The Accelerator Laboratory provides customers with access to Simoa technology and supports multiple projects and services, including sample testing, homebrew assay development, and custom assay development.

The Company also provides contract research services for customers and Laboratory Developed Test (“LDT”) services through its CLIA-certified Accelerator Laboratory (the “Accleerator Laboratory”).

To date, the Company has completed over 2,200 projects for more than 470 customers from all over the world using its Simoa platforms.

6 unchanged sentences

GAAP are not included herein.

The Consolidated Balance Sheet included herein was derived from the audited Consolidated Financial Statements as of December 31, 2022, but does not include all disclosures required by U.S.

The Consolidated Balance Sheet and related information as of December 31, 2022 included herein was derived from the audited Consolidated Financial Statements as of December 31, 2022, but does not include all disclosures required by U.S.

GAAP on an annual reporting basis.

3 unchanged sentences

In the opinion of management, the Consolidated Financial Statements contain all normal, recurring adjustments necessary for a fair statement of financial position, results of operations, comprehensive loss, and cash flows as of the dates and for the interim periods presented.

The results of operations for the three and six months ended June 30, 2023 may not be indicative of the results for the full fiscal year ended December 31, 2023 or any other period.

The results of operations for the three and nine months ended September 30, 2023 may not be indicative of the results for the full year ended December 31, 2023 or any other period.

The Company’s fiscal year is the twelve-month period from January 1 through December 31.

2 unchanged sentences

GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenues, and expenses reported and disclosures in the financial statements and accompanying notes.

Such estimates include, but are not limited to, revenue recognition, valuation of inventory, leases, valuation of intangible and other long-lived assets, recoverability of deferred tax assets, ongoing impairment reviews, and stock-based compensation expense.

Such estimates include, but are not limited to, revenue recognition, valuation of inventory, leases, valuation of intangible and other long-lived assets, recoverability of deferred

tax assets, ongoing impairment reviews, and stock-based compensation expense.

The Company bases its estimates on historical experience, known trends, market specific information, or other relevant factors it believes to be reasonable.

5 unchanged sentences

dollars using the period-end exchange rates for assets and liabilities, average exchange rates during the corresponding period for revenue and expenses, and historical rates for equity.

The effects of foreign currency translation adjustments are recorded in accumulated other comprehensive loss within stockholders’ equity on the Consolidated Balance Sheets.

The effects of foreign currency translation adjustments are recorded in accumulated other comprehensive income (loss), a component of stockholders’ equity on the Consolidated Balance Sheets.

Foreign currency transaction gains (losses) are included in other income (expense), net on the Consolidated Statements of Operations.

Foreign exchange losses were not material during the six months ended June 30, 2023, and were $0.4 million during the six months ended 2022.

Foreign exchange losses were not material during the nine months ended September 30, 2023, and were $ 0.8 million during the nine months ended September 30, 2022.

Principles of Consolidation

5 unchanged sentences

The following table summarizes the period ending cash and cash equivalents as presented on the Consolidated Balance Sheets and the total cash, cash equivalents, and restricted cash as presented on the Consolidated Statements of Cash Flows (in thousands):

As of June 30,

As of September 30,

Cash and cash equivalents

3 unchanged sentences

The short-term or long-term classification is determined in accordance with the expiration of the underlying letter of credit and security.

Marketable Securities

The Company’s current portfolio of marketable securities is entirely debt securities and may at any time include commercial paper, U.S.

Treasuries, corporate notes and bonds, U.S.

Government agency bonds, certificates of deposit, and similar types of debt securities.

Marketable debt securities with original maturities of three months or less at the time of purchase are recorded in cash equivalents on the Consolidated Balance Sheets as they are considered highly liquid and readily convertible into cash.

All other marketable securities, including those with maturities beyond one year, are recorded as current assets on the Consolidated Balance Sheets based on their highly liquid nature and because such securities are available for use in current operations.

The Company classifies its marketable securities as either held to maturity, available-for-sale, or trading at the time of purchase and re-evaluates such classification at each balance sheet date.

All of the Company’s marketable securities are currently classified as available-for-sale as it may use them in current operations.

Available-for-sale securities are recorded at fair value (refer to Note 6 − Fair Value of Financial Instruments ).

Unrealized gains and losses (other than impairment or credit related losses) are recorded in accumulated other comprehensive income (loss), net of tax, a component of stockholders’ equity on the Consolidated Balance Sheets.

Realized gains and losses are determined using the specific identification method and are recorded in other income (expense), net on the Consolidated Statements of Operations.

Quarterly, or more frequently if circumstances warrant, the Company monitors its marketable securities for impairment.

In the event a security’s fair value is less than its amortized cost basis, the Company evaluates whether an impairment exists and if the impairment is a result of credit loss or other factors.

For a security in an unrealized loss position, if the Company intends to sell the security in an unrealized loss position, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, an impairment loss equal to the difference between the security’s fair value and amortized cost basis is recorded in other income (expense), net.

