Signs Supply Agreement and Receives First Commercial Purchase Order from Top-Tier Medtech Company for Bioptx™ Baseline Band, Targets Fourth Quarter to Begin Shipping
Signs First Contract Research Organization Partnership to Develop and Evaluate Rockley’s Bioptx™ Biomarker Sensing Platform for Use in Clinical Trials
Bolsters Board of Directors and Establishes Scientific Advisory Board
Rockley Photonics Holdings Limited (NYSE: RKLY), a global leader in photonics-based health monitoring and communications solutions, today announced its financial results for the second quarter ended June 30, 2022.
“I am proud of the progress we made in the second quarter. As we ramp towards commercial production, we have reached many of the milestones that we’ve been working towards and expect to reach many more in the coming months,” said Dr. Andrew Rickman, chairman and chief executive officer of Rockley. “I’m pleased with the progress that the team has made over the last year with our products and our customers. In August alone, we signed a supply agreement and received our first commercial purchase order, we also received the first production devices from our manufacturing partner, and we expanded our medtech market opportunity by adding contract research organizations as an additional market for our solutions. These announcements showcase many significant achievements for Rockley. I am looking forward to what is ahead of us as I believe that we are close to achieving our goal of having our biosensing solutions available to our customers in volume.”
“There are many value creation opportunities ahead for Rockley and I am committed to driving the financial strategy that supports them,” said Chad Becker, interim chief financial officer of Rockley. “In my first few weeks as interim CFO, I have focused on ensuring more efficient use of cash and adjusting our operating model as we advance toward the commercialization of our technology in consumer wearables and medtech products. We are committed to reducing our operating costs and conserving cash and have built a framework to support that while enabling a rapid move to commercial production.”
Second Quarter of Fiscal Year 2022 Financial Highlights:
(in millions except per share)
Cash, cash equivalents, and investments at period end
A reconciliation of GAAP financial measures to non-GAAP financial measures is included in the financial statement tables included in this press release. For more information regarding the non-GAAP financial measures discussed in this press release, please see "Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures" below.
Rockley will host a conference call and webcast to discuss the second quarter results at 5:00 p.m. Eastern Time today, August 11, 2022. The live audio webcast along with accompanying presentation materials will be accessible on the Company’s Investor Relations website at investors.rockleyphotonics.com.
The U.S. dial-in for the call is 866-682-6100 or +1 404-267-0373 for international callers. Please reference access code 13731648. A replay of the conference call will be available until September 10, 2022, at 11:59 p.m. Eastern Time, while an archived version of the webcast will be available on Rockley’s Investor Relations website for one year. The U.S. dial-in for the conference call replay is 877-660-6853 or +1 201-612-7415. The replay access code is 13731648.
In compliance with disclosure obligations under Regulation FD, Rockley announces material information to the public through a variety of means, including filings with the Securities and Exchange Commission, press releases, public conference calls and webcasts, as well as the investor relations website.
A global leader in photonics-based health monitoring and communications solutions, Rockley is developing a comprehensive range of photonic integrated circuits and associated modules, sensors, and full-stack solutions. From next-generation sensing platforms specifically designed for mobile health monitoring and machine vision to high-speed, high-volume solutions for data communications, Rockley is laying the foundation for a new generation of applications across multiple industries. Rockley believes that photonics will eventually become as pervasive as micro-electronics, and it has developed a platform with the power and flexibility needed to address both mass markets and a wide variety of vertical applications.
Formed in 2013, Rockley is uniquely positioned to support hyper-scale manufacturing and address a multitude of high-volume markets. Rockley has partnered with numerous tier-1 customers across a diverse range of industries to deliver the complex optical systems required to bring transformational products to market.
