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Teknova Reports Third Quarter 2022 Financial Results

Third quarter 2022 total revenue was $10.7 million, up 14% year-over-year
Company updates 2022 revenue outlook to $40-42 million
Cash position of $50 million supports path to profitability

HOLLISTER, Calif., Nov. 09, 2022 (GLOBE NEWSWIRE) -- Alpha Teknova, Inc. (“Teknova” or the “Company”) (Nasdaq: TKNO), a leading provider of critical reagents for the discovery, research, development, and commercialization of drug therapies, novel vaccines, and molecular diagnostics, today announced financial results for the third quarter ended September 30, 2022.

“Teknova delivered a solid third quarter revenue performance, driven by robust Lab Essentials growth and healthy demand across our broad customer base,” said Stephen Gunstream, President and CEO of Teknova. “Most recently, we entered the qualification phase of our new state-of-the-art production facility and announced an Early Access Program for the first novel products to emerge from our R&D pipeline. We are balancing selective strategic investments with prudent management of our capital to position Teknova for accelerated growth and remain on our path to profitability.”

Corporate and Financial Updates

  • Achieved quarterly total revenue of $10.7 million, up 14% compared to $9.4 million in the third quarter 2021
  • Remained on track with capacity expansion of existing facilities and are nearing completion of the Company’s new, state-of-the-art manufacturing facility. Qualification activities are underway, and facility expected to be operational for production of research grade products by the end of 2022
  • Reported cash position of $49.9 million, supporting ongoing investment in future growth
  • Introduced an Early Access Program for two novel products in development and added WFI Quality Water to the Company’s product portfolio
  • Goodwill was fully impaired, resulting in a one-time, non-cash impairment charge of $16.6 million in the third quarter 2022

Revenue for the Third Quarter and Year-to-Date 2022

    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
    2022     2021     2022     2021  
Lab Essentials   $ 9,470     $ 7,195     $ 24,838     $ 20,440  
Clinical Solutions     919       1,690       7,673       4,354  
Sample Transport           73       6       1,035  
Other     303       434       1,012       954  
Total revenue   $ 10,692     $ 9,392     $ 33,529     $ 26,783  


Third Quarter 2022 Financial Results

Total revenue for the third quarter 2022 was $10.7 million, up 14% compared to $9.4 million in the third quarter 2021.

Gross profit for the third quarter 2022 was $4.8 million, compared to $4.3 million in the third quarter 2021. Gross margin for the third quarter 2022 was 44.6% of revenue. This compares to gross margin of 45.4% in the third quarter 2021. The lower gross margin for the third quarter 2022 compared to the gross margin in the prior year primarily reflects additional headcount resulting in higher labor costs.

Operating expenses for the third quarter 2022 were $27.7 million compared to $8.2 million in the third quarter 2021. The increase was primarily related to a one-time, $16.6 million non-cash goodwill impairment charge in the quarter, coupled with additional headcount, stock-based compensation expense, and marketing costs.

Net loss for the third quarter 2022 was $22.5 million, or negative $0.80 per diluted share, compared to net loss of $3.3 million, or negative $0.12 per diluted share, for the third quarter 2021.

Cash used in operating activities for the third quarter 2022 was $8.3 million, compared to cash used in operating activities of $4.8 million for the third quarter 2021.

Adjusted EBITDA for the third quarter 2022 was negative $4.6 million, compared to negative $2.7 million for the third quarter 2021. Free Cash Flow was negative $14.9 million for the third quarter 2022, compared to negative $8.7 million for the third quarter 2021.

2022 Revenue Outlook

Teknova is updating its outlook for the fiscal year ending December 31, 2022, to total revenue of $40 million to $42 million, which assumes approximately 16% growth at the mid-point of guidance, excluding Sample Transport revenue earned in 2021. The Company expects an approximately 15% increase in Lab Essentials and at least a 25% increase in Clinical Solutions revenue to drive total revenue growth for the year. The Company does not anticipate any material revenue from Sample Transport in 2022.

Conference Call and Webcast

Teknova will host a webcast and conference call on Wednesday, November 9, 2022, beginning at 4:30 p.m. ET. Participants can access the live webcast on the Investor Relations section of the Teknova website and at this link: https://edge.media-server.com/mmc/p/rjjxxr67. To receive a PIN number for dial in, participants can register for the webcast via this link: https://register.vevent.com/register/BIc8c72fb8e9214c49b689933915e724ad. The webcast will be available for replay on the Company’s website approximately two hours after the event.

About Teknova

Teknova is expediting clinical breakthroughs in life sciences by providing custom products and reagents for drug therapies, novel vaccines, and molecular diagnostics. With a focus on agility and customization, Teknova delivers research-grade and GMP products, including cell culture media and supplements, protein and nucleic acid purification buffers, and molecular biology reagents for a multitude of established and emerging applications, including cell and gene therapy, mRNA therapeutics, genomics, and synthetic biology. Teknova's proprietary processes enable the manufacture and delivery of high-quality, custom, made-to-order products with short turnaround times and at scale across all stages of development, including commercialization.

