On August 3, 2016 NanoString Technologies, Inc. (NASDAQ:NSTG), a provider of life science tools for translational research and molecular diagnostic products, reported financial results for the second quarter ended June 30, 2016(Press release, NanoString Technologies, AUG 3, 2016, View Source [SID:1234514216]).

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Second Quarter Financial Highlights

Total revenue of $22.6 million, 73% year-over-year growth
Total product and service revenue of $17.5 million, 40% year-over-year growth
Consumables revenue of $10.3 million, including $1.2 million of Prosigna IVD kits, 39% year-over-year growth
Instrument revenue of $6.4 million, 46% year-over-year growth
Collaboration revenue of $5.1 million

"We had a successful second quarter characterized by strong commercial execution and rapid progress in delivering against diagnostic milestones in our biopharma collaborations," said president and chief executive officer Brad Gray. "Demand for our nCounter platform was robust across all products and geographies. Our nCounter SPRINT Profiler accounted for approximately half of units sold, driving 46% year-on-year growth in instrument revenue and underscoring the value of SPRINT in reaching new customers and expanding our installed base."

Recent Business Highlights

Grew installed base to over 410 nCounter Analysis Systems at June 30, 2016
Achieved milestones in the Merck and Medivation & Astellas collaborations valued at $13.5 million, of which $5.0 million was received in the second quarter and $8.5 million was received in the third quarter
Over 30 abstracts presented at the June 2016 annual meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) demonstrating the value of the nCounter platform, including several highlighting investigational assays for immuno-oncology and lymphoma
Received positive Medical Coverage Policy decisions from Aetna and Cigna for the Prosigna Breast Cancer Gene Signature Assay
Presented first proof-of-concept data for digital immunohistochemistry (IHC), a novel technology to simultaneously count multiple protein targets in the spatial context of tumor tissue biopsies, at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) conference

Second Quarter Financial Results

Revenue for the three months ended June 30, 2016 increased by 73% to $22.6 million, as compared to $13.1 million for the second quarter of 2015. Instrument revenue was $6.4 million, up 46% versus the prior year period, resulting from strong demand for all products in all regions. Consumables revenue, excluding Prosigna, was $9.1 million for the second quarter of 2016, 32% higher than in the comparable 2015 quarter. Prosigna IVD kit revenue was $1.2 million for the quarter, an increase of 110% over the second quarter of 2015. Collaboration revenue totaled $5.1 million, benefiting from the achievement of multiple milestones in diagnostic development collaborations. Gross margin on product and service revenue was 55% for the second quarter of 2016, up from 53% for the second quarter of 2015.

Research and development expense increased by 52% to $8.8 million for the second quarter of 2016 versus $5.8 million for the second quarter of 2015, reflecting increased costs associated with biopharma collaborations announced earlier this year and new products and technologies under development for the life science research market. Selling, general and administrative expense was $15.5 million for the second quarter of 2016 compared to $12.8 million for the prior year period.

Net loss for the three months ended June 30, 2016 declined to $10.8 million, or a loss of $0.55 per diluted share, compared with $12.4 million, or a loss of $0.66 per diluted share, for the second quarter of 2015.

Outlook for 2016

The company raised its financial outlook for 2016 as follows:

Total revenue was increased to the range of $89 million to $93 million, as compared to the previous range of $86 million to $90 million
Gross margin on product and service revenues in the range of 54% to 55%, unchanged
Operating expenses in the range of $94 million to $99 million, unchanged
Operating loss guidance was reduced to the range of $37 million to $40 million, as compared to the previous range of $40 million to $43 million
Net loss per share range was reduced to $2.15 to $2.30, as compared to the previous range of $2.30 to $2.45
Cash from collaborations in 2016 in the range of $40 million to $45 million, unchanged