To learn more about Rockley, visit rockleyphotonics.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release that are not historical facts constitute “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding Rockley’s future expectations, beliefs, plans, objectives, and assumptions regarding future events or performance. The words “anticipate,” “believe,” “continue,” “could,” “develop,” “enable,” “estimate,” “eventual,” “expect,” “future,” “intend,” “may,” “might,” “opportunity,” “outlook,” “plan,” “possible,” “position,” “potential,” “predict,” “project,” “revolutionize,” “seem,” “should,” “trend,” “will,” “would” and other terms that predict or indicate future events, trends, or expectations, and similar expressions or the negative of such expressions may identify forward-looking statements, but the absence of these words or terms does not mean that a statement is not forward-looking. Forward-looking statements in this press release include, but are not limited to, statements regarding the following: (a) the expectation that Rockley will reach many milestones in the coming months; (b) the timing for achieving the goal of having Rockley’s biosensing solutions available to its customers in volume; (c) the value creation opportunities ahead for Rockley; (d) Rockley’s commitment to reducing its operating costs and conserving cash; (e) the expected timing for shipping Bioptx Baseline Band to customers and timing of volume production; (f) anticipated benefits and features of Rockley’s products and partnership agreements; (g) the anticipated benefits of being added to the Russell 3000® Index; and (h) anticipated financial results, including expected revenue for 2022.
Forward-looking statements are subject to several risks and uncertainties (many of which are beyond the Company’s control) or other assumptions that may cause actual results or performance to differ materially from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following: (i) the Company’s ability to achieve commercial production of its products and technology, including in a timely and cost-effective manner; (ii) the Company’s ability to achieve customer design wins, convert memoranda of understanding and development contracts into production contracts, and achieve customer acceptance of its products and technology; (iii) risks related to purchase orders, including the lack of long-term purchase commitments, the cancellation, reduction, delay, or other changes in customer purchase orders, and if and to the extent customers seek to enter into licensing arrangements in lieu of purchases; (iv) the Company’s history of losses and need for additional capital and its ability to access additional financing to support its operations and execute on its business plan, as well as the risks associated with any future financings; (v) legal and regulatory risks, including those related to its products and technology and any threatened or actual litigation; (vi) risks associated with its fabless manufacturing model and dependency on third-party suppliers; (vii) the Company’s reliance on a few significant customers for a majority of its revenue and its ability to expand and diversify its customer base; (viii) the Company’s financial performance; (ix) the impacts of COVID-19 on the Company, its customers and suppliers, its target markets, and the economy; (x) the Company’s ability to successfully manage growth and its operations as a public company; (xi) fluctuations in the Company’s stock price and the Company’s ability to maintain the listing of its ordinary shares on the NYSE; (xii) the Company’s ability to anticipate and respond to industry trends and customer requirements; (xiii) changes in the Company’s current and future target markets; (xiv) intellectual property risks; (xv) the Company’s ability to compete successfully; (xvi) market opportunity and market demand for, and acceptance of, the Company’s products and technology, as well as the customer products into which the Company’s products and technology are incorporated; (xvii) risks related to international operations; (xviii) risks related to cybersecurity, privacy, and infrastructure; (xix) risks related to financial and accounting matters; (xx) general economic, financial, legal, political, and business conditions and changes in domestic and foreign markets; (xxi) risks related to the Company’s debt arrangements, restrictions on the Company’s operations contained in those debt arrangements and compliance with the terms thereof; (xxii) changes adversely affecting the businesses or markets in which the Company is engaged; and (xxiii) risks related to the Company’s backlog, including the risk that backlog may not translate into future revenue, as well as other factors described under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended 2021, and in other documents the Company files with the Securities and Exchange Commission in the future. The forward-looking statements contained in this press release are based on various assumptions, whether or not identified in this press release, and on the Company’s current expectations, beliefs, and assumptions and are not predictions of actual performance. If any of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, actual results may differ materially from those discussed in or implied by these forward-looking statements. There can be no assurance that future developments affecting the Company will be those that have been anticipated. These forward-looking statements speak only as of the date hereof and the Company does not intend to update or revise any forward-looking statements, whether because of new information, future events, or otherwise, except as required by law.