Additionally, the Company determines if a credit loss exists by considering information about the collectability of the security, current market conditions, and the issuer’s financial condition.

If a decline in fair value is a result of a credit loss, an allowance for credit losses is recorded in other income (expense), net, limited to the portion attributed to the credit loss.

Recent Accounting Pronouncements

2 unchanged sentences

Disaggregated Revenue

The following tables disaggregate the Company’s revenue from contracts with customers by revenue type and geography (based on the location products and services are consumed) (in thousands):

Three Months Ended June 30, 2023

Three Months Ended June 30, 2022

The following tables disaggregate the Company’s revenue from contracts with customers by geography, based on the location products and services are consumed, and revenue type (in thousands):

Three Months Ended September 30, 2023

Three Months Ended September 30, 2022

North America

9 unchanged sentences

Total revenues

Six Months Ended June 30, 2023

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2023

Nine Months Ended September 30, 2022

North America

9 unchanged sentences

Total revenues

For each of the three and six months ended June 30, 2023, one customer accounted for more than 10 % of the Company’s total revenues.

At June 30, 2023, one customer accounted for more than 10 % of the Company’s gross accounts receivable.

For each of the three and nine months ended September 30, 2023, one customer accounted for more than 10 % of the Company’s total revenues.

At September 30, 2023, one customer accounted for more than 10 % of the Company’s gross accounts receivable.

Product Revenue

On May 26, 2022, the Company and UltraDx Limited (“UltraDx”), a company formed by ARCH Venture Partners (“ARCH”), entered into an agreement (the “UltraDx Agreement).

Under the UltraDx Agreement, the Company agreed to supply UltraDx with HD-X instruments (both fully assembled and disassembled), assays and assay

components, and granted a co-exclusive license to manufacture, seek Chinese regulatory approval of (including performance of any necessary research and development activities), and commercialize, HD-X instruments assembled in China and related assays in the Chinese neurological in vitro diagnostic market.

Under the UltraDx Agreement, the Company agreed to supply UltraDx with HD-X instruments (both fully assembled and disassembled), assays and assay components, and granted a co-exclusive license to manufacture, seek Chinese regulatory approval of (including performance of any necessary research and development activities), and commercialize, HD-X instruments assembled in China and related assays in the Chinese neurological in vitro diagnostic market.

Refer to Note 14 − Related Party Transactions for a discussion of the related party relationships between Quanterix and these entities.

3 unchanged sentences

Given the uncertainty of the completion of the preferred share financing, the Company concluded that the non-cash consideration related to the ordinary shares was variable consideration that was fully constrained at contract inception.

During the three months ended June 30, 2023, UltraDx completed the qualified preferred share financing and issued to the Company one million ordinary shares with a total fair value of $ 1.0 million.

In the second quarter of 2023, UltraDx completed the qualified preferred share financing and issued to the Company one million ordinary shares.

Refer to Note 6 − Fair Value of Financial Instruments for the Company’s disclosures related to determining the fair value of the shares received.

Also refer to Note 16 − Variable Interest Entities for additional information on the Company’s investment interests in UltraDx as a result of the share issuance.

During the three and six months ended June 30, 2023, the Company recognized $ 1.4 million of revenue, which includes the one-time revenue from the receipt of the UltraDx shares.

During the three and six months ended June 30, 2022, no revenue was recognized under the UltraDx Agreement.

During the three months ended September 30, 2023, revenue recognized was not material.

During the nine months ended September 30, 2023, the Company recognized $ 1.6 million of revenue, which includes the one-time revenue from the receipt of the UltraDx shares in the second quarter of 2023.

During the three and nine months ended September 30, 2022, the Company recognized $ 1.9 million of revenue.

Service Revenue

5 unchanged sentences

The statement of work automatically renews on a quarterly basis until Lilly provides a termination notice in accordance with the terms of the Lilly Collaboration Agreement.

As of June 30, 2023, the Lilly Collaboration Agreement and the statement of work were still in effect.

As of September 30, 2023, the Lilly Collaboration Agreement and the statement of work were still in effect.

Concurrent with the execution of the Lilly Collaboration Agreement, the Company entered into a Technology License Agreement (the “Lilly License”) under which Lilly granted the Company a non-exclusive license to Lilly’s proprietary pTau217 antibody technology for use in research use only products and services and future in vitro diagnostics applications within the field of Alzheimer’s disease.

In consideration of the Lilly License, the Company paid an upfront fee, is required to make milestone payments based on the achievement of predetermined regulatory and commercial events, and will pay royalties on net sales of licensed products.

The Company recognized revenue from the Lilly Collaboration Agreement of $ 1.5 million and $ 3.0 million during the three and six months ended June 30, 2023, respectively, and $ 2.7 million and $ 5.4 million during the three and six months ended June 30, 2022, respectively.

