NanoString Technologies Releases Operating Results for Second Quarter of 2020

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 second quarter of 2020.

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Second Quarter Financial Highlights

• Product and service revenue of $21.1 million, 5% year-over-year decline. On a pro forma basis, reflecting the impact of the Veracyte transaction on revenue recorded for Prosigna® IVD kits, product and service revenue increased by 2%
• Instrument revenue of $9.8 million, including $6.3 million of GeoMx® Digital Spatial Profiler (DSP) instrument revenue, 98% year-over-year growth
• Consumables revenue of $8.4 million, 42% year-over-year decline. Pro forma decline was 34%
• Service revenue of $3.0 million, 2% year-over-year decline

“We extended our spatial genomics market leadership in the second quarter, generating orders for 20 new GeoMx DSP systems. We recently enabled GeoMx DSP with read-out on next generation sequencers, which significantly expands our market opportunity in the large discovery research community,” said Brad Gray, President and CEO of NanoString. “In addition, despite COVID-19 headwinds we had better than expected nCounter instrument placements and consumable pull-through in the second quarter.”

GeoMx DSP Platform

• GeoMx Orders: Received orders for 20 GeoMx® DSP instruments in the second quarter, bringing cumulative orders received to more than 125 instruments since launch
• GeoMx Shipments and Installs: Shipped 24 and installed 11 GeoMx® DSP instruments in the second quarter, bringing cumulative shipments to 93 and cumulative installs to 69 instruments since launch
• Launch of Next Generation Sequencing (NGS) Read-out and Cancer Transcriptome Atlas (CTA): Announced the launch of GeoMx DSP compatibility with Illumina’s next generation sequencers, as well as the commercial availability of the CTA, the first in a portfolio of GeoMx DSP products that will utilize NGS read-out
• NGS Read-Out Collaboration with Illumina: Announced collaboration with Illumina to co-develop software solutions for GeoMx DSP data readout using NGS technology to be processed using Illumina’s powerful DRAGEN Bio-IT platform, providing a compute engine for rapid, turnkey spatial biology
• Expanded Bio-Techne/Advanced Cell Diagnostics (ACD) Partnership: Announced an expanded menu of RNAscope probes that are validated for off-the-shelf use with NGS read-out of GeoMx to enable seamless selection of molecularly guided regions-of-interest
• Publications: Sharp acceleration of peer-reviewed publications utilizing GeoMx DSP technology, with6 new publications in the second quarter, bringing the cumulative total to 23 peer-reviewed publications. A majority of the publications highlight the use of spatial biology, demonstrating our continued and growing leadership in the translational and discovery research markets
• COVID-19 Research Assays: Announced a new GeoMx® COVID-19 Immune Response Atlas to offer novel insights into the pathology of the SARS-CoV-2 virus

nCounter Platform

• nCounter Installed Base: Grew installed base to approximately 890 nCounter® Analysis Systems at June 30, 2020, as compared to approximately 790 systems at June 30, 2019
• nCounter Publications: Surpassed 3,500 cumulative peer-reviewed publications utilizing nCounter technology
• nCounter Software: Announced collaboration with OnRamp Bioinformatics, a provider of cloud-based genomic analysis tools, for the development of new analysis tools for data generated on nCounter® Analysis Systems

Financial

• Balance Sheet Position: Concluded the quarter with approximately $250 million in cash, cash equivalents and short-term investments

Second Quarter Financial Results

The Company has 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 the Company’s 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 notes and table at the end of this press release.

Fiscal Year 2020

On April 6, 2020, as a result of ongoing disruption relating to the COVID-19 pandemic and uncertainty as to the timing with which we expect customer order activity to normalize, the Company announced it was withdrawing its financial guidance for fiscal year 2020. As of the date of this release, management cannot predict the extent or the duration of the impact of the COVID-19 outbreak on the Company’s full year operating results.

Supplemental Information

As a supplement to the table above, the Company has posted to the investor relations section of the Company’s website, at www.nanostring.com, supplemental financial data that includes our adjusted financial measures as compared to the nearest comparable GAAP financial measures, for the second quarter of 2020 and for each quarter of and the full year of 2019.

Conference Call

Management will host a conference call today beginning at 1:30 p.m. PT / 4:30 p.m. ET to discuss these results and answer questions. Individuals interested in listening to the conference call may do so by dialing (866) 211-0364 for domestic callers, or (647) 689-6861 for international callers. Please reference Conference ID 2329249. To listen to a live webcast, please visit the investor relations section of the Company’s website at www.nanostring.com. A replay of the call will be available beginning August 10, 2020 at 7:30 p.m. ET through midnight ET on August 17, 2020. To access the replay, dial (800) 585-8367 or (416) 621-4642 and reference Conference ID: 2329249. The webcast will also be available on the Company’s website for one year following the completion of the call.

Non-GAAP, or Adjusted, Financial Information

The Company believes 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 the Company’s 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 the Company believes 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.

Pro Forma Financial Information

As used in this press release, “pro forma growth” and “pro forma decline” percentages are calculated by comparing the applicable period-over-period financial results to reflect the impact of the Veracyte transaction as if such transaction had occurred on January 1, 2019, the beginning of the earliest period presented. Further disclosure regarding the terms and pro forma impact of the Veracyte transaction can be obtained in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 4, 2019.

About NanoString Technologies, Inc.

NanoString Technologies is a leading provider of life science tools for discovery and translational research. The Company’s nCounter® Analysis System has been cited in more than 3,500 peer-reviewed publications. The nCounter Analysis System offers a cost-effective way to easily profile the expression of hundreds of genes, proteins, miRNAs, or copy number variations, simultaneously with high sensitivity and precision, facilitating a wide variety of basic research and translational medicine applications, including biomarker discovery and validation. The Company’s GeoMx® Digital Spatial Profiler enables highly-multiplexed spatial profiling of RNA and protein targets in a variety of sample types. For more information, please 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, the impact of the COVID-19 pandemic and slowing global research activity on our operations and future financial performance, the impact of new products and expansion into new markets, the growth trajectory of our nCounter and GeoMx franchises, and the anticipated launch of new products and technology. 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 the impact of the COVID-19 pandemic and adverse conditions in the general domestic and global economic markets, 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, and nCounter are trademarks or registered trademarks of NanoString Technologies, Inc., in the United States and/or other countries.