Rapid Micro Biosystems, Inc. (Nasdaq: RPID) (the “Company”), an innovative life sciences technology company providing mission critical automation solutions to facilitate the efficient manufacturing and fast, safe release of healthcare products, today announced its financial results for the second quarter ended June 30, 2022.
Second Quarter Summary:
- Commercial revenue (combined product and service revenue) of $3.9 million
- Recurring revenue increased 31% to $2.5 million and represented 65% of commercial revenue compared to 33% in the prior year
- Placed two new systems and completed validation of three new customer systems
- Cash, cash equivalents and investments of $166.9 million at June 30, 2022
“While we placed two systems in the second quarter in line with our guidance, revenue was slightly below our expectations mainly due to slower-than-expected progress on a few system validations in the second half of the quarter as well as third-party logistics delays in the final days of the quarter that pushed revenue from several significant consumable shipments into the third quarter. We expect substantially all of the impacted revenues to be recognized in the third quarter. Excluding the impact of the delays in consumables, recurring revenue grew over 40% compared to the second quarter of last year, evidencing the continued strength of our business model and customer value proposition,” said Robert Spignesi, President and CEO.
“As access to customer sites and in-person engagement continued to improve gradually as we moved through the second quarter and into the third quarter, we have learned more about the challenges the pandemic created for our customers in advancing capital purchasing decisions and for us in accurately assessing the timing of sales opportunities. We have also identified opportunities to improve aspects of our sales process and sales team training. At the same time, macroeconomic uncertainty is impacting the timing of some customer purchase decisions. As a result of our post-quarter analysis, we now anticipate fewer system placements for the full year and, accordingly, we are lowering our 2022 revenue outlook.”
“We are taking decisive actions to enhance our commercial execution and right-size our cost structure to maintain our ability to invest in key growth initiatives while also managing our significant cash balance and long cash runway. We are confident these actions will better position us to capitalize on the large and growing market opportunity for our Growth Direct System,” said Spignesi.
Organizational Restructuring Plan
The Company is implementing an organizational restructuring plan to right-size its cost structure based on its lowered 2022 outlook. The Company will continue to invest in key growth initiatives including enhancing commercial execution and key product development programs that are expected to drive future revenue growth. The plan involves an approximately 20% reduction in the Company’s workforce, which is largely focused on non-commercial functions.
In connection with the organizational restructuring plan, the Company also announced that Andy Keys is leaving his role as Chief Commercial Officer effective immediately and Mr. Spignesi is assuming commercial leadership responsibilities.
The Company expects the organizational restructuring plan to result in approximately $8.0 – $9.0 million in annualized cost savings by the first quarter 2023. It expects to incur restructuring charges of approximately $1.5 million to be recognized in the third quarter of fiscal year 2022.
Second Quarter Financial Results
Total (commercial) revenue for the second quarter of 2022 was $3.9 million, compared to commercial revenue of $5.7 million in the second quarter of 2021. The decrease was attributable to fewer placements of Growth Direct systems and lower validation revenue due to a few customer-related delays. This was partially offset by higher recurring consumables and service contract revenue, which increased 31% to $2.5 million and represented 65% of commercial revenue, compared to $1.9 million and 33% of commercial revenue in the second quarter last year. The Company placed two new systems and completed validation of three new customer systems in the second quarter of 2022.
In the second quarter of 2022, the Company did not recognize any revenue from its contract with the U.S. Biomedical Advanced Research and Development Authority (“BARDA”), which was completed in the fourth quarter 2021. In the second quarter of 2021, the Company recognized $0.4 million of non-commercial revenue related to its BARDA contract.
Total cost of commercial revenue was $5.1 million in the second quarter of 2022, compared to $7.4 million in the second quarter of 2021, representing a decrease of 32%. The decrease was due to lower system placements as well as increased manufacturing efficiencies in consumables, partially offset by higher consumables sales volume and higher service costs associated with higher field service and validation headcount, travel and materials to support increasing service activity.
Total operating expenses were $12.9 million in the second quarter of 2022, compared to $9.1 million in the second quarter of 2021. The increase was mainly due to higher expenses incurred to operate as a publicly traded company as well as higher employee-related costs due to increased investment in commercial and product development headcount.
Net loss for the second quarter of 2022 was ($13.1) million, compared to ($11.8) million in the second quarter of 2021. Net loss per share attributable to common shareholders for the second quarter of 2022 was ($0.31), compared to ($20.01) in the second quarter of 2021. The number of weighted-average common shares outstanding in the second quarter this year was materially higher than the second quarter last year because of the conversion of outstanding preferred stock to common stock in connection with the Company’s initial public offering in July 2021. This difference accounts for a substantial portion of the decrease in net loss per share between the periods.
Cash, cash equivalents and investments were $166.9 million, and the Company had no debt outstanding as of June 30, 2022.
Full Year 2022 Outlook
The Company is updating its prior full year 2022 revenue outlook to at least $17.0 million. This assumes that the Company will place between three and five systems in the second half of the year, with most or all of those placements made in the fourth quarter. The Company’s lowered guidance reflects expectations for fewer systems placements in fiscal year 2022 as it continues to ramp its commercial team and optimize its commercial execution as well as macro-economic uncertainty that is expected to persist through the second half of the year.
Review of Strategic Alternatives and Rejection of Kennedy Lewis Management Proposal
In a separate release issued this morning, the Company also announced that its Board of Directors has initiated a review of strategic alternatives and unanimously rejected an unsolicited non-binding proposal from Kennedy Lewis Investment Management LLC to acquire all of the outstanding shares of the Company for $5.00 per share cash. For full details regarding these announcements, please refer to the Company’s press release on investors.rapidmicrobio.com.