The Company recognized revenue from the Lilly Collaboration Agreement of $ 1.5 million and $ 4.5 million during the three and nine months ended September 30, 2023, respectively, and $ 2.7 million and $ 8.1 million during the three and nine months ended September 30, 2022, respectively.

Collaboration and License Revenue

Abbott Laboratories

On September 29, 2020, the Company and Abbott Laboratories (“Abbott”) entered into a Non-Exclusive License Agreement (the “Abbott License Agreement”).

Under the terms of the Abbott License Agreement, the Company granted Abbott a non-exclusive, worldwide, royalty-bearing license, without the right to sublicense, under the Company’s bead-based single molecule detection patent (the “Licensed Patents”) in the field of in vitro diagnostics.

Abbott agreed to pay the Company an initial license fee of $ 10.0 million in connection with the execution of the Abbott License Agreement, which was recognized as license revenue during 2020.

On September 29, 2020, the Company and Abbott Laboratories (“Abbott”) entered into a Non-Exclusive License Agreement (the “Abbott License Agreement”) under which the Company granted Abbott a non-exclusive, worldwide, royalty-bearing license, without the right to sublicense, to the Company’s bead-based single molecule detection patent (the “Licensed Patents”) in the field of in vitro diagnostics.

Abbott paid the Company an initial license fee of $ 10.0 million, which was recognized as license revenue during 2020.

Abbott also agreed to pay the Company milestone fees, subject to the achievement by Abbott of certain development, regulatory, and commercialization milestones and low single-digit royalties on net sales of licensed products.

2 unchanged sentences

Abbott may also terminate the Abbott License Agreement at any time, without cause, upon 60 days ’ notice.

During the three and six months ended June 30, 2023, the Company recognized $ 0.5 million of one-time revenue related to the expiration of a previously paid for option to expand the scope of the Abbott License Agreement.

During the three and nine months ended September 30, 2023, the Company recognized zero and $ 0.5 million of one-time revenue, respectively, related to the expiration of a previously paid for option to expand the scope of the Abbott License Agreement.

Grant Revenue

1 unchanged sentence

The timing of revenue recognition and receipt of funding varies by grant and can be independent from performance of the related activities, such as an upfront payment of the award value, or subsequent to the Company’s requests for reimbursement for already performed activities (subject to the approval of the granting organization), as further described below.

On September 21, 2022, the Company and the National Institutes of Health (the “NIH”) entered into a contract (the “NIH Grant”) with a total award value of $ 1.7 million.

The NIH is an agency of the U.S.

Department of Health and Human Services and granted the Company funding in support of the development of certain point-of-care diagnostic technologies through collaborative efforts.

On September 21, 2022, the Company and the National Institutes of Health (the “NIH”), an agency of the U.S.

Department of Health and Human Services, entered into a contract (the “NIH Grant”) with a total award value of $ 1.7 million.

The NIH granted the Company funding in support of the development of certain point-of-care diagnostic technologies through collaborative efforts.

Grant funding is to be used solely for activities related to the point-of-care diagnostic device development project and the contract period runs through August 2025.

Receipt of the award value occurs throughout the term of the contract period and after the Company submits for reimbursement of activities related to the grant.

As of June 30, 2023, the Company had not received any of the award value.

During the three and six months ended June 30, 2023, grant revenue recognized and research and development expenses incurred were immaterial.

As of September 30, 2023, the Company had received $ 0.5 million of the award value.

During the three months ended September 30, 2023, grant revenue recognized and research and development expenses incurred were not material.

During the nine months ended September 30, 2023, grant revenue recognized and research and development expenses incurred were $ 0.5 million and $ 0.4 million, respectively.

During the three and nine months ended September 30, 2022, grant revenue recognized and research and development expenses incurred were not material.

On March 24, 2022, the Company and the Alzheimer’s Drug Discovery Foundation (the “ADDF”) entered into a contract (the “ADDF Grant”) with a total funding value of $ 2.3 million.

1 unchanged sentence

The ADDF Grant restricts the Company’s use of the granted funds solely for activities related to the Company’s Alzheimer’s diagnostic test development project and the contract period runs through June 2024.

Receipt of the contract funding was subject to achievement of pre-defined milestones, and as of June 30, 2023, the Company had received the total funding value of $ 2.3 million.

During the three and six months ended June 30, 2023 and 2022, grant revenue recognized and research and development expenses incurred were immaterial.

Receipt of the contract funding was subject to achievement of pre-defined milestones, and as of September 30, 2023, the Company had received the total funding value of $ 2.3 million.

During the three and nine months ended September 30, 2023, grant revenue recognized and research and development expenses incurred were $ 0.3 million and $ 0.4 million, respectively.

During the three and nine months ended September 30, 2022, grant revenue recognized and research and development expenses incurred were $ 0.3 million and $ 0.4 million, respectively.

On September 29, 2020, the Company entered into a contract with the NIH under its Rapid Acceleration of Diagnostics (“RADx”) program (the “RADx Grant”), with a total award value of $ 18.2 million.

