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Sequenom Cash Flow Analysis Q1 2014

|Includes: Sequenom, Inc. (SQNM)

This post concludes the series of posts related to my review of Sequenom's (NASDAQ:SQNM) first calendar quarter earnings. I've analyzed cash flow trends which show substantial progress toward the company goal of eliminating cash burn by the fourth quarter of 2014. The final component required to achieve this goal is operating expense controls. Admittedly I review the financial statements pretty thoroughly to understand the minutiae. However my analysis on spending trends comes down to the following table

Average Daily Spending
  Mar-14 Dec-13 Sep-13 Jun-13 Mar-13
Cost of revenues $26,110 $26,825 $27,042 $24,333 $24,538
Operating expenses $32,697 $34,951 $36,946 $39,206 $40,974
Capital expenditures $ 433 $ 994 $ 2,575 $ 5,021 $ 4,124
Less noncash items:          
Deprec/Amort $ 3,490 $ 3,733 $ 3,856 $ 3,889 $ 3,643
Stock compensation $ 2,957 $ 3,209 $ 2,291 $ 2,597 $ 3,074
Normalized cash $52,793 $55,828 $60,416 $62,074 $62,919
Average Daily Spending $ 580 $ 613 $ 664 $ 682 $ 691

Notes:

  1. Operating expenses exclude restructuring charges.

I reviewed volume, pricing and gross margins in my earlier posts. My recap of the component drivers of cash flow improvement are summarized in this final table

Cash Flow Component Trend
  Mar-14 Dec-13 Sep-13 Jun-13 Mar-13
Accessions (NYSE:K) 49.9 45.4 48.3 46.7 44.5
M21 domestic ASP $ 765 $ 744 $ 711 $ 505 $ 674
COGS per accession $ 456 $ 491 $ 481 $ 442 $ 474
Gross Margin % 38.6% 31.6% 30.1% 15.9% 27.5%
Average Daily Spend $ 580 $ 613 $ 664 $ 682 $ 691

Disclosure: I am long SQNM.