NanoString Technologies Releases Fourth Quarter and Full Year 2022 Operating Results and Provides 2023 Financial Outlook

Rhea-AI Summary

NanoString Technologies, Inc. (NASDAQ:NSTG) reported strong momentum in spatial biology, showing a 50% increase in orders YoY for over 105 instruments in Q4 2022. Revenue reached $34.4 million, with spatial biology contributing $14.8 million. The company recorded full-year revenues of $127.3 million. Notably, $40 million in CosMx orders is in backlog, positioning them for continued growth in 2023, with projected revenues between $170 million and $180 million. However, the company anticipates an adjusted EBITDA loss of $65 to $75 million. Cash reserves stood at $196.5 million as of year-end 2022.

Positive

• 50% growth YoY in spatial biology instrument orders.
• Q4 revenue exceeded $34 million.
• Backlog of approximately $40 million in CosMx orders.
• Successful launch of CosMx 6000-plex RNA panel.

Negative

• Net loss increased to $159.5 million for 2022.
• Adjusted EBITDA loss projected between $65 million to $75 million.
• Gross margin decreased to 49% in 2022 from 53% in 2021.

- Generated Record Orders for Over 105 Spatial Biology Instruments, Representing 50% Growth Year-over-Year -

- Q4 Revenue Over $34 Million -

SEATTLE--(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 fourth quarter and fiscal year ended December 31, 2022.

“We are thrilled with the momentum that’s building in the spatial biology market. In 2022, we grew spatial biology instrument orders 50% year-on-year, and with approximately $40 million of CosMx orders in backlog, we are well-positioned for strong revenue growth in 2023,” said Brad Gray, President and CEO of NanoString. “At the Advances in Genome Biology and Technology (AGBT) conference earlier this month, we wowed researchers with demonstrations of our AtoMx Spatial Informatics Platform and customer-generated data using our new 6,000-plex CosMx RNA panel. We believe that we currently offer researchers the most compelling portfolio of spatial biology solutions, and with CosMx RNA assays that provide 12 times the data of competing platforms, and the only cloud-based spatial informatics suite, our lead is growing.”

Fourth Quarter Financial Highlights

• Revenue of $34.4 million
• Spatial biology revenue of $14.8 million
• nCounter® revenue, inclusive of all service and other revenue, of $19.6 million

Full Year Financial Highlights

• Revenue of $127.3 million
• Spatial biology revenue of $44.7 million
• nCounter revenue, inclusive of all service and other revenue, of $82.6 million
• Cash, cash equivalents and short-term investments balance of $196.5 million as of December 31, 2022

Spatial Biology

• Generated over 105 new system orders in Q4, including approximately 80 for CosMx™ and over 25 for GeoMx®
• Shipped our first 13 CosMx systems in Q4, generating Q4 revenue of approximately $3 million
• Exited 2022 with over 165 CosMx systems in backlog to be shipped in future periods, representing revenue to be recognized in future periods of approximately $40 million
• Announced and demonstrated expansion of capability of CosMx to 6000-plex RNA at the 2023 AGBT annual conference, representing 12 times the number of data points per cell that can be analyzed as compared to competing spatial imaging platforms
• Entered a collaboration with Weill Cornell Medical to create a Spatial Atlas of Human Anatomy (SAHA), that will create multicellular, single-cell, and sub-cellular maps of 30 non-diseased organs from a healthy and diverse population of adults
• Released CosMx SMI dataset generated from formalin-fixed paraffin-embedded (FFPE) human liver samples. The dataset highlights the data quality of the platform, demonstrating high sensitivity and high specificity capabilities
• Total installed base of our spatial biology platforms of approximately 350, an increase of approximately 37% as compared to 2021
• Total peer-reviewed publications featuring our spatial biology platforms were approximately 195 as of December 31, 2022, representing an increase of approximately 105 publications in the last 12 months

nCounter

• Total installed base of our nCounter platforms of approximately 1,120, an increase of approximately 7% as compared to 2021
• Total peer-reviewed publications featuring nCounter were approximately 6,520 as of December 31, 2022, representing an increase of approximately 1,320 publications in the last 12 months

2023 Outlook

The company, based on its plans and initiatives for 2023, expects to record results approximately as follows:

• Revenue of $170 to $180 million, including spatial biology revenue of $95 to $100 million and nCounter revenue, inclusive of all service and other revenue, of $75 to $80 million
• Adjusted EBITDA loss 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 December 31,
	GAAP								Non-GAAP Adjusted
	2022				2021				2022				2021
Total revenue	$	34,422			$	42,455			$	34,420			$	42,007
Cost of revenue		21,122				20,046				19,604				19,394
Gross margin		39	%			53	%			43	%			54	%
Research and development		19,086				18,162				14,996				15,693
Selling, general and administrative		36,895				31,596				27,530				26,553
Adjusted EBITDA		N / A				N / A			$	(27,710	)		$	(19,633	)
Non-operating expense, net		(1,433	)			(1,912	)			(1,433	)			(1,912	)
Net loss	$	(44,114	)		$	(29,261	)		$	(29,143	)		$	(21,545	)
	Years Ended December 31,
	GAAP								Non-GAAP Adjusted
	2022				2021				2022				2021
Total revenue	$	127,262			$	145,085			$	126,725			$	143,957
Cost of revenue		65,475				68,304				60,721				65,502
Gross margin		49	%			53	%			52	%			54	%
Research and development		70,841				69,504				58,968				59,301
Selling, general and administrative		143,129				115,503				115,593				92,985
Adjusted EBITDA		N / A				N / A			$	(108,557	)		$	(73,831	)
Non-operating expense, net		(7,360	)			(7,028	)			(7,360	)			(7,028	)
Net loss	$	(159,543	)		$	(115,254	)		$	(115,917	)		$	(80,859	)