2 unchanged sentences

Receipt of the award value occurred throughout the term of the contract period and after the Company submitted for reimbursement of activities related to the grant.

During the three months ended June 30, 2022, the Company received $ 0.5 million which represented the final and total funding value of the $ 18.2 million award.

During both the three and six months ended June 30, 2022, the Company recognized no grant revenue and incurred no research and development expenses.

As of June 30, 2022, the Company had no future obligations under the RADx Grant.

Contract Assets and Liabilities

There were no contract assets of as June 30, 2023 or December 31, 2022.

During the first half of 2022, the Company received $ 0.5 million which represented the final and total funding value of the $ 18.2 million award.

During the three and nine months ended September 30, 2023 and 2022, the Company recognized no grant revenue and incurred no research and development expenses.

As of September 30, 2023, the Company had no future obligations under the RADx Grant.

Contract Assets

There were no contract assets of as September 30, 2023 or December 31, 2022.

Deferred Revenue

The Company refers to contract liabilities as deferred revenue on the Consolidated Balance Sheets.

During the six months ended June 30, 2023 and 2022, the Company recognized $ 4.9 million and $ 3.6 million of revenue, respectively related to its deferred revenue balance at January 1 of each such period.

During the nine months ended September 30, 2023 and 2022, the Company recognized $ 6.4 million and $ 4.7 million of revenue, respectively, related to its deferred revenue balance at January 1 of each such period.

Remaining Performance Obligations

As of June 30, 2023, the aggregate amount of transaction price allocated to performance obligations that have not yet been satisfied, or are partially satisfied, was $ 11.7 million.

Of the performance obligations not yet satisfied or partially satisfied, $ 10.4 million is expected to be recognized as revenue in the next 12 months , with the remainder expected to be recognized within the 24 months thereafter.

The $ 10.4 million principally consists of amounts billed for undelivered services related to initial and extended service-type warranties and research services.

As of September 30, 2023, the aggregate amount of transaction prices allocated to performance obligations that have not yet been satisfied, or are partially satisfied, was $ 11.0 million.

Of the performance obligations not yet satisfied or partially satisfied, $ 9.8 million is expected to be recognized as revenue in the next 12 months , with the remainder expected to be recognized thereafter.

The $ 9.8 million primarily consists of amounts billed for undelivered services related to initial and extended service-type warranties and research services.

Costs to Obtain a Contract

5 unchanged sentences

Amortization of costs to obtain a contract

Balance at June 30

Costs to obtain a contract are amortized to earnings over the estimated life of the contract and are recorded in cost of goods sold and selling, general, and administrative expense on the Consolidated Statements of Operations.

The Company evaluates potential impairment of these amounts at each balance sheet date, and no related impairments were recorded during the six months ended June 30, 2023 or 2022.

Balance at September 30

Costs to obtain a contract are amortized to earnings over the life of the contract and are recorded in cost of goods sold and selling, general, and administrative expense on the Consolidated Statements of Operations.

The Company evaluates potential impairment of these amounts at each balance sheet date, and no related impairments were recorded during the nine months ended September 30, 2023 and 2022.

Allowance for Credit Losses

1 unchanged sentence

The Company’s expected credit loss allowance methodology is developed using historical collection experience, current and future economic and market conditions, and a review of the status of customers’ accounts receivable.

Customers are assessed for credit worthiness upfront through a credit review, which includes analysis of customers’ financial statements when a credit rating is not available.

The allowance for credit losses on accounts receivable is summarized as follows (in thousands):

The change in the allowance for credit losses on accounts receivable is summarized as follows (in thousands):

Balance at December 31 of prior year

1 unchanged sentence

Write-offs and recoveries collected

Balance at June 30

Balance at September 30

Marketable Securities

The amortized cost, gross unrealized gains, gross unrealized losses, and fair value of the Company’s marketable securities by major security type were as follows (in thousands):

As of September 30, 2023

Amortized cost

Unrealized Gains

Unrealized Losses

Commercial paper

Government agency bonds

Corporate bonds

Total marketable securities

Marketable securities are reported in the following Consolidated Balance Sheets captions:

Cash and cash equivalents

Marketable securities

Total marketable securities

The Company did no t have any marketable securities as of December 31, 2022.

The following table shows the gross unrealized losses and fair value of the Company’s available-for-sale securities with unrealized losses that are not deemed to be other-than-temporary, aggregated by major security type and length of time that the individual securities have been in a continuous unrealized loss position (in thousands):

Less Than 12 Months

As of September 30, 2023

Unrealized Losses

Commercial paper

Government agency bonds

Corporate bonds

The Company did not have any individual securities in a continuous loss position for greater than 12 months, and there were no individual securities that were in a significant unrealized loss position as of September 30, 2023.