Non-GAAP Financial Measures

This press release contains financial measures that have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). Teknova uses the following non-GAAP financial measures in assessing the performance of its business and the effectiveness of its business strategies: (a) Adjusted EBITDA and (b) Free Cash Flow.

Teknova defines Adjusted EBITDA as net loss adjusted for interest income (expense), net, benefit from income taxes, depreciation expense, amortization of intangible assets, and stock-based compensation expense. Adjusted EBITDA reflects further adjustments to eliminate the impact of certain items, including certain non-cash and other items that Teknova does not consider representative of its ongoing operating performance.

Teknova defines Free Cash Flow as cash used in operating activities less purchases of property, plant, and equipment.

Teknova presents Adjusted EBITDA and Free Cash Flow in this press release because Teknova believes that analysts, investors, and other interested parties frequently use these measures to evaluate companies in Teknova's industry and that such measures facilitate comparisons on a consistent basis across reporting periods. Teknova also believes such measures are helpful in highlighting trends in Teknova's operating results because they exclude items that are not indicative of Teknova's core operating performance. Investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures presented by Teknova may be different from the non-GAAP financial measures used by other companies.

A full reconciliation of these non-GAAP measures to the most comparable GAAP measures is included at the end of this release.

Forward-Looking Statements

Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute “forward-looking statements.” These statements include, but are not limited to, statements relating to Teknova’s anticipated total revenue, expected growth in Lab Essentials and Clinical Solutions, ongoing capacity expansion, new research and development products, prospects, including to achieve profitability, and long-term growth strategy. The words, without limitation, “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these or similar identifying words. These forward-looking statements are based on management’s current expectations and beliefs and are subject to uncertainties and factors, all of which are difficult to predict and many of which are beyond Teknova’s control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to, demand for Teknova’s products (including the delay or pausing of customer orders); Teknova’s assessment of fundamental indicators of future demand across its target customer base; Teknova’s ability to expand its production capacity and commercial and R&D capabilities; Teknova’s cash flows and revenue growth rate; Teknova’s supply chain, sourcing, manufacturing and warehousing; inventory management; risks related to global economic and marketplace uncertainties related to the impact of the COVID-19 pandemic, including the impact of the pandemic on Teknova’s supply chain; reliance on a limited number of customers for a high percentage of Teknova’s revenue; potential acquisitions and integration of other companies and other factors discussed in the “Risk Factors” section of Teknova’s most recent periodic reports filed with the Securities and Exchange Commission (“SEC”), including in Teknova’s Annual Report on Form 10-K for the year ended December 31, 2021 and subsequent Quarterly Reports on Form 10-Q filed with the SEC, all of which you may obtain for free on the SEC’s website at www.sec.gov. Although Teknova believes that the expectations reflected in its forward-looking statements are reasonable, Teknova does not know whether its expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by Teknova on its website or otherwise. Teknova does not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.


ALPHA TEKNOVA, INC.
Condensed Statements of Operations
(Unaudited)
(In thousands, except share and per share data)

    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
    2022     2021     2022     2021  
Revenue   $ 10,692     $ 9,392     $ 33,529     $ 26,783  
Cost of sales     5,922       5,129       18,163       14,141  
Gross profit     4,770       4,263       15,366       12,642  
Operating expenses:                        
Research and development     1,925       1,372       5,867       2,922  
Sales and marketing     2,397       885       6,592       2,494  
General and administrative     6,502       5,607       20,856       13,606  
Amortization of intangible assets     287       287       861       861  
Goodwill impairment     16,613             16,613        
Total operating expenses     27,724       8,151       50,789       19,883  
Loss from operations     (22,954 )     (3,888 )     (35,423 )     (7,241 )
Other income (expenses), net                        
Interest income (expense), net     70       (255 )     85       (553 )
Other income (expense), net     36             36       (2 )
Total other income (expenses), net     106       (255 )     121       (555 )
Loss before income taxes     (22,848 )     (4,143 )     (35,302 )     (7,796 )
Benefit from income taxes     (374 )     (892 )     (1,128 )     (1,640 )
Net loss   $ (22,474 )   $ (3,251 )   $ (34,174 )   $ (6,156 )
Net loss per share—basic and diluted   $ (0.80 )   $ (0.12 )   $ (1.22 )   $ (0.51 )
Weighted average shares used in computing net loss per share—basic and diluted     28,090,267       28,011,917       28,059,897       12,069,214  



ALPHA TEKNOVA, INC.
Condensed Balance Sheets
(Unaudited)
(In thousands)