Condensed Consolidated Statements of Operations
(Unaudited and in thousands, except share and per share amounts)
Selling, general, and administrative expenses
Gain (loss) on equity method investment
Change in fair value of debt instruments
Change in fair value of warrant liabilities
(Loss) gain on foreign currency
Provision for income tax (benefit)
(Unaudited and in thousands, except share amounts and par value)
Accounts receivable, net of allowance of $0 and $302 as of June 30, 2022 and December 31, 2021, respectively
Other receivables, net of allowance of $0 and $141 as of June 30, 2022 and December 31, 2021, respectively
Prepaid expenses and other current assets
Liabilities and Shareholders’ Equity (Deficit)
Long-term debt, net of current portion
Ordinary shares, $0.000004 par value; 12,443,961,038 and 12,417,500,000 authorized as of June 30, 2022 and December 31, 2021, respectively; 129,917,925 and 127,860,639 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
Total shareholders’ equity (deficit)
Total liabilities and shareholders’ equity (deficit)
Condensed Consolidated Statements of Cash Flows
Cash flows from operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of marketable securities to redemption value
Net realized loss on sale of marketable securities
Change in fair value of debt instrument
Change in fair value of warrant liabilities
Forgiveness of Paycheck Protection Program loan
Non-cash interest on convertible loan notes
Changes in operating assets and liabilities:
Prepaid expenses and other current assets
Other current and long-term liabilities
Net cash used in operating activities
Cash flows from investing activities:
Purchase of property and equipment
Proceeds from sale and maturities of marketable securities
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from convertible loan notes
Principal payments on long-term debt
Proceeds from exercise of options
Proceeds from exercise of warrants
Proceeds from issuance of warrants
Withheld taxes paid on behalf of employees on net settled
Net cash (used in) provided by financing activities
Net (decrease) increase in cash and cash equivalents
Use of Non-GAAP Financial Measures
In addition to financial information presented in accordance with GAAP, this press release includes certain financial measures that are not prepared in accordance with generally accepted accounting principles in the United States, including: non-GAAP SG&A, non-GAAP R&D, non-GAAP net loss, non-GAAP net loss per share, and adjusted EBITDA, each of which is a non-GAAP financial measure. The Company defines non-GAAP SG&A as GAAP SG&A other than stock-based compensation, non-capitalized transaction costs and forgiveness of PPP loan, and non-GAAP R&D as GAAP R&D other than stock-based compensation. The Company defines non-GAAP net loss as net loss other than the non-GAAP cost of revenue adjustment, non-GAAP SG&A adjustment, and non-GAAP R&D adjustment (in each case as described above), and defines non-GAAP net loss per share as net loss other than non-GAAP adjustments noted above divided by weighted shares outstanding. The Company defined adjusted EBITDA as net loss before interest expense, taxes, depreciation and amortization, stock-based compensation, change in fair value of debt instruments and warrants, and non-capitalized transaction costs as the Company believes they are not indicative of its core operating performance. As noted below, none of these non-GAAP financial measures is a substitute for or superior to measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any other performance measures derived in accordance with GAAP.
The Company believes that presenting these non-GAAP financial measures provides useful supplemental information to investors about the Company in understanding and evaluating its operating results, enhancing the overall understanding of its past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by its management in financial and operational-decision making. The Company uses these non-GAAP measures to help assess its operating performance and operating leverage in its business, analyze its financial results, establish operational goals, develop operating budgets, and make strategic decisions. The Company also believes that the presentation of these non-GAAP financial measures provides an additional tool for investors to use in comparing its core business and results of operations over multiple periods with other companies in its industry, many of which present similar non-GAAP financial measures to investors, and to help analyze the Company’s cash performance.
Other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore any non-GAAP measures the Company uses may not be directly comparable to similarly titled measures of other companies. Further, there are a number of limitations related to the use of non-GAAP measures and their nearest GAAP equivalents. Accordingly, these non-GAAP financial measures should be considered as supplemental in nature, should not be considered as the sole measure of the Company’s performance, and are not intended to be construed, and should not be considered, in isolation from, or as a substitute for, the comparable or related financial information calculated in accordance with GAAP.
Adjusted EBITDA (unaudited, in thousands):
Provision for income tax (benefit)
Change in equity method investment
Change in fair value of debt instruments
Change in fair value of warrant liabilities
Non-GAAP Net Income (unaudited, in thousands):
Selling, general and administrative adjustment
Non-GAAP net loss per share:
Non-GAAP - Cost of Revenue (unaudited, in thousands):
Non-GAAP - Selling, General and Administrative Expenses (unaudited, in thousands):
Selling, general, and administrative expenses
Non-GAAP selling, general and administrative expenses
Non-GAAP - Research and Development Expenses (unaudited, in thousands):
Non-GAAP research and development expenses
Non-capitalized transaction costs include non-recurring expense related to the issuance of convertible loan notes in 2022, 2021 and the Business Combination.
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