For marketable securities in an unrealized loss position, the Company does not intend to sell them before recovery of their amortized cost bases, it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost bases, and the unrealized losses are not credit related.

Accordingly, the Company has not recorded any impairment losses or a credit loss allowance.

The Company did not sell any marketable securities or record any realized gains or losses for the three and nine months ended September 30, 2023.

At September 30, 2023, the Company had $ 0.4 million of accrued interest receivable on its marketable securities, which was recorded in prepaid expenses and other current assets on the Consolidated Balance Sheets.

The following table summarizes the contractual maturities of the Company’s marketable securities (in thousands):

As of September 30, 2023

Amortized cost

Due within one year

Due in one to two years

Fair Value of Financial Instruments

1 unchanged sentence

The following tables present the Company’s fair value hierarchy for its financial assets that are measured at fair value on a recurring basis (in thousands):

As of June 30, 2023

As of September 30, 2023

Quoted prices in active markets (Level 1)

2 unchanged sentences

Financial assets:

Cash equivalents - money market funds

Cash equivalents:

Money market funds

Commercial paper

Total cash equivalents:

Marketable securities:

Commercial paper

Government agency bonds

Corporate bonds

Total marketable securities

Total financial assets

4 unchanged sentences

Financial assets:

Cash equivalents - money market funds

Money market funds (1)

Total financial assets

(1) Included in cash and cash equivalents on the Consolidated Balance Sheets.

(2) Marketable securities are initially valued at their purchase price and subsequently fair valued at the end of each reporting period utilizing third party pricing services or other observable data.

The pricing services utilize industry standard valuation methods, including both income and market-based approaches and observable market inputs to determine the fair value.

These observable market inputs include reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, current spot rates, and other industry and economic events.

Nonrecurring Fair Value Measurements

On June 26, 2023, the Company received ordinary shares in UltraDx (refer to Note 3 − Revenue and Related Matters ) which were valued at $ 1.0 million upon receipt, primarily using the third-party purchase price of similar interests issued during UltraDx’s financing event that closed in the second quarter of 2023.

As UltraDx is a recently formed, privately held entity, there is minimal market activity or other financial information available to determine the fair value of UltraDx’s shares and therefore this investment is considered a Level 3 financial asset.

As UltraDx is a recently formed, privately held entity, there was minimal market activity or other financial information available to determine the fair value of UltraDx’s shares and therefore this investment is considered a Level 3 financial asset.

Changes in the inputs and assumptions used would have resulted in a higher or lower fair value measurement.

Pursuant to ASC 321 – Investments – Equity Securities , the Company has elected the measurement alternative for equity investments without readily determinable fair values and will continue to recognize the UltraDx shares at cost, less any impairment, and adjusted for any observable price changes in orderly transactions.

As of June 30, 2023 and December 31, 2022, the carrying value of the Company’s Level 3 financial assets was $ 1.3 million and $ 0.3 million, respectively.

There were no changes in the carrying value of these assets during the three and six months ended June 30, 2023 and 2022.

These assets are included in other non-current assets on the Consolidated Balance Sheets.

During the third quarter of 2023, the Company recorded an immaterial adjustment to the fair value of the UltraDx shares.

There were no other changes in the carrying value of these assets during the three and nine months ended September 30, 2023 and 2022.

As of September 30, 2023 and December 31, 2022, the carrying value of the Company’s Level 3 financial assets was $ 1.1 million and $ 0.3 million, respectively, and are included in other non-current assets on the Consolidated Balance Sheets.

Refer to Note 16 − Variable Interest Entities for further discussion.

Other Fair Value Disclosures

During the six months ended June 30, 2023 and 2022, the Company did not transfer financial assets between levels of the fair value hierarchy.

Additionally, there have been no changes to the valuation techniques for Level 3 financial assets.

During the nine months ended September 30, 2023 and 2022, the Company did not transfer financial assets between levels of the fair value hierarchy.

Additionally, there have been no changes to the valuation techniques for Level 2 or Level 3 financial assets.

Inventory, net of inventory reserves, consisted of the following (in thousands):

June 30, 2023

September 30, 2023

December 31, 2022

5 unchanged sentences

Accrued expenses and other current liabilities consisted of the following (in thousands):

June 30, 2023

September 30, 2023

December 31, 2022

2 unchanged sentences

Accrued tax liabilities

Accrued in-transit inventory

Other accrued expenses

2 unchanged sentences

Stock Options

Stock option activity for the six months ended June 30, 2023 is presented below (in thousands, except per share and contractual life amounts):

Stock option activity for the nine months ended September 30, 2023 is presented below (in thousands, except per share and contractual life amounts):

Weighted-average

Weighted-average remaining

Weighted-average

remaining contractual

Number of shares

exercise price per share

contractual life (in years)

life (in years)

intrinsic value

Outstanding at December 31, 2022

Outstanding at June 30, 2023

Exercisable at June 30, 2023

Vested and expected to vest at June 30, 2023

Outstanding at September 30, 2023

Exercisable at September 30, 2023

Vested and expected to vest at September 30, 2023

Restricted Stock Units

Restricted stock unit (“RSU”) activity for the six months ended June 30, 2023 is presented below (in thousands, except per share and contractual life amounts):