    As of September 30,     As of December 31,  
    2022     2021  
ASSETS            
Current assets:            
Cash and cash equivalents   $ 49,855     $ 87,518  
Accounts receivable, net     5,581       4,666  
Contract assets     667        
Inventories, net     10,323       5,394  
Income taxes receivable     120       1,188  
Prepaid expenses and other current assets     3,521       2,438  
Total current assets     70,067       101,204  
Property, plant and equipment, net     52,628       29,810  
Operating right-of-use lease assets     18,558        
Goodwill           16,613  
Intangible assets, net     17,843       18,704  
Other non-current assets     1,176       180  
Total assets   $ 160,272     $ 166,511  
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities:            
Accounts payable   $ 3,485     $ 2,248  
Accrued liabilities     6,590       5,495  
Current portion of operating lease liabilities     2,253        
Total current liabilities     12,328       7,743  
Deferred tax liabilities     2,028       3,153  
Other accrued liabilities     212       273  
Long-term debt, net     16,878       11,870  
Deferred rent           269  
Long-term operating lease liabilities     16,830        
Total liabilities     48,276       23,308  
Stockholders’ equity:            
Preferred stock            
Common stock            
Additional paid-in capital     153,708       150,741  
Accumulated deficit     (41,712 )     (7,538 )
Total stockholders’ equity     111,996       143,203  
Total liabilities and stockholders’ equity   $ 160,272     $ 166,511  



ALPHA TEKNOVA, INC.
Condensed Statements of Cash Flows
(Unaudited)
(In thousands)

    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
    2022     2021     2022     2021  
Operating activities:                        
Net loss   $ (22,474 )   $ (3,251 )   $ (34,174 )   $ (6,156 )
Adjustments to reconcile net loss to net cash used in operating activities:                        
Bad debt expense     2       4       34       235  
Inventory reserve     186       (23 )     178       676  
Depreciation and amortization     729       748       2,272       2,100  
Stock-based compensation     968       442       2,689       927  
Deferred taxes     (374 )     (893 )     (1,125 )     (1,640 )
Amortization of debt financing costs     60       43       159       89  
Non-cash lease expense     75       11       256       60  
Loss on disposal of property, plant and equipment     210             210       4  
Goodwill impairment     16,613             16,613        
Other                       (10 )
Changes in operating assets and liabilities:                        
Accounts receivable     227       (504 )     (949 )     (170 )
Contract assets     (667 )           (667 )      
Inventories     (2,600 )     (500 )     (5,107 )     (1,497 )
Income taxes receivable     (3 )     447       1,068       226  
Prepaid expenses and other current assets     (1,820 )     (2,195 )     (1,083 )     (1,777 )
Other non-current assets     (407 )     2       (996 )     (5 )
Accounts payable     1,247       501       969       468  
Accrued liabilities     (283 )     348       343       553  
Other     (21 )     (17 )     (61 )     (70 )
Cash used in operating activities     (8,332 )     (4,837 )     (19,371 )     (5,987 )
Investing activities:                        
Purchase of property, plant and equipment     (6,582 )     (3,907 )     (23,419 )     (12,465 )
Proceeds from loan to related party                       529  
Proceeds on sales of short-term marketable securities                       1,132  
Proceeds from maturities of short-term marketable securities                       695  
Cash used in investing activities     (6,582 )     (3,907 )     (23,419 )     (10,109 )
Financing activities:                        
Proceeds from long-term debt           1       5,135       11,890  
Payment of debt issuance costs                 (151 )     (153 )
Payment of exit fee costs                 (135 )      
Payment of costs related to initial public offering           (1,266 )           (3,615 )
Proceeds from initial public offering, net of underwriters’ commissions and discounts                       102,672  
Proceeds from exercise of stock options     35             134        
Proceeds from issuance of common stock under employee stock purchase plan                 144        
Cash provided by financing activities     35       (1,265 )     5,127       110,794  
Change in cash and cash equivalents     (14,879 )     (10,009 )     (37,663 )     94,698  
Cash and cash equivalents at beginning of period     64,734       108,022       87,518       3,315  
Cash and cash equivalents at end of period   $ 49,855     $ 98,013     $ 49,855     $ 98,013  



ALPHA TEKNOVA, INC.
Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures
(Unaudited)
(In thousands)

    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
    2022     2021     2022     2021  
Net loss – as reported   $ (22,474 )   $ (3,251 )   $ (34,174 )   $ (6,156 )
Add back:                        
Interest income (expense), net     70       (255 )     85       (553 )
Benefit from income taxes     (374 )     (892 )     (1,128 )     (1,640 )
Depreciation expense     442       461       1,411       1,239  
Amortization of intangible assets     287       287       861       861  
EBITDA   $ (22,189 )   $ (3,140 )   $ (33,115 )   $ (5,143 )
Other and one-time expenses:                        
Stock-based compensation expense     968       442       2,689       927  
Goodwill impairment charge     16,613             16,613        
Adjusted EBITDA   $ (4,608 )   $ (2,698 )   $ (13,813 )   $ (4,216 )


    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
    2022     2021     2022     2021  
Cash used in operating activities   $ (8,332 )   $ (4,837 )   $ (19,371 )   $ (5,987 )
Purchase of property, plant and equipment     (6,582 )     (3,907 )     (23,419 )     (12,465 )
Free Cash Flow   $ (14,914 )   $ (8,744 )   $ (42,790 )   $ (18,452 )


Investor Contacts 
Matt Lowell 
Chief Financial Officer 
matt.lowell@teknova.com 
+1 831-637-1100 

Sara Michelmore
MacDougall Advisors
smichelmore@macdougall.bio
+1 781-235-3060

Media Contact
Jenn Henry
Senior Vice President, Marketing
jenn.henry@teknova.com
+1 831-313-1259

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