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Fluidigm Q2 Revenues Grow 4 Percent, Miss Wall Street Estimate

This story has been updated from a previous version to include comments from Fluidigm's Q2 earnings call.

NEW YORK (GenomeWeb) – Fluidigm said after the close of the market on Thursday that its second quarter revenues grew 4 percent year over year as the company missed analysts' consensus estimate on the top line and significantly reduced its full-year 2015 revenue guidance.

For the three months ended June 30, the South San Francisco, California-based company reported total revenues of $28.6 million compared to $27.6 million in the year-ago quarter, but below the Wall Street estimate of $30.4 million. On a currency-neutral basis, Q2 revenues increased 11 percent.

It was the second consecutive quarter that Fluidigm's revenues missed Wall Street estimates, and investors reacted negatively to the news, sending shares of the company tumbling around 38 percent to $12.28 in Friday morning trade on the Nasdaq. Also on Friday, Piper Jaffray downgraded Fluidigm's shares to neutral from overweight, and lowered its price target on Fluidigm's stock to $15 from a previous target of $43, citing greatly reduced visibility regarding the firm's financial outlook.

Instrument revenue grew 13 percent year over year to $17.4 million from $15.4 million, driven by increased sales of CyTOF systems and contributions from new products, but offset by weakness in Biomark HD and C1 system sales.

Meantime, consumables revenue declined 8 percent year over year to $11.1 million from $12.1 million. Consumables revenues were negatively impacted by decreased sales from production genomics applications, but partly offset by single-cell biology applications, Fluidigm said.

Fluidigm noted that quarterly consumables pull-through for its genomics analytical systems was below its historical range of $40,000 to $50,000 per instrument per year, although quarterly pull-through for genomics preparatory systems was within its historical range of $15,000 to $25,000 per instrument per year. Meanwhile, consumables pull-through for proteomics analytical systems was within its historical range of $50,000 to $70,000 per instrument per year.

In a statement, Fluidigm President and CEO Gajus Worthington noted that 2015 "continues to be a challenging year for Fluidigm. While our single-cell proteomics product line performed well in the second quarter, our results were pressured by decreased sales of consumables to production genomics customers and a decline in single-cell genomics instrument sales."

Expanding on these issues in a conference call following the release of the company's earnings, Worthington noted that although the company's recently launched Helios CyTOF platform was a bright spot in the quarter, "Q2 sales of our core single-cell genomics instruments declined year over year and sequentially." And while in Q1 these dynamics were confined to company's legacy BioMark gene expression and genotyping platform, in Q2 the company's C1 Single-Cell Auto Prep system was also impacted.

"In the last three months we have worked hard to understand the dynamics driving these shortfalls," Worthington said. "We believe the unprecedented number of new products launched diverted attention from core products. This means our recovery will take longer than we thought a quarter ago. We have aggressively moved to realign our commercial activity between core and new products, and we believe we now have the right plan to fix this. However, these changes take time to have effect, so we do not expect to see a positive impact on revenue until the end of 2015."

Worthington also noted in a statement that the company has "implemented an action plan to address the underlying issues", and specifically has "initiated organizational changes to regain our strong commercial execution focused on our large market opportunities."

Further detailing this in the call, he noted that Fluidigm will "continue to implement our new organization to bolster production genomics revenue and facilitate greater focus within single-cell biology … [and] realign our commercial activity with appropriate balance between new products and continuing opportunities for BioMark and C1 sales."

In addition, he said that the company has appointed "new leadership" to support commercial activity for the BioMark; namely, Worthington noted, "two long-time leaders of Fluidigm, with consistent track records of success, have taken over the management of single-cell marketing," at the company. Finally, he said, the company plans to recruit "additional sales executive leadership to create a structure required to meet the needs of our expanded product portfolio."

Fluidigm took a net loss in the quarter of $15.2 million, or $.53 per share, up from $12.7 million, or $.45 per share, in the year-ago period. On an adjusted basis, its loss per share was $.20, bettering the Wall Street estimate of a loss of $.48 per share.

The company's R&D expenses fell 11 percent to $10.1 million from $11.4 million, while its SG&A costs rose 13 percent to $21.2 million from $18.7 million.

Fluidigm finished the quarter with $23.7 million in cash and cash equivalents and $76.2 million in short-term investments.

"I am confident we have thoroughly evaluated recent challenges, and are implementing sound strategies to address them," Worthington said during the call. "The reality is our fixes will take time to have effect, resulting in a substantial downward revision of our full-year guidance. Our changing guidance is primarily based on the following expectations: Genomics and analytical consumables pull-through range will be consistent with the first half of the year; minimal contributions from new products; and continued pressure on core single-cell genomics instrumentation."

Specifically, the company now projects total 2015 revenue of between $110 million and $115 million, compared to a previous guidance of between $133 million and $143 million. These revenue projections incorporate an estimated negative currency-related impact of approximately 4 to 5 percent at the midpoint of the range, the company noted.