Restricted stock unit (“RSU”) activity for the nine months ended September 30, 2023 is presented below (in thousands, except per share and contractual life amounts):

Weighted-average

7 unchanged sentences

Unvested RSUs at December 31, 2022

Unvested RSUs at June 30, 2023

Expected to convert at June 30, 2023

Unvested RSUs at September 30, 2023

Expected to convert at September 30, 2023

Employee Stock Purchase Plan (“ESPP”)

In December 2017, the Company adopted the 2017 Employee Stock Purchase Plan (the “2017 ESPP”).

The 2017 ESPP contains an “evergreen” provision, which allows for an increase in the number of shares under the plan on the first day of each fiscal year beginning with fiscal year 2018.

The increase is equal to the lowest of:

The 2017 ESPP contains an “evergreen” provision, which allows for an increase in the number of shares under the plan on the first day of each fiscal year beginning with 2018.

The increase is equal to the lower of:

(i) 1 % of the number of shares of common stock outstanding on the last day of the immediately preceding fiscal year and (ii) an amount determined by the Company’s Board of Directors or Compensation Committee.

2 unchanged sentences

March 1 through August 31, and September 1 through February 28.

During the six months ended June 30, 2023, employees purchased 70 thousand shares of the Company’s common stock pursuant to the 2017 ESPP.

During the nine months ended September 30, 2023, employees purchased 121 thousand shares of the Company’s common stock pursuant to the 2017 ESPP.

Stock-Based Compensation Expense

Stock-based compensation expense was recorded in the following categories on the Consolidated Statements of Operations (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of product revenue

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Total stock-based compensation

As of June 30, 2023, there was $ 39.8 million of total unrecognized stock-based compensation expense related to unvested RSUs and stock options, which is expected to be recognized over the remaining weighted-average vesting period of 2.9 years.

As of September 30, 2023, there was $ 37.4 million of total unrecognized stock-based compensation expense related to unvested RSUs and stock options, which is expected to be recognized over the remaining weighted-average vesting period of 2.8 years.

The fair value of the Company’s stock options granted and purchase rights to the ESPP were estimated using the Black-Scholes valuation model with the following assumptions:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Stock Options:

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3.3 % - 3.9 %

5.2 % - 5.5 %

0.7 % - 3.9 %

Expected dividend yield

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115.3 % − 117.3 %

72.8 % − 82.5 %

51.9 % − 117.3 %

Weighted-average grant date fair value

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The following table presents the computation of basic and diluted net loss per share (in thousands, except per share data):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Weighted average common shares outstanding

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The following common share equivalents have been excluded from the calculation of diluted net loss per share (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Common stock and RSUs

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Total anti-dilutive shares

The Company’s effective tax rates were 4.0 % and 3.2 % for the three and six months ended June 30, 2023, respectively, and 0.0 % for each of the three and six months ended June 30, 2022.

The Company’s effective tax rates were ( 2.7 )% and ( 3.0 %)% for the three and nine months ended September 30, 2023, respectively, and 0.2 % and less than 0.1 % for the three and nine months ended September 30, 2022, respectively.

The income tax provision and effective tax rate is driven primarily by a valuation allowance in the United States, partially offset by income taxes in foreign jurisdictions.

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As a result, the Company performed a goodwill impairment test and determined its goodwill was impaired as the carrying amount of the Company’s sole reporting unit exceeded its estimated fair value.

The Company concluded that its entire goodwill balance was impaired and recognized an $ 8.2 million non-cash impairment charge during the third quarter of 2022.

As of June 30, 2023 and December 31, 2022, the Company had no remaining goodwill balance.

The Company concluded that its entire goodwill balance was impaired and recognized an $ 8.2 million impairment charge during the third quarter of 2022.

As of September 30, 2023 and December 31, 2022, the Company had no remaining goodwill balance.

Commitments and Contingencies

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During the year ended December 31, 2022, the Company and Stratec Consumables GmbH (“Stratec”) entered into an amendment to the supply agreement with Stratec (as amended, the “Stratec Supply Agreement”), related to the supply of discs used in Simoa bead-based instruments.

As part of the Stratec Supply Agreement, the Company agreed to purchase a total of 515,000 discs to be shipped at various points starting in 2022 and continuing through 2024 at an agreed purchase price per disc.

In 2022, Stratec shipped 75,000 discs to the Company and Stratec is required to ship no less than 220,000 discs in 2023.

As part of the Stratec Supply Agreement, the Company agreed to purchase a total of 515 thousand discs to be shipped at various points starting in 2022 and continuing through 2024 at an agreed purchase price per disc.

In 2022, Stratec shipped 75 thousand discs to the Company.

