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Accelerate Diagnostics Posts Sharp Q4 Revenue Increase

NEW YORK (360Dx) – Accelerate Diagnostics reported after the market closed on Thursday that its fourth quarter revenues rose sharply year over year, but still fell short of the consensus Wall Street estimate.

For the three months ended Dec. 31, 2017, the company posted revenues of $2.1 million, compared to $39,000 in preliminary revenues for Q4 2016. The company  did not report final revenue figures a year ago. The growth in the recently completed quarter was driven by sales of the company's Pheno system and PhenoTest BC kit, Accelerate said.

Q4 2017 revenues matched the company's preliminary figures announced last month but fell short of the analysts' average estimate of $2.4 million.

The company reported signed agreements for 337 instruments. Contracts for customer evaluations covered 259 instruments, while revenue-generating placements grew to 78 across the US, European, and Middle East regions.

In a conference call, Accelerate CEO and President Lawrence Mehren explained that the revenue split between the US and Europe was "roughly 70 percent US and 30 percent Europe, while the commercial contracts were roughly 50-50."

Accelerate's R&D expenses for the quarter rose 9 percent year over year to $6.1 million from $5.6 million in Q4 2016. Its SG&A costs rose 10 percent to $11.5 million from $10.5 million, driven by higher personnel and customer evaluation-related costs across the US and Europe, the company said.

"Commercially, we met or exceeded our expectations on most of our key parameters, including the number of qualified prospects, the number of evaluation contracts, pricing per test and modules, capital mix, and annuity per module," Mehren said in the call. "However, we underestimated the length of the sales cycle, something which we believe we have now mitigated."

Accelerate recorded a net loss for the quarter of $15.1 million or $0.27 per share. The consensus Wall Street estimate was for a loss of $.33 per share. A year ago the company preliminarily reported a Q4 2016 net loss of $16.1 million, or $.31 per share.

"Now, with the recent data showing significant reductions in sepsis mortality from our first clinical customer, we've reached an important point where other hospitals, and the government, have started to notice," Mehren said in a statement.

For the full year 2017, Accelerate reported revenues rose to $4.2 million from $246,000 in 2016, which missed the analysts' average estimate of $4.4 million.

The firm's R&D costs in 2017 fell 24 percent to $22.3 million from $29.5 million in 2016, driven by clinical trial and pre-launch inventory costs incurred in the prior year period which did not repeat. For 2017, its SG&A expenses rose 21 percent to $45.1 million, from $37.2 million in 2016 due to higher personnel and customer evaluation related costs across the US and Europe.

Accelerate reported a net loss of $62.9 million, or $1.16 per share, which bested the average analysts' estimate of a loss of $1.22 per share. In 2016, the company reported a net loss of $66.4 million, or $1.29 per share.

Accelerate finished 2017 with $28.5 million in cash and cash equivalents.

For Q1 2018, the firm anticipates revenues to be in the range of $21 million to $30 million. It expects the pricing for the BC kit to remain above $200 per kit, with the potential to increase with demand. Accelerate CFO Steve Reichling noted that the firm will focus on two main initiatives, including "achieving a revenue guidance" and developing the Accelerate Pheno system.

In January, Accelerate received CE-IVD marking for its Accelerate Pheno system that targets severe bacterial pneumonia infections. The firm expects to begin clinical trials for the kit in Q2 or Q3, followed by a submission for review by the US Food and Drug Administration.

"Coming out of 2017, we were pretty consistent with our expectations of [expected cash usage] of $10 [million] to $13 million per quarter," Reichling said during the conference call. "We expect this to ramp up as we get into our clinical trials for the respiratory test and wrapping up the sales team, but nothing too dramatic, and I think we'll be in the range of $13 [million] to $15 million on a net basis per quarter."

The firm's shares were up 7 percent in Thursday after-hours trading on the Nasdaq at $24.90.