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Fluidigm Q1 Revenues Grow 4 Percent, Miss Wall Street Estimate

NEW YORK (GenomeWeb) – Fluidigm said after the close of the market on Thursday that its first quarter revenues grew 4 percent year over year.

For the three months ended March 31, the South San Francisco, California-based life science research tools firm reported revenues of $26.7 million, up from $25.7 million in the year-ago period, but short of the Wall Street estimate of $30.7 million.

Investors reacted negatively to the miss, sending Fluidigm's stock tumbling nearly 30 percent to $26.61 in early Friday morning trade on the Nasdaq. Also on Friday, Mizuho Securities lowered its price target on Fluidigm's stock to $30 from a previous target of $50, citing increased uncertainty over the next six months.

On a currency-neutral basis, revenues were up 10 percent year over year, Fluidigm said. The company's Q1 2014 revenue also excludes $3.8 million of revenue realized prior to the close of its January 2014 acquisition of DVS Sciences.

Instrument revenue in Q1 grew 5 percent to $15.8 million from $15.1 million in the same quarter a year ago, driven by increased sales from C1 single-cell sample prep systems, CyTOF systems, and new products, offset by Biomark systems.

Meanwhile, consumables revenue grew 5 percent year over year to $10.8 million from $10.3 million, driven by increased sales for single-cell biology applications and partly offset by decreased sales from production genomics applications.

"Our first quarter revenue did not meet our internal expectations due to several factors, including timing of CyTOF orders and shipments, a shortfall in Biomark system revenues, and weak genomics analytical consumables sales," Fluidigm President and CEO Gajus Worthington said in a statement. "In addition, currency had a more negative impact than we assumed at the beginning of the year."

Expanding on these headwinds during a conference call following release of the company's earnings, Worthington noted that the shortfall in CyTOF sales was approximately $2 million, but that the performance of this business in the quarter was the least disconcerting.

"The revenue gap in Q1 was due to the timing of system orders, subsequent shipment of new system orders, and recognition of revenue against backlog," Worthington said. "Orders arrived very late in the quarter, and those outside the US couldn't be converted to revenue in Q1. Also, a customer surprised us with a substantially pushed out delivery date due to site readiness issues. As a result, we were unable to record backlog in accordance with our plan. And, finally, a couple of orders we expected in Q1 moved into Q2."

Worthington assured investors that acceptance of CyTOF continues to improve. For instance, he noted that Fluidigm "recently confirmed that a prominent European agency has funded multiple CyTOF purchases for this year," and that during Q1 the company sold a bundle of a BioMark, C1, and CyTOF instrument as it has in previous quarters.

"From our perspective, the power of combining single-cell genomics and proteomics is beyond dispute," Worthington said.

However, he noted that the company has taken "a far more cautious view toward BioMark sales in our revised guidance." Specifically, "single-cell BioMark placements were substantially lower than we expected," Worthington said. "While historically approximately 25 percent of C1 units have been sold with a BioMark HD, in Q1 this combination was only 10 percent. We were surprised by this result, given that we continue to see opportunity for the BioMark as a validation tool for single-cell sequencing. However, that opportunity did not materialize in Q1. So given our first quarter results, we are compelled to meaningfully reduce our outlook for BioMark sales."

Finally, genomics analytical pull-through tracked below Fluidigm's historical range of $40,000 to $50,000 per year. "We attribute this to volatility based on timing of large production genomics customers," Worthington said. "When it comes to pull-through, one quarter does not make a trend."

Fluidigm's net loss for the quarter inched upward to $15.9 million, or $.56 per share, from $15.4 million, or $.57 per share, in the same quarter last year. Fluidigm used 28,468,000 shares to calculate its per-share loss in Q1 2015 compared to 26,900,000 shares in Q1 2014.

On an adjusted basis, its net loss was $.25 per share, besting analysts' consensus estimate of a net loss of $.44 per share.

R&D spending at the company increased 32 percent to $10.0 million from $7.6 million, while SG&A expenses jumped 31 percent to $20.1 million from $15.3 million.

Fluidigm finished the quarter with approximately $37.0 million in cash and cash equivalents, and $79.4 million in short-term investments.

The company adjusted its full-year 2015 guidance to a revenue range of $133 million to $143 million from previous guidance of $142 million to $149 million. Full-year revenue projections incorporate an estimated negative currency-related impact of approximately 4 to 5 percent at the midpoint of the range versus the company's prior estimate of 3 to 4 percent.

In a research note issued Friday morning, Mizuho's Peter Lawson wrote that "despite a significant reset in guidance we gained no real sense that the core business (BioMark and genomics analytical consumable sales) would be back on track, or what really happened in the BioMark business, and how it would return. In addition, we are increasingly skittish about volatility returning to the DVS business, and now potentially the consumables business."