In 2023, Stratec is required to ship no less than 220 thousand discs, 184 thousand of which have been shipped as of September 30, 2023.

The total purchase commitment under the Stratec Supply Agreement is $ 3.7 million.

Other Purchase Commitments

The Company purchases raw materials for manufacturing operations under annual and multi-year agreements, some of which have minimum quantity requirements.

Additionally, the Company enters into annual agreements for other parts of its operations.

The Company’s total purchase commitments under these agreements as of June 30, 2023 was $ 2.6 million.

The Company’s other non-cancellable purchase commitments primarily consist of purchases of raw materials for manufacturing operations under annual and multi-year agreements, some of which have minimum quantity requirements.

The Company’s total purchase commitments under these agreements as of September 30, 2023 were $ 4.7 million.

License Agreements

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In August 2022, the Company and Harvard University (“Harvard”) entered into a license agreement (the “Harvard License Agreement”) for certain intellectual property owned by Harvard.

Pursuant to the Harvard License Agreement, the Company paid an upfront fee of $ 0.6 million, which was recorded in research and development expenses on the Consolidated Statements of Operations.

Pursuant to the Harvard License Agreement, the Company paid an upfront fee of $ 0.6 million in August 2022, which was recorded in research and development expenses on the Consolidated Statements of Operations.

Under this license, the Company is required to pay Harvard low single-digit royalties on net sales of products and services using the licensed technology, as well as a portion of its applicable sublicense revenues.

The Company incurred no royalty expense under the Harvard License Agreement for the three and six months ended June 30, 2023, and 2022.

The Company incurred no royalty expense under the Harvard License Agreement for the three and nine months ended September 30, 2023 and 2022.

Refer to Note 14 − Related Party Transactions for a discussion of a related party relationship with Harvard.

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In June 2007, the Company and Tufts University (“Tufts”) entered into a license agreement (the “Tufts License Agreement”) for certain intellectual property owned by Tufts.

The Tufts License Agreement, which was subsequently amended, is exclusive and sub-licensable, and will continue in effect on a country-by-country basis as long as there is a

valid claim of a licensed patent in a country.

The Tufts License Agreement, which was subsequently amended, is exclusive and sub-licensable, and will continue in effect on a country-by-country basis as long as there is a valid claim of a licensed patent in a country.

The Company is contractually obligated to pay license and maintenance fees that are creditable against royalties, in addition to low single-digit royalties on direct sales and services, and a royalty on sublicense income.

The Company recorded royalty expense related to the Tufts License Agreement of $ 0.4 million and $ 0.8 million during the three and six months ended June 30, 2023, respectively and $ 0.4 million and $ 0.7 million during the three and six months ended June 30, 2022, respectively.

This royalty expense is recorded in cost of product revenue on the Consolidated Statements of Operations.

The Company incurred royalty expenses related to the Tufts License Agreement of $ 0.5 million and $ 1.3 million during the three and nine months ended September 30, 2023, respectively and $ 0.3 million and $ 1.1 million during the three and nine months ended September 30, 2022, respectively, which are recorded in cost of product revenue on the Consolidated Statements of Operations.

Refer to Note 14 − Related Party Transactions for a discussion of a related party relationship with Tufts.

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Maturity of lease liabilities

As of June 30, 2023

As of September 30, 2023

2023 (remainder)

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Total operating lease liabilities

The Company’s lease agreement for office and lab facilities in Bedford, Massachusetts included a tenant improvement allowance with the landlord that offset a portion of the Company's construction costs.

The Company’s lease agreement for office and laboratory facilities in Bedford, Massachusetts included a tenant improvement allowance with the landlord that offset a portion of the Company’s construction costs.

During the first quarter of 2023, the Company received the final tenant improvement allowance reimbursement of $ 0.9 million.

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This Board member continues to receive compensation from Tufts on a formulaic basis based on royalties and license payments the Company makes to Tufts.

At June 30, 2023 and December 31, 2022, open payable balances to Tufts were immaterial.

At September 30, 2023 and December 31, 2022, open payable balances to Tufts were not material.

A member of the Company’s Board of Directors is affiliated with Harvard and Mass General Brigham.

Revenue recorded from sales of products and services to Harvard and its affiliates and to Mass General Brigham and its affiliates totaled $ 0.5 million and $ 0.7 million for the three and six months ended June 30, 2023, respectively, and was immaterial for the three and six months ended June 30, 2022.

Revenue recorded from sales of products and services to Harvard and its affiliates and to Mass General Brigham and its affiliates totaled $ 0.3 million and $ 1.0 million for the three and nine months ended September 30, 2023, respectively.

Revenue recorded from sales of products and services was no t material for the three months ended September 30, 2022, and $ 0.5 million for the nine months ended September 30, 2022.

Additionally, in August 2022, the Company and Harvard entered into the Harvard License Agreement for certain intellectual property owned by Harvard (refer to Note 13 − Commitments and Contingencies ).