Supplemental Information

As a supplement to the table above, we have posted to the investor relations section of our website, at https://investors.nanostring.com/financials/quarterly-results/default.aspx, supplemental financial data that include our adjusted financial measures as compared to the nearest comparable GAAP financial measures, for the fourth quarter and full year of 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://investors.nanostring.com/events-and-presentations/default.aspx. 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 February 28, 2023 at 7:30 pm ET through midnight ET on March 14, 2023. To access the replay, dial (866) 813-9403 or (929) 458-6194 and reference Conference ID: 176735. 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, a leader in spatial biology, offers an ecosystem of innovative discovery and translational research solutions, empowering our customers to map the universe of biology. The GeoMx® Digital Spatial Profiler, cited in approximately 190 peer-reviewed publications, is a flexible and consistent solution combining the power of whole tissue imaging with gene expression and protein data for spatial whole transcriptomics and proteomics from one FFPE slide. The CosMx™ Spatial Molecular Imager is an FFPE-compatible, single-cell imaging platform powered by spatial multiomics enabling researchers to map single cells in their native environments to extract deep biological insights and novel discoveries from one experiment. The AtoMx™ Spatial Informatics Platform is a cloud-based informatics solution with advanced analytics and global collaboration capabilities, enabling powerful spatial biology insights anytime, anywhere. At the foundation of our research tools is our nCounter® Analysis System, cited in approximately 6,520 peer-reviewed publications, which offers a secure way to easily profile the expression of hundreds of genes, proteins, miRNAs, or copy number variations, simultaneously with high sensitivity and precision. 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, future operating results, future cash flows, the impact of new products and expansion into new markets, the growth trajectory of our nCounter, GeoMx and CosMx franchises, and our estimated 2023 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 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, AtoMx 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 December 31,								Years Ended December 31,
	2022				2021				2022				2021
Revenue:
Instruments	$	10,925			$	17,560			$	37,589			$	55,616
Consumables		18,470				19,874				70,367				71,846
Services and other		5,027				5,021				19,306				17,623
Total revenue		34,422				42,455				127,262				145,085
Costs and expenses:
Cost of revenue		21,122				20,046				65,475				68,304
Research and development		19,086				18,162				70,841				69,504
Selling, general and administrative		36,895				31,596				143,129				115,503
Total costs and expenses (a) (b)		77,103				69,804				279,445				253,311
Loss from operations		(42,681	)			(27,349	)			(152,183	)			(108,226	)
Other income (expense):
Interest income		1,078				147				2,409				649
Interest expense		(1,885	)			(1,876	)			(7,535	)			(7,490	)
Other income expense, net		(631	)			(99	)			(1,917	)			(20	)
Total other expense, net		(1,438	)			(1,828	)			(7,043	)			(6,861	)
Net loss before provision for income taxes		(44,119	)			(29,177	)			(159,226	)			(115,087	)
Provision for income taxes		5				(84	)			(317	)			(167	)
Net loss	$	(44,114	)		$	(29,261	)		$	(159,543	)		$	(115,254	)
Net loss per share, basic and diluted	$	(0.95	)		$	(0.64	)		$	(3.44	)		$	(2.54	)
Weighted average shares used in computing basic and diluted net loss per share		46,663				45,682				46,406				45,299
(a) Includes $6.3 million and $6.5 million of stock-based compensation expense for the three month period ended December 31, 2022, and 2021, respectively, and $25.9 million and $30.2 million for the twelve months ended December 31, 2022 and 2021, respectively.
(b) Includes $3.0 million and $1.5 million of depreciation and amortization expense for the three month period ended December 31, 2022 and 2021, respectively, and $8.1 million and $5.9 million for the twelve months ended December 31, 2022 and 2021, respectively.

NANOSTRING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
	December 31,
	2022				2021
Assets
Current assets:
Cash and cash equivalents	$	112,250			$	107,068
Restricted cash and equivalents		898				—
Short-term investments		84,282				241,821
Accounts receivable, net		31,506				40,130
Inventory, net		43,273				31,486
Prepaid expenses and other		14,565				7,115
Total current assets		286,774				427,620
Property and equipment, net		44,457				27,043
Operating lease right-of-use assets		17,581				19,226
Other assets		4,600				5,592
Total assets	$	353,412			$	479,481
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	16,619			$	14,283
Accrued liabilities		7,884				6,765
Accrued compensation and other employee benefits		17,494				17,466
Customer deposits		1,757				1,278
Deferred revenue and other liabilities, current portion		9,588				7,474
Operating lease liabilities, current portion		5,518				4,889
Total current liabilities		58,860				52,155
Deferred revenue and other liabilities, net of current portion		3,754				3,527
Long-term debt, net		226,622				225,144
Operating lease liabilities, net of current portion		18,362				21,693
Total liabilities		307,598				302,519
Total stockholders’ equity		45,814				176,962
Total liabilities and stockholders’ equity	$	353,412			$	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, total revenue, cost of revenue, research and development expense and selling, general and administrative expense and net loss. We exclude stock-based compensation expense, impairment 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 reorganization and restructuring charges, 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, impairment 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 reorganization and restructuring charges, 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 December 31,								Years Ended December 31,
	2022				2021				2022				2021
Net loss - GAAP	$	(44,114	)		$	(29,261	)		$	(159,543	)		$	(115,254	)
Collaboration revenue		(2	)			(448	)			(537	)			(1,128	)
Stock-based compensation		6,264				6,484				25,908				30,173
Depreciation and amortization		2,965				1,524				8,116				5,871
Interest expense, net		807				1,729				5,126				6,841
Other expense, net		631				99				1,917				20
Provision for income taxes		(5	)			84				317				167
Reorganization and restructuring charges		2,384				—				2,384				—
Other business development expense		—				—				393				115
Litigation expense		2,387				—				5,921				—
Impairment expense		823				—				823				—
Recovery of certain previously remitted state and local taxes		—				—				—				(896	)
Cloud computing arrangement implementation expense		150				156				618				260
Adjusted EBITDA - non-GAAP		(27,710	)			(19,633	)			(108,557	)			(73,831	)
Non-operating expense, net		(1,433	)			(1,912	)			(7,360	)			(7,028	)
Net loss - non-GAAP	$	(29,143	)		$	(21,545	)		$	(115,917	)		$	(80,859	)

	Three Months Ended December 31,								Years Ended December 31,
	2022				2021				2022				2021
GAAP Total revenue	$	34,422			$	42,455			$	127,262			$	145,085
Collaboration revenue		(2	)			(448	)			(537	)			(1,128	)
Non-GAAP Total revenue	$	34,420			$	42,007			$	126,725			$	143,957
GAAP Cost of revenue	$	21,122			$	20,046			$	65,475			$	68,304
Stock-based compensation		(744	)			(469	)			(2,759	)			(2,125	)
Depreciation and amortization		(774	)			(183	)			(1,995	)			(677	)
Non-GAAP Cost of revenue	$	19,604			$	19,394			$	60,721			$	65,502
GAAP Gross margin	39%				53%				49%				53%
Non-GAAP Gross margin	43%				54%				52%				54%
GAAP Research and development	$	19,086			$	18,162			$	70,841			$	69,504
Stock-based compensation		(1,563	)			(1,543	)			(6,867	)			(6,182	)
Reorganization and restructuring charges		(881	)			—				(881	)			—
Depreciation and amortization		(1,646	)			(926	)			(4,125	)			(3,906	)
Other business development activities		—				—				—				(115	)
Non-GAAP Research and development	$	14,996			$	15,693			$	58,968			$	59,301
GAAP Selling, general and administrative	$	36,895			$	31,596			$	143,129			$	115,503
Stock-based compensation		(3,957	)			(4,472	)			(16,282	)			(21,866	)
Reorganization and restructuring charges		(1,503	)			—				(1,503	)			—
Depreciation and amortization		(545	)			(415	)			(1,996	)			(1,288	)
Other business development activities		—				—				(393	)			—
Litigation expenses		(2,387	)			—				(5,921	)			—
Impairment expenses		(823	)			—				(823	)			—
Recovery of certain previously remitted state and local taxes		—				—				—				896
Cloud computing arrangements implementation expense		(150	)			(156	)			(618	)			(260	)
Non-GAAP Selling, general and administrative	$	27,530			$	26,553			$	115,593			$	92,985

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230228006129/en/

Doug Farrell

Vice President, Investor Relations & Corporate Communications

dfarrell@nanostring.com

Phone: 206-602-1768

Source: NanoString Technologies, Inc.

FAQ

What were NanoString Technologies' Q4 financial results for 2022?

In Q4 2022, NanoString reported revenue of $34.4 million, with spatial biology revenue of $14.8 million.

How much growth did NanoString experience in spatial biology orders?

NanoString saw a 50% year-on-year growth in spatial biology instrument orders, totaling over 105 orders in Q4 2022.

What is the revenue outlook for NanoString in 2023?

NanoString expects 2023 revenues to be between $170 million and $180 million.

What net loss did NanoString report for the full year 2022?

NanoString reported a net loss of $159.5 million for the full year 2022.

What was the cash balance of NanoString at the end of 2022?

As of December 31, 2022, NanoString had cash, cash equivalents, and short-term investments of $196.5 million.