Harvard is obligated to pay a portion of the payments received from the Company under the Harvard License Agreement to a member of the Company’s Board of Directors.

Cost of product revenue and operating expenses with Harvard and its affiliates and Mass General Brigham and its affiliates for the three and six months ended June 30, 2023 and 2022 was immaterial.

At June 30, 2023 and December 31, 2022, open payables to and receivable balances from Harvard and Mass General Brigham were immaterial.

Cost of product revenue and operating expenses with Harvard and its affiliates and Mass General Brigham and its affiliates for the three and nine months ended September 30, 2023 and 2022 were not material.

At September 30, 2023 and December 31, 2022, open payables to and receivable balances from Harvard and Mass General Brigham were not material.

As discussed in Note 3 − Revenue and Related Matters , on May 26, 2022, the Company and UltraDx, a company formed by ARCH, entered into the UltraDx Agreement to supply certain instruments and to grant certain licenses.

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As of June 7, 2023, this individual was no longer a member of the Company’s Board of Directors.

Cost of goods sold for both the three and six months ended June 30, 2023 were immaterial.

At June 30, 2023 and December 31, 2022, there were no open payable balances to UltraDx and open receivable balances from UltraDx were $ 0.4 million and zero , respectively.

Cost of goods sold for both the three and nine months ended September 30, 2023 were not material.

At September 30, 2023 and December 31, 2022, there were no open payable balances to UltraDx and open receivable balances from UltraDx were $ 0.4 million and zero , respectively.

Restructuring

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The Restructuring Plan included the elimination of 119 positions and other cost-saving measures.

During the three and nine months ended September 30, 2022, the Company incurred approximately $ 3.4 million of expenses related to the Restructuring Plan, which were recorded in impairment and restructuring on the Consolidated Statements of Operations.

These expenses were substantially for cash payments of severance and employee benefits, $ 3.1 million of which was paid by September 30, 2022.

Total restructuring expenses incurred in 2022 under the Restructuring Plan were $ 3.8 million.

As a result of the Restructuring Plan, the Company performed an impairment assessment of its goodwill, long-lived assets, including operating lease right-of-use assets, and intangibles.

The assessments resulted in the Company recording an impairment charge of $ 25.6 million during the year ended December 31, 2022.

The impairment charge included (1) $ 16.3 million associated with the operating lease right-of-use asset and related property and equipment at leased facilities, (2) $ 8.2 million of goodwill (refer to Note 11 – Goodwill ), and (3) $ 1.1 million for software costs related to projects that were rationalized as part of the Restructuring Plan.

There were no impairment charges recorded associated with the Restructuring Plan during the three and six months ended June 30, 2023.

There were no material changes to the Restructuring Plan or the exit and disposal costs in 2023.

The following table presents the restructuring reserve and provision activity for the six months ended June 30, 2023 (in thousands):

The assessments resulted in the Company recording an impairment charge of $ 16.9 million during the three and nine months ended September 30, 2022, which was recorded in impairment and restructuring on the Consolidated Statements of Operations.

The impairment charge included (1) $ 8.2 million of goodwill (refer to Note 12 − Goodwill ), (2) $ 7.7 million associated with the operating lease right-of-use asset and related property and equipment at leased facilities no longer being utilized, and (3) $ 1.0 million for software costs related to projects that were rationalized as part of the Restructuring Plan.

During the nine months ended September 30, 2023, there were no material changes to the Restructuring Plan or the related exit and disposal costs.

The following table presents the restructuring reserve and provision activity for the nine months ended September 30, 2023 (in thousands):

Severance and Employee Benefit Costs

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Foreign currency translation

Balance at June 30, 2023

The Company did not have any restructuring activities during the six months ended June 30, 2022.

Balance at September 30, 2023

The Company did not have any restructuring activities or additional impairment charges related to the Restructuring Plan during the nine months ended September 30, 2023.

Variable Interest Entities

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Primarily due to having less than a 5 % ownership interest in UltraDx, the Company concluded that it does not have the power to direct activities impacting UltraDx’s economic performance and therefore the Company is not the primary beneficiary of the VIE.

Based on the Company’s assessments, it does not have any controlling financial interests in any VIEs, and therefore did not consolidate any VIEs into its Consolidated Financial Statements during the three and six months ended June 30, 2023 and 2022.

As of June 30, 2023 and December 31, 2022, the carrying value of the Company’s investment interests in VIEs was $ 1.3 million and $ 0.3 million, respectively, which are recorded in other non-current assets on the Consolidated Balance Sheets.

As of September 30, 2023 and December 31, 2022, the carrying value of the Company’s investment interests in VIEs was $ 1.1 million and $ 0.3 million, respectively, which are recorded in other non-current assets on the Consolidated Balance Sheets.

Refer to Note 6 − Fair Value of Financial Instruments for the Company’s related valuation disclosures.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements