AXDX Analysts Reports

This document is being provided for the exclusive use of SUNNY PURI at ANSON ADVISORS INC
North America Equity Research

09 May 2019
Neutral
Accelerate Diagnostics AXDX, AXDX US
Price (09 May 19): $19.77
1Q19 Model Update: In-line System Placement,
Price Target (Dec-19): $16.00
With Revenue Ramp Yet to Follow
We are updating our Accelerate Diagnostics (AXDX) model following the Life Science Tools & Diagnostics
release of 1Q results and subsequent earnings call. Revenues of $1.8M came in Tycho W. Peterson
AC
just below consensus ($1.9M), although placements (75 total) were in line (1-212) 622-6568
with JPMe. Looking closer, 52 of the 1Q placements were in the U.S. (25% tycho.peterson@jpmorgan.com
evaluation program conversions and 75% direct placements), which again Bloomberg JPMA PETERSON <GO>
J.P. Morgan Securities LLC
included large orders from IDNs, and 18 placements were in EMEA, including
a large multi-unit placement in the Middle East. Moving down the P&L, gross Julia Qin, CFA
margin also improved sequentially (from 29% to 48%) on higher consumable (1-212) 622-9253
julia.qin@jpmchase.com
mix, although this includes 3% benefit from previous write-off of pre-MDA
manufactured inventory.
Tejas Savant
Looking ahead, AXDX continues to expect 300-400 commercial instrument (1-212) 622-5650
tejas.savant@jpmorgan.com
placements in 2019, although the bulk of these placements are expected to
occur in 4Q in light of the anticipated Mayo/UCLA study readout at IDWeek
David Adlington
in October and two other independent study readouts near YE19, with 2Q and
(44-20) 7134-5828
3Q placements expected to be similar to 1Q levels. On the consumables side, david.adlington@jpmorgan.com
AXDX continues to expect annuity per instrument of $45K-65K (U.S. near J.P. Morgan Securities plc
the high end of the range, and EMEA below the range) and an average go-live
time of 4-9 months (~9 months for multi-unit IDN customers, ~3 months for Key Changes (FYE Dec)
small independent customers), hence, consumable revenues are expected to Prev Curr
pick up in 2H19. Moving down the P&L, AXDX expects to make continued Revenue - 19E ($ mn) 21 15
Revenue - 20E ($ mn) 56 43
investments in S&M and R&D (including clinical trials for pneumonia and
China approval), with full-year cash burn expected to be close to 2018 levels. Quarterly Forecasts (FYE Dec)
Putting it together, while 1Q placements were in line with our expectations, Revenue ($ mn)
2018A 2019E 2020E
the more important question lies in revenue generation, with the expected Q1 1 2A 7
consumable revenue ramp in 2H19 and, longer-term, the ability to drive opex Q2 2 3 9
leverage with top-line growth remaining to be seen. As such, with shares now Q3 1 4 12
Q4 2 6 15
trading at 71x fwd sales, we believe the positives are already priced in, and we FY 6 15 43
remain Neutral and maintain our Dec 2019 PT of $16.
Style Exposure
Quant Current Historical Rank
Factors Rank 6M 1Y 3Y 5Y
Value 86 80 76 85 92
Growth 28 21 26 97 100
Momentum 67 87 54 85 2
Quality 85 83 80 84 78
Low Vol 60 54 59 71 87
ESGQ 97 6 2 - -
Sources for: Style Exposure – J.P. Morgan Quantitative and Derivatives Strategy; all other tables are company data and J.P. Morgan estimates.
See page 7 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.
www.jpmorganmarkets.com
Tycho W. Peterson North America Equity Research

(1-212) 622-6568 09 May 2019
tycho.peterson@jpmorgan.com
Price Performance Summary Investment Thesis and Valuation

Investment Thesis
While we remain encouraged by the long-term potential of the
flagship Pheno instrument, uptake post-launch a year ago and
particularly, the revenue ramp, have been much weaker than
originally anticipated. Following several disappointing quarters
with significant revenue misses and continued pipeline delays,
business model potential fruition is clearly taking longer than
expected, and thus, we now see better risk/reward in other
parts of our coverage universe.
YTD 1m 3m 12m
Abs 71.9% 11.1% 4.1% -11.9% Valuation
Rel 55.5% 10.4% -0.1% -10.3%
Our YE19 DCF-derived PT of $16 assumes a WACC of 10.9%
Company Data and +2.5% terminal growth.
Shares O/S (mn) 54
52-week range ($) 24.75-10.23 Performance Drivers
Market cap ($ mn) 1,067.64
Exchange rate 1.00
Free float(%) 53.0%
3M - Avg daily vol (mn) 0.25
3M - Avg daily val ($ mn) 4.9
Volatility (90 Day) 57
Index RUSSELL 2000
BBG BUY|HOLD|SELL 2|3|0
Key Metrics (FYE Dec)

$ in millions FY18A FY19E FY20E FY21E
Financial Estimates
Revenue 6 15 43 90
Adj. EBITDA (78) (67) (79) (65)
Adj. EBIT (80) (70) (81) (69)
Adj. net income (88) (81) (92) (80)
Adj. EPS (1.62) (1.47) (1.64) (1.39)
BBG EPS (1.62) (1.68) (1.61) (1.24)
Cashflow from operations (68) (61) (73) (61)
FCFF (78) (68) (83) (73)
Margins and Growth
Revenue growth 35.7% 159.9% 191.6% 110.2%
EBITDA margin (1367.4%) (457.6%) (183.1%) (72.5%)
EBITDA growth 25.9% (13.0%) 16.7% (16.8%)
EBIT margin (1417.4%) (474.5%) (189.4%) (76.5%)
Net margin (1557.8%) (547.4%) (213.8%) (88.1%)
Adj. EPS growth 39.3% (9.1%) 11.2% (15.4%)
Ratios
Adj. tax rate (0.2%) (0.3%) 0.0% 0.0%
Interest cover NM NM NM NM
Net debt/Equity NM NM NM NM
Net debt/EBITDA 0.6 NM NM NM
ROCE (54.4%) (26.0%) (25.0%) (26.9%)
ROE (100.3%) (322.9%) 205.9% 70.5%
Valuation
FCFF yield (7.2%) (6.3%) (7.5%) (6.4%)
Dividend yield 0.0% 0.0% 0.0% 0.0%
EV/EBITDA NM NM NM NM
Adj. P/E NM NM NM NM
Sources for: Performance Drivers – Bloomberg, J.P. Morgan Quantitative and Derivatives Strategy; all other tables are company data and J.P. Morgan estimates.
2

(1-212) 622-6568 09 May 2019
Investment Thesis, Valuation and Risks

Accelerate Diagnostics (Neutral; Price Target: $16.00)
Investment Thesis
While we remain encouraged by the long-term potential of the flagship Pheno
instrument, uptake post-launch a year ago and particularly, the revenue ramp, have
been much weaker than originally anticipated. Following several disappointing
quarters with significant revenue misses and continued pipeline delays, business
model potential fruition is clearly taking longer than expected, and thus, we now see
better risk/reward in other parts of our coverage universe.
Valuation
Our YE19 DCF-derived PT of $16 assumes a WACC of 10.9% and +2.5% terminal
growth.
Risks to Rating and Price Target

Upside risks to our rating and price target include: (i) The Pheno instrument is a
potentially disruptive technology with a large addressable market that could provide
greater upside potential in the near term; (ii) Attractive endmarket demand and
government tailwind can drive unexpected growth in the install base, which could
lead to best-in-class revenue growth with a more rapidly improving margin profile;
(iii) The timing for the commercial launches of the product pipeline is still uncertain
and could be sooner than anticipated.
Downside risks to our rating and price target include: (i) The competitive landscape
in clinical microbiology is crowded and intense; (ii) Our long-term forecasts are
partly dependent on the successful commercialization of tests beyond blood stream
infections including respiratory and skin/soft tissue infections; (iii) Accelerate is a
development-stage company with little meaningful revenue currently. We model the
company achieving profitability in 2019, although this could be delayed if the
company spends more or revenue ramps slower than anticipated.
3

(1-212) 622-6568 09 May 2019
Figure 1: AXDX Model

Income Statement 2014A 2015A 2016A 2017A 2018A 1QA 2QE 3QE 4QE 2019E 1QE 2QE 3QE 4QE
(in millions, except per share amounts) Mar Jun Sep Dec Mar Jun Sep Dec
Capital Sales 0 0 0 3 2 0 0 0 1 2 1 1 1 1
Consumable Sales 0 0 0 1 4 1 2 4 5 12 6 8 11 13
Total Revenue Revenue 0.1 0.1 0 4 6 2 3 4 6 15 7 9 12 15
Cost of goods sold 0 0 0 (1) (3) (1) (1) (2) (3) (7) (3) (4) (4) (5)
Gross Profit 0 0 0 3 2 1 1 2 3 8 4 5 7 9
Research and Development (20) (26) (28) (22) (28) (7) (5) (6) (7) (25) (6) (5) (5) (5)
SG&A (11) (18) (36) (45) (55) (13) (13) (13) (15) (53) (21) (21) (21) (24)
Depreciation & Amortization (1) (2) (2) (3) (3) (1) (1) (1) (1) (2) (1) (1) (1) (1)
Operating Profit (Loss) - EBIT (32) (46) (66) (64) (80) (19) (17) (16) (18) (70) (22) (21) (18) (20)
Other income (expense), net 0 0 0 1 (8) (3) (3) (3) (3) (11) (3) (3) (3) (3)
Pretax Income (31) (45) (66) (64) (88) (22) (19) (19) (21) (80) (25) (24) (21) (22)
Income Tax 1 0 0 1 (0) (0) 0 0 0 (0) 0 0 0 0
Net Income (Loss) attributable to common (31) (45) (66) (63) (88) (22) (19) (19) (21) (81) (25) (24) (21) (22)
Diluted shares outstanding 43.4 45.0 51.3 54.0 54.5 54.3 54.6 54.9 55.1 54.7 55.6 55.9 56.2 56.4
GAAP Diluted EPS ($0.71) ($1.01) ($1.29) ($1.16) ($1.62) ($0.40) ($0.36) ($0.34) ($0.37) ($1.47) ($0.45) ($0.42) ($0.37) ($0.39)
Gross Margin 0% 0% 0% 80% 44% 48% 50% 55% 55% 52% 56% 58% 63% 63%
R&D Margin (as % of revenue) 0% 0% 0% 534% 487% 396% 190% 140% 110% 168% 80% 60% 40% 35%
SG&A Margin (as % of revenue) 0% 0% 0% 1079% 974% 727% 450% 300% 250% 360% 280% 230% 180% 160%
Operating (EBIT) Margin 0% 0% 0% -1537% -1417% -1076% -590% -385% -305% -474% -304% -232% -157% -132%
Effective Tax Rate 0% 0% 0% 1% 0% -1% 0% 0% 0% 0% 0% 0% 0% 0%
Net Margin 0% 0% 0% -1505% -1558% -1241% -682% -447% -349% -547% -340% -261% -179% -150%
Revenue growth (y/y) 0% 0% 55% 1732% 36% 118% 68% 212% 225% 160% 321% 218% 178% 150%
EPS growth (y/y) 39% 7% -17% -16% -8% -9% 13% 19% 9% 5%
Source: J.P. Morgan estimates, Company data.
4

(1-212) 622-6568 09 May 2019
Figure 2: DCF Analysis

Projected FY Ending Dec 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Revenue ($M) 0 0 0 4 6 15 43 90 162 280 437 574
growth y/y 20% 55% 1732% 36% 160% 192% 110% 80% 73% 56% 31%
EBIT ($M) 0 (46) (67) (64) (80) (70) (81) (69) (28) 43 117 221
EBIT margin 0% NA -29328% -1527% -1413% -474% -189% -76% -17% 15% 27% 39%
Tax-affected EBIT ($M) 0 (46) (67) (63) (80) (70) (81) (69) (28) 29 82 158
Free Cash Flow 0 (44) (67) (72) (78) (68) (83) (73) (35) 19 69 144
growth y/y 262% 109%
Discounted PV of Terminal Value ($M) at a Equivalent Terminal

Discount Rate Cash Flows ($M) Perpetual Growth Rate of Enterprise Value ($M) EBITDA Multiple (forward 12 mos)
2020 - 2025 1.5% 2.0% 2.5% 3.0% 3.5% 1.5% 2.0% 2.5% 3.0% 3.5% 1.5% 2.0% 2.5% 3.0% 3.5%
9.9% (26) 986 1,054 1,131 1,219 1,320 961 1,028 1,105 1,193 1,295 4.1x 4.4x 4.7x 5.1x 5.5x
+ =
10.4% (28) 906 965 1,031 1,106 1,192 878 937 1,003 1,078 1,164 3.7x 4.0x 4.2x 4.6x 4.9x
10.9% (30) 835 886 943 1,008 1,081 805 856 913 978 1,051 3.4x 3.6x 3.9x 4.1x 4.5x
11.4% (32) 772 817 867 923 986 739 784 834 890 954 3.1x 3.3x 3.5x 3.8x 4.0x
11.9% (34) 715 755 799 848 903 681 720 764 813 868 2.9x 3.1x 3.2x 3.4x 3.7x
Net Debt (Cash) Terminal Value

($M) Equity Value ($M) Equity Value per Share as a % of Enterprise Value
1.5% 2.0% 2.5% 3.0% 3.5% 1.5% 2.0% 2.5% 3.0% 3.5% 1.5% 2.0% 2.5% 3.0% 3.5%
16 945 1,012 1,089 1,177 1,279 $17.26 $18.49 $19.90 $21.50 $23.36 103% 102% 102% 102% 102%
- = =
16 862 921 987 1,062 1,148 $15.75 $16.82 $18.03 $19.40 $20.97 103% 103% 103% 103% 102%
16 789 840 897 962 1,035 $14.41 $15.34 $16.39 $17.57 $18.91 104% 104% 103% 103% 103%
16 723 768 818 874 938 $13.21 $14.03 $14.95 $15.97 $17.13 104% 104% 104% 104% 103%
16 665 704 748 797 852 $12.14 $12.87 $13.67 $14.57 $15.57 105% 105% 105% 104% 104%
5

(1-212) 622-6568 09 May 2019
Accelerate Diagnostics: Summary of Financials

Income Statement - Annual FY17A FY18A FY19E FY20E FY21E Income Statement - Quarterly 1Q19A 2Q19E 3Q19E 4Q19E
Revenue 4 6 15 43 90 Revenue 2A 3 4 6
COGS (1) (3) (7) (17) (31) COGS (1)A (1) (2) (3)
Gross profit 3 2 8 26 59 Gross profit 1A 1 2 3
SG&A (42) (52) (50) (84) (106) SG&A (12)A (12) (12) (14)
Adj. EBITDA (62) (78) (67) (79) (65) Adj. EBITDA (18)A (16) (16) (17)
D&A (3) (3) (2) (3) (4) D&A (1)A (1) (1) (1)
Adj. EBIT (64) (80) (70) (81) (69) Adj. EBIT (19)A (17) (16) (18)
Net Interest 1 (7) (10) (10) (10) Net Interest (3)A (3) (3) (3)
Adj. PBT (64) (88) (80) (92) (80) Adj. PBT (21)A (19) (19) (21)
Tax 1 (0) (0) 0 0 Tax (0)A 0 0 0
Minority Interest - - - - - Minority Interest - - - -
Adj. Net Income (63) (88) (81) (92) (80) Adj. Net Income (22)A (19) (19) (21)
Reported EPS (1.16) (1.62) (1.47) (1.64) (1.39) Reported EPS (0.40)A (0.36) (0.34) (0.37)
Adj. EPS (1.16) (1.62) (1.47) (1.64) (1.39) Adj. EPS (0.40)A (0.36) (0.34) (0.37)
DPS 0.00 0.00 0.00 0.00 0.00 DPS 0.00A 0.00 0.00 0.00
Payout ratio 0.0% 0.0% 0.0% 0.0% 0.0% Payout ratio 0.0%A 0.0% 0.0% 0.0%
Shares outstanding 54 54 55 56 57 Shares outstanding 54A 55 55 55
Balance Sheet & Cash Flow Statement FY17A FY18A FY19E FY20E FY21E Ratio Analysis FY17A FY18A FY19E FY20E FY21E
Cash and cash equivalents 29 66 254 178 111 Gross margin 76.0% 43.8% 53.2% 60.7% 65.4%
Accounts receivable 2 2 3 7 14 EBITDA margin (1474.6%) (1367.4%) (457.6%) (183.1%) (72.5%)
Inventories 8 8 1 3 5 EBIT margin (1536.6%) (1417.4%) (474.5%) (189.4%) (76.5%)
Other current assets 82 102 102 103 103 Net profit margin (1505.4%) (1557.8%) (547.4%) (213.8%) (88.1%)
Current assets 120 178 360 290 234
PP&E 5 7 3 4 7 ROE (64.0%) (100.3%) (322.9%) 205.9% 70.5%
LT investments - - - - - ROA (60.3%) (56.8%) (29.2%) (27.7%) (29.5%)
Other non current assets 0 0 3 3 2 ROCE (66.0%) (54.4%) (26.0%) (25.0%) (26.9%)
Total assets 126 185 367 297 242 SG&A/Sales 1016.7% 923.7% 342.7% 194.5% 117.7%
Net debt/equity NM NM NM NM NM
Short term borrowings - - - - -
Payables 2 1 3 5 9 P/E (x) NM NM NM NM NM
Other short term liabilities 4 6 1 4 7 P/BV (x) 9.0 18.8 NM NM NM
Current liabilities 6 8 4 9 16 EV/EBITDA (x) NM NM NM NM NM
Long-term debt 0 120 370 370 370 Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0%
Other long term liabilities 1 0 0 (0) (0)
Total liabilities 7 128 374 379 386 Sales/Assets (x) 0.0 0.0 0.1 0.1 0.3
Shareholders' equity 119 57 (7) (82) (144) Interest cover (x) 67.8 NM NM NM NM
Minority interests - - - - - Operating leverage (0.2%) 70.6% (8.1%) 8.6% (13.7%)
Total liabilities & equity 126 185 367 297 242
BVPS 2.20 1.05 (0.14) (1.46) (2.51) Revenue y/y Growth 1732.0% 35.7% 159.9% 191.6% 110.2%
y/y Growth 44.7% (52.1%) (112.9%) 977.3% 71.8% EBITDA y/y Growth (4.0%) 25.9% (13.0%) 16.7% (16.8%)
Net debt/(cash) (109) (46) 16 92 157 Tax rate (1.0%) (0.2%) (0.3%) 0.0% 0.0%
Adj. Net Income y/y Growth (5.2%) 40.5% (8.7%) 13.9% (13.4%)
Cash flow from operating activities (56) (68) (61) (73) (61) EPS y/y Growth (10.1%) 39.3% (9.1%) 11.2% (15.4%)
o/w Depreciation & amortization 3 3 2 3 4 DPS y/y Growth - - - - -
o/w Changes in working capital (8) (3) 1 (1) (2)
Cash flow from investing activities (26) (20) (1) (3) (5)
o/w Capital expenditure (3) (1) (1) (3) (5)
as % of sales 71.0% 17.6% 10.0% 7.5% 6.0%
Cash flow from financing activities 90 126 250 0 0
o/w Dividends paid 0 0 0 0 0
o/w Net debt issued/(repaid) 0 172 250 0 0
Net change in cash 9 38 187 (76) (66)
Adj. Free cash flow to firm (72) (78) (68) (83) (73)
y/y Growth 6.9% 8.1% (11.9%) 21.5% (12.3%)
Source: Company reports and J.P. Morgan estimates.
Note: $ in millions (except per-share data).Fiscal year ends Dec. o/w - out of which
6

(1-212) 622-6568 09 May 2019
Analyst Certification: All authors named within this report are research analysts unless otherwise specified.The research analyst(s)
denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the
research analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that
the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views
about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be
directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For all Korea-
based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith
and that the views reflect their own opinion, without undue influence or intervention.
Important Disclosures
 Market Maker: J.P. Morgan Securities LLC makes a market in the securities of Accelerate Diagnostics.
 Market Maker/ Liquidity Provider: J.P. Morgan is a market maker and/or liquidity provider in the financial instruments of/related to
Accelerate Diagnostics.
 Client: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as clients: Accelerate Diagnostics.
 Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following
entity(ies) as clients, and the services provided were non-investment-banking, securities-related: Accelerate Diagnostics.
 Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking
services in the next three months from Accelerate Diagnostics.
 Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services
other than investment banking from Accelerate Diagnostics.
 Debt Position: J.P. Morgan may hold a position in the debt securities of Accelerate Diagnostics, if any.
Company-Specific Disclosures: Important disclosures, including price charts and credit opinion history tables, are available for
compendium reports and all J.P. Morgan–covered companies by visiting https://www.jpmm.com/research/disclosures, calling 1-800-477-
0406, or e-mailing research.disclosure.inquiries@jpmorgan.com with your request. J.P. Morgan’s Strategy, Technical, and Quantitative
Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-
0406 or e-mail research.disclosure.inquiries@jpmorgan.com.
Accelerate Diagnostics (AXDX, AXDX US) Price Chart
55
OW $32
44
OW $31
Date Rating Share Price Price Target
($) ($)
33 OW $25 OW $28 OW $27 OW $25 N $16
08-Aug-16 OW 21.07 25.00
Price($) 27-Feb-17 OW 26.60 28.00
22 03-May-17 OW 27.60 31.00

03-Aug-17 OW 26.25 32.00
03-Nov-17 OW 19.30 27.00
11 09-May-18 OW 22.40 25.00
07-Nov-18 N 16.30 16.00
0
May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May
16 16 16 17 17 17 17 18 18 18 18 19 19
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Mar 24, 2016. All share prices are as of market close on the previous business day.
The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire
period.
J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated
7

(1-212) 622-6568 09 May 2019
Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:

J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if
applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy
reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a
recommendation or a rating. In our Asia (ex-Australia and ex-India) and U.K. small- and mid-cap equity research, each stock’s expected
total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it
does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P.
Morgan’s research website, www.jpmorganmarkets.com.
Coverage Universe: Peterson, Tycho W: Accelerate Diagnostics (AXDX), Accuray (ARAY), Agilent Technologies (A), Bruker
Corporation (BRKR), Catalent (CTLT), Charles River Laboratories (CRL), DENTSPLY SIRONA Inc (XRAY), Danaher (DHR),
GenMark Diagnostics (GNMK), Genomic Health (GHDX), Guardant Health (GH), Hologic (HOLX), ICON Plc (ICLR), IQVIA
Holdings Inc (IQV), Illumina, Inc. (ILMN), Intrexon (XON), Intuitive Surgical, Inc. (ISRG), Invitae (NVTA), Luminex (LMNX),
Mettler-Toledo (MTD), Myriad Genetics Inc. (MYGN), NanoString (NSTG), Natera (NTRA), Oxford Immunotec (OXFD), Pacific
Biosciences Inc. (PACB), PerkinElmer (PKI), Qiagen N.V. (QGEN), Quanterix (QTRX), Quidel (QDEL), Repligen (RGEN), Syneos
Health Inc (SYNH), Thermo Fisher Scientific (TMO), Twist Bioscience (TWST), Varian Medical (VAR), Waters (WAT)
J.P. Morgan Equity Research Ratings Distribution, as of April 06, 2019

Overweight Neutral Underweight
(buy) (hold) (sell)
J.P. Morgan Global Equity Research Coverage 44% 41% 14%
IB clients* 53% 47% 37%
JPMS Equity Research Coverage 42% 44% 14%
IB clients* 74% 64% 56%
*Percentage of subject companies within each of the "buy," "hold" and "sell" categories for which J.P. Morgan has provided investment banking services
within the previous 12 months.
For purposes only of FINRA ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating
category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above.
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10
Completed 09 May 2019 09:36 PM EDT Disseminated 09 May 2019 09:43 PM EDT
21-Jul-2015, N/A, N/A, N/A, N/A, N/A , N/A, N/A, N/A, N/A , N/A, N/A, N/A, N/A , N/A, N/A, N/A, N/A , N/A, N/A
Buy 0 218 Reduce 0 9 Hold 0 123 IBC 0
Equity Research
May 9, 2019 Medical Technology
Sean Lavin, MD
(212) 527-3570 Accelerate Diagnostics, Inc.
slavin@btig.com Q1 Performance Better Than We Expected But We
Andrea Alfonso Remain Cautious; Maintain Neutral
(212) 527-3565
aalfonso@btig.com AXDX reported Q1 revenue of $1.75M, short of consensus’ $1.9M forecast.
Revenue was down sequentially by 4%. Although we had expected a
Marie Thibault revenue stepdown given the typical cadence of placements-to-
(212) 527-3557 conversions, the magnitude of the decline was less than we expected. In
mthibault@btig.com Q1, the company added 75 commercially contracted placements vs. 133 in
4Q18; to clarify, commercial placements refer to customers that have
agreed to install and run tests (may or may not be active users). The
company still sees a 4-9 month lag before instruments become active. On
expectations for 2019, mgmt continues to target 300-400 placements as a
AXDX $19.77 full transition to the rental model and more comprehensive body of
Upsi de
12 month target
%
$#,##0;(#,##0) positive studies may drive up volumes. As we had conservatively modeled

a steep decline to start the year, we are encouraged by results coming in
NEUTRAL ahead of our forecast in what is a generally weak capital equipment
quarter. That being said, management continues to signal lumpiness in the
52 week range $10.42 - $24.60
quarters ahead and we prefer to see a few more quarters of consistency
Dividend
Market Yield
Cap (m) $1,074 before turning more constructive on shares. Maintain Neutral rating.
Price Performance
 
Progress on LRTI test but design tweaks may push out timelines a
bit. Pre-clinical testing work began in the quarter and while results of
the testing were encouraging (ID results accurate/AST consistent with
reference), mgmt feels instrument design tweaks are needed to
improve reportability. Specifically, this involves the ability to break
down mucusoid thickness. The trial was expected to begin in 1H19 but
may be postponed to the summer.
  timelines but dialogue productive. Mgmt noted that it is

China
nearing the final stages of planning for the preclinical phase.
Positively, Chinese regulatory authorities may be open to using prior
U.S. data. Plans for commercialization in 1H21 remain on track.
Source: IDC  
Valuation: We maintain our Neutral rating. Risks are on page 2.
Estimates
1Q18 A 2Q18 A 3Q18 A 4Q18 A FY18 A 1Q19 A 2Q19 E 3Q19 E 4Q19 E FY19 E FY20 E
Sales 1 2 1 2 6 2 2 3 7 14 24
Gross Margin (%) 38.6% 57.6% 49.8% 28.8% 43.8% 47.7% 47.7% 47.7% 47.7% 47.7% 57.3%
EBIT (21) (20) (19) (20) (80) (19) (19) (19) (18) (75) (76)
Net Income (Adj.) (21) (23) (22) (22) (88) (22) (19) (19) (18) (78) (76)
Diluted EPS (GAAP) (0.37) (0.43) (0.41) (0.41) (1.62) (0.40) (0.32) (0.33) (0.30) (1.35) (1.28)
Source: BTIG Estimates and Company Documents ($ in millions, except per share amount)
Please Read: Important disclosures and analyst’s certification appear in Appendix

Model Changes
We are raising our FY19 estimate by the size of the beat vs. our forecast
($800k). We continue to model a sizable ramp in Q4. Our FY19 revenue
forecast rises to $14M from $13.1M previously. On gross margin, we have
increased our estimate slightly for the Q1 beat but retain our conservative
forecast given the impact of manufacturing investment at least through the 1H
of 2019. Though we find management’s commentary regarding the sales
funnel encouraging, we have little to go by and surmise that our revenue
forecasts remain placeholders for now until we see more encouraging signs of
test volumes and capital sales.
Exhibit 1. Model Changes
New Old Change

FY19 FY20 FY21 FY19 FY20 FY21 FY19 FY20 FY21
Total Revenue ($M) $14.0 $24.1 $40.6 $13.1 $22.6 $38.1 7% 7% 7%
y/y growth (%) 146.2% 72.9% 68.0% 131.0% 72.8% 68.3% 1522bps 14bps -26bps
Net Loss ($M) -$77.6 -$75.8 -$72.3 -$82.2 -$83.4 -$80.7 -6% -9% -10%
LPS ($1.35) ($1.28) ($1.22) ($1.43) ($1.41) ($1.36) -6% -9% -10%
Gross Margin 47.7% 57.3% 62.3% 46.9% 57.3% 62.2% 74bps -6bps 8bps
EBIT Margin NM NM NM NM NM NM NM NM NM
Sources: BTIG estimates and company filings
Valuation
Our Accelerate Diagnostics rating is Neutral. Our valuation is DCF-based.
Given the string of quarterly misses over the 2 years, the ongoing challenges
within the hospital purchasing environment and changes to the company’s
commercial strategy, we continue to see risk to achieving Street estimates.
BTIG does not provide price targets on Neutral-rated stocks. Risks to our rating
include company to be acquired, meeting and beating FY19 estimates,
contracting adoption cycles, LRTI data, successful expansion into China,
expansion of healthcare valuations, and drastic change in hospital spending.
BTIG LLC Sean Lavin, MD (212) 527-3570 www.btigresearch.com

2
AXDX Income Statement Dec-14 Dec-15 Dec-16 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Dec-20 Dec-21
$ millions, except EPS and %s FY14 A FY15 A FY16 A FY17 A 1Q18 A 2Q18 A 3Q18 A 4Q18 A FY18 A 1Q19 A 2Q19 E 3Q19 E 4Q19 E FY19 E 1Q20 E 2Q20 E 3Q20 E 4Q20 E FY20 E FY21 E
License Fees/Royalties 0.12 0.07 0.08 0.08 0.02 0.02 0.02 0.02 0.08 0.02 0.02 0.02 0.02 0.08 0.02 0.02 0.02 0.02 0.08 0.08
Product Revenue 0.00 0.08 0.16 4.10 0.78 1.67 1.34 1.80 5.59 1.73 2.03 3.47 6.65 13.88 2.88 3.54 6.09 11.56 24.06 40.48
Total Revenue 0.12 0.15 0.25 4.18 0.80 1.69 1.36 1.82 5.67 1.75 2.05 3.49 6.67 13.96 2.90 3.56 6.11 11.58 24.14 40.56
y/y growth NM NM NM NM 51.1% 142.1% 63.6% -14.1% 35.7% 118.5% 21.0% 157.5% 266.3% 146.2% 65.5% 73.6% 75.0% 73.6% 72.9% 68.0%
COGS 0.00 0.00 0.00 1.00 0.49 0.72 0.68 1.30 3.19 0.92 1.07 1.83 3.49 7.31 1.36 1.67 2.52 4.77 10.31 15.29
Gross Profit 0.12 0.15 0.25 3.18 0.31 0.975 0.68 0.52 2.48 0.83 0.98 1.66 3.18 6.65 1.54 1.89 3.58 6.82 13.83 25.27
R&D 20.05 26.02 28.20 22.30 6.78 6.06 7.89 6.91 27.64 6.93 6.90 7.00 7.00 27.83 7.40 7.60 7.80 8.00 30.80 34.80
SG&A 10.70 17.88 36.20 45.06 14.35 15.33 12.15 13.38 55.21 12.72 13.00 14.00 14.00 53.72 14.40 14.60 14.80 15.00 58.80 62.80
Total Operating Expenses 31.64 45.70 66.75 67.36 21.14 21.39 20.04 20.28 82.85 19.66 19.90 21.00 21.00 81.56 21.80 22.20 22.60 23.00 89.60 97.60
EBIT -31.52 -45.55 -66.50 -64.18 -20.83 -20.41 -19.37 -19.76 -80.37 -18.82 -18.92 -19.34 -17.82 -74.90 -20.26 -20.31 -19.02 -16.18 -75.77 -72.33
Other (Expense) Income 0.06 0.05 0.39 0.65 0.20 -2.71 -2.58 -2.65 -7.75 -2.68 0.00 0.00 0.00 -2.68 0.00 0.00 0.00 0.00 0.00 0.00
Pretax Income -31.46 -45.50 -66.11 -63.53 -20.63 -23.12 -21.95 -22.41 -88.115 -21.50 -18.92 -19.34 -17.82 -77.58 -20.26 -20.31 -19.02 -16.18 -75.77 -72.33
Income Taxes (Benefit) -0.53 0.00 -0.27 0.65 -0.18 -0.10 0.15 -0.07 -0.21 -0.22 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Net Income (Loss) -30.93 -45.50 -66.37 -62.88 -20.81 -23.22 -22.10 -22.34 -88.33 -21.72 -18.92 -19.34 -17.82 -77.58 -20.26 -20.31 -19.02 -16.18 -75.77 -72.33
EPS -$0.71 -$1.01 -$1.29 -$1.16 -$0.37 -$0.43 -$0.41 -$0.41 -$1.62 -$0.40 -$0.32 -$0.33 -$0.30 -$1.35 -$0.34 -$0.34 -$0.32 -$0.27 -$1.28 -$1.22
Diluted Shares Outstanding 43.63 45.00 51.28 54.07 55.64 54.00 54.15 54.19 54.49 54.34 58.50 58.66 58.82 57.58 58.95 59.08 59.22 59.35 59.15 59.35
Margins
Gross Profit NM NM NM 76.0% 38.6% 57.6% 49.8% 28.8% 43.8% 47.7% 47.7% 47.7% 47.7% 47.7% 53.2% 53.2% 58.7% 58.9% 57.3% 62.3%
EBIT NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
EBITDA NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Pretax Income NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Net Income NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Expenses
COGS as a % of Revenue NM NM NM NM 61.4% 42.4% 50.2% 71.2% 56.2% 52.3% 52.3% 52.3% 52.3% 52.3% 46.8% 46.8% 41.3% 41.1% 42.7% 37.7%
SG&A as a % of Revenue NM NM NM NM 1791.9% 906.0% 896.9% 734.2% 973.8% 727.0% 634.8% 401.2% 209.7% 384.8% 497.2% 410.7% 242.3% 129.5% 243.6% 154.8%
R&D as a % of Revenue NM NM NM NM 846.7% 358.2% 582.4% 379.0% 487.4% 396.2% 336.9% 200.6% 104.9% 199.4% 255.5% 213.8% 127.7% 69.1% 127.6% 85.8%
Total Operating Expenses NM NM NM NM 2638.6% 1264.2% 1479.3% 1113.2% 1461.2% 1123.2% 971.8% 601.8% 314.6% 584.1% 752.8% 624.5% 370.1% 198.5% 371.1% 240.6%
Tax Expense (Income) NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Net operating losses (est.) -223.40 -286.93 -307.56 -330.68 -352.64 -375.05 -375.05 -396.55 -415.47 -434.81 -452.63 -452.63 -472.89 -493.20 -512.22 -528.40 -528.40 -600.72
Sources: BTIG estimates and company reports

3
AXDX Placement/Revenue Model Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Dec-20 Dec-21
FY17 A 1Q18 A 2Q18 A 3Q18 A 4Q18 A FY18 A 1Q19 A 2Q19 E 3Q19 E 4Q19 E FY19 E 1Q20 E 2Q20 E 3Q20 E 4Q20 E FY20 E FY21 E
U.S.
Capital Equipment
Instruments Under Contract Evaluation (Cumulative - Beginning of Quarter) 164 157 194 270
Quarterly Additions 10 60 90 130
Quarterly Conversions 7 10 0 2
Quarterly Fallouts 10 13 14 14
Instruments Under Contract Evaluation (Cumulative - End of Quarter) 164 157 194 270 384 384
Active Instruments (As of Quarter End) 48 55 65 65 67 67
additions 42 7 10 0 2 19
% sold 66% 65% 75% 80% 10% 58%
% reagent rental 35% 35% 25% 20% 90% 43%
# of instruments sold 29 5 8 0 0 12
ASP of instrument sold (000s) $32 $25 $30 $30 $50 $34
Commercially Contracted Instruments (Cumulative) - New Way of Forecasting 2019 and Beyond 72 77 93 209 209 266 276 286 301 301 331 361 391 444 444 674
% capital mix 2% 3% 11% 25% 10.3% 2% 3% 11% 25% 10.3% 11.0%
ASP of instrument sold (000s) $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
U.S. Instrument Revenue ($M) 1.0 0.1 0.2 0.0 0.0 0.3 0.3 0.4 1.6 3.8 6.0 0.3 0.5 2.2 5.6 8.6 13.8
Consumables
Active Instruments 39 48 58 65 65 65 83 69 64 72 72 129 155 184 231 231 425
Tests Per Day Per Active System 0.5 1.0 0.5 1.0 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8
Price Per Test $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Revenue Per Active System $9,486 $17,100 $9,000 $18,000 $13,680 $13,680 $13,680 $13,680 $13,680 $13,680 $13,680 $13,680
y/y growth -62.4% -3.7% -50.0% -37.5% 44.2% -20.0% 52.0% -24.0% 0.0% 0.0% 0.0% 0.0%
U.S. Consumables Revenue ($M) 2.3 0.5 1.0 0.6 1.2 3.2 1.1 0.9 0.9 1.0 3.9 1.8 2.1 2.5 3.2 9.6 18.7
Total U.S. Revenue ($M) $3.3 $0.6 $1.2 $0.6 $1.2 $3.6 $1.4 $1.4 $2.5 $4.8 $10.0 $2.1 $2.7 $4.7 $8.7 $18.1 $32.5
OUS
Capital Equipment
additions 28 4 4 4 6 18
% sold 24% 0% 35% 40% 10% 21%
% reagent rental 76% 100% 65% 60% 90% 79%
ASP of instruments sold (000s) $25 $10 $20 $40 $40 $28
Commercially Contracted Instruments (Cumulative) - New Way of Forecasting 2019 and Beyond 71 89 77 80 85 85 95 100 112 145 145 150
% capital mix 2% 3% 11% 25% 10.3% 2% 3% 11% 25% 10.3% 11.0%
ASP of instrument sold (000s) $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
OUS Instrument Revenue ($M) 0.2 0.0 0.0 0.1 0.0 0.1 0.1 0.1 0.4 1.1 1.7 0.1 0.2 0.6 1.8 2.7 2.9
Consumables
Active Instruments 23 30 35 39 44 44 13 31 32 47 47 38 40 45 58 58 90
Price Per Test $150 $150 $150 $150 $200 $200 $200 $200 $200 $200 $200 $200
y/y growth -49.0% -8.2% 29.6% -32.9% 166.7% 45.2% 2.9% 33.3% 0.0% 0.0% 0.0% 0.0%
OUS Consumables Revenue ($M) 0.7 0.2 0.4 0.7 0.6 1.9 0.2 0.6 0.6 0.8 2.2 0.7 0.7 0.8 1.0 3.3 5.1
Total OUS Revenue ($M) $0.9 $0.2 $0.5 $0.8 $0.6 $2.0 $0.3 $0.7 $1.0 $1.9 $3.9 $0.8 $0.9 $1.4 $2.9 $5.9 $8.0
WW
Capital Equipment
Commercially Contracted Instruments (Cumulative) - New Way of Forecasting 2019 and Beyond 355 353 366 386 386 426 461 503 589 589 824
additions 15 15 4 6
Instrument Revenue ($M) 1.17 0.11 0.25 0.06 0.03 0.47 0.36 0.53 2.01 4.83 7.72 0.43 0.69 2.77 7.36 11.25 16.74
Consumables
Tests Per Day Per Active System 0.43 0.79 0.68 0.89
Revenue Per Active System $7,739 $14,169 $12,198 $15,990
Global Consumables Revenue ($M) 2.98 0.66 1.42 1.27 1.77 5.11 1.38 1.50 1.46 1.83 6.16 2.45 2.84 3.32 4.20 12.82 23.74
WW Product Revenue ($M) $4.2 $0.8 $1.7 $1.3 $1.8 $5.6 $1.7 $2.0 $3.5 $6.7 $13.9 $2.9 $3.5 $6.1 $11.6 $24.1 $40.5
y/y growth 51.3% 148.4% 53.3% -14.3% 34.2% 124.2% 21.3% 159.9% 269.3% 148.8% 66.2% 74.3% 75.4% 73.8% 73.3% 68.2%
sequential growth -63.3% 116.7% -20.2% 35.0% -4.0% 17.2% 71.1% 91.8% -56.8% 22.9% 72.2% 90.0%

4
BTIG Covered Companies Mentioned in this Report
ACCELERATE DIAGNOSTICS, INC. (AXDX, Neutral, $N/A PT; Current Price: $19.77; Analyst: Sean.Lavin)

5
Appendix: Analyst Certification and Other Important Disclosures
Analyst Certification
I, Sean Lavin, MD, hereby certify that the views about the companies and securities discussed in this report are
accurately expressed and that I have not received and will not receive direct or indirect compensation in exchange
for expressing specific recommendations or views in this report.
I, Andrea Alfonso, hereby certify that the views about the companies and securities discussed in this report are
I, Marie Thibault, hereby certify that the views about the companies and securities discussed in this report are
Regulatory Disclosures
Ratings Definitions
BTIG LLC’s (“BTIG”) ratings, effective June 12, 2017, are defined as follows:
BUY – A security which is expected to produce a positive total return of 15% or greater over the 12 months
following the recommendation. The BUY rating may be maintained as long as it is deemed appropriate,
notwithstanding price fluctuations that would cause the target to fall outside of the 15% return.
SELL – A security which is expected to produce a negative total return of 15% or greater over the next 12 months
following the recommendation. The SELL rating may be maintained as long as it is deemed appropriate,
NEUTRAL – A security which is not expected to appreciate or depreciate meaningfully over the next 12 months.
NOT RATED – A security which is not rated or covered by BTIG.
UNDER REVIEW – Effective immediately, coverage of the following securities is Under Review. Ratings, price
targets, disclosures, and estimates for the companies listed below are suspended and should no longer be relied
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BTIG must disclose in each research report the percentage of all securities rated by the member to which the
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must also disclose the percentage of subject companies within each of these three categories for whom the
member has provided investment banking services within the previous twelve months. Stocks under coverage as
of the end of the most recent calendar quarter (March 31, 2019): 348
Distribution of BTIG’s Research Recommendations (as of March 31, 2019):

BUY: 62.6%; NEUTRAL: 34.8%; SELL: 2.6%
Distribution of BTIG’s Investment Banking Services (as of March 31, 2019):

BUY: 25.7%; NEUTRAL: 9.9%; SELL: 0.0%
For purposes of FINRA ratings distribution rules, BTIG’s stock ratings of Buy, Neutral and Sell fall into Buy, Hold
and Sell categories, respectively.
Company Valuation and Risk Disclosures

Accelerate Diagnostics, Inc. (AXDX, Neutral) , PT)
Valuation: Our Accelerate Diagnostics rating is Neutral. Our valuation is DCF-based. Given the string of quarterly
misses over the past 2 years, the ongoing challenges within the hospital purchasing environment and changes to

6
the company’s commercial strategy, we continue to see risk to achieving Street estimates. BTIG does not provide
price targets on Neutral-rated stocks.
Risks: Risks to our rating include company to be acquired, meeting and beating FY19 estimates, contracting
adoption cycles, LRTI data, successful expansion into China, expansion of healthcare valuations, and drastic
change in hospital spending.
Company–Specific Regulatory Disclosures

BTIG LLC expects to receive or intends to seek compensation for investment banking services in the next 3
months from: Accelerate Diagnostics, Inc. (AXDX)
Other Disclosures
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respectively.

9
C O M PA N Y N O T E
May 9, 2019
Accelerate Diagnostics, Inc. (AXDX) Overweight

Placements Keep Coming, Consumables Pullthrough Soon To Follow
CONCLUSION
PRICE: US$19.77
Accelerate reported revenue of $1.8M, just below the Street's $1.9M estimate, but EPS
Price as of the close May 9, 2019.
of ($0.40) was above the Street's ($0.41) estimate. They placed 75 instruments this
TARGET: US$22.00
quarter, above our 67 estimate. The strong placement number is encouraging given typical
14x FY21E EV/Rev; rev: $92.5M, 55.8M s/
seasonality (strong 4Q) and guidance of 300-400 in 2019. We look forward to a utilization
o, $1.85 debt/sh.
inflection point in 2Q19. We remain Overweight on Accelerate and are reiterating our price
target of $22 based on 14x our 2021E EV/Rev. William R. Quirk, CFA
Sr Research Analyst, Piper Jaffray & Co.
612 303-6858, william.r.quirk@pjc.com
• 1Q19 Results: Accelerate announced 1Q19 revenues of $1.8M, below Consensus and Daniel H. Macek
our $1.9M estimate. They placed 75 instruments in the quarter, above our estimate of Research Analyst, Piper Jaffray & Co.
67. EPS was ($0.40), above the Street's estimate of ($0.41). 612 303-6962, daniel.h.macek@pjc.com
Rachel M. Vatnsdal
• Business Update: Management was upbeat on the call after another quarter of Research Analyst, Piper Jaffray & Co.
612 303-6441, rachel.m.vatnsdal@pjc.com
strong placements (75 in 1Q19 vs. 11 in 1Q18). They reiterated the 4-9 month lag
on consumable pullthrough, with individual hospitals moving quicker than multi-center Changes Previous Current
hospitals. Management noted ~half of the contractual base has not gone live yet, so Rating — Overweight
they estimate a large pick up in consumables in 2H19, specifically 4Q19. The strong Price Tgt — US$22.00
instrument placement number this quarter was driven by 57 placements in the U.S. The FY19E Rev (mil) — US$13.3
remaining 18 instruments were placed in EMEA including a large multi-instrument sale FY20E Rev (mil) US$33.7 US$33.6
FY19E EPS US$(1.79) US$(1.68)
in the Middle East. Accelerate has been in discussions with NMPA (China's FDA) to
FY20E EPS US$(1.65) US$(1.60)
finalize trial design to receive approval for Pheno usage and they reiterated estimated
commercialization in China in 1H21. Management gave an update on the UCLA/Mayo 52-Week High / Low US$24.75 / US$10.23
Shares Out (mil) 54.2
Study which was submitted for ID Week this fall (not ASM in June). Additionally,
Market Cap. (mil) US$1,071.5
Accelerate began pre-clinical testing for their severe bacterial pneumonia assay.
Avg Daily Vol (000) 246
Book Value/Share US$1.43
• 2019 Guidance: Management reiterated their prior 2019 guidance of 300-400 Net Cash Per Share US$0.86
placements and reiterated average consumables of $45k-$65k, with strong U.S. Debt to Total Capital 67.7%
utilization slightly offset by EMEA. Yield 0.00%
Fiscal Year End Dec
• Our Thoughts: We are incrementally optimistic on Accelerate given their strong Pheno Price Performance - 1 Year
placements this quarter. Management was confident in their 4-9 month lag associated
USD
26
with reagent rental placement and consumables pullthrough. Given the strong placement 24
number in 4Q18, we believe 2Q19 should be a revenue inflection point, followed by 22
significant acceleration in 4Q19. Thus we reiterate our Overweight rating and $22 price 20
target. 18
16
R I S K S TO A C H I E V E M E N T O F P T & R E C O M M E N D AT I O N 14
Competition, clinical trial outcomes, commercialization and profitability/cash burn. 12
C O M PA N Y D E S C R I P T I O N 10
May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19
Accelerate is commercializing disruptive technology for microbiology.
Source: Bloomberg
REVENUE (US$ m) EARNINGS PER SHARE (US$)

YEAR
Mar Jun Sep Dec FY FY RM Mar Jun Sep Dec FY FY P/E
2018A 0.8 1.7 1.4 1.8 5.7 188.0x (0.37) (0.43) (0.41) (0.41) (1.62) NM
2019E 1.8A 3.0 3.8 4.8 13.3 80.6x (0.40)A (0.42) (0.43) (0.43) (1.68) NM
2020E 6.4 7.2 8.8 11.2 33.6 31.9x (0.42) (0.41) (0.40) (0.38) (1.60) NM
Piper Jaffray does and seeks to do business with companies covered in its research reports. As a result, investors should be aware
that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only
a single factor in making their investment decisions. This report should be read in conjunction with important disclosure information,
including an attestation under Regulation Analyst certification, found on pages 3 - 4 of this report or at the following site:
http://www.piperjaffray.com/researchdisclosures .
Accelerate Diagnostics, Inc. Page 1 of 4
Accelerate Diagnostics
Income Statement
Fiscal Year End: Dec 31
($ in thousands) William Quirk, CFA | 612-303-6858
Updated as of 5/9/2019 Piper Jaffray & Co.
2018A 2019E 2020E
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Annual
Qtr 1 A Qtr 2 A Qtr 3 A Qtr 4 A Qtr 1 A Qtr 2 E Qtr 3 E Qtr 4 E Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E 2018A 2019E 2020E 2021E 2022E 2023E
Instrument Revenue 469 1,049 515 548 881 1,317 1,675 2,178 2,853 2,383 2,620 2,921 2,581 6,052 10,777 22,889 34,029 46,043
Assay Revenue 312 623 818 1,253 854 1,655 2,097 2,616 3,568 4,801 6,115 8,287 3,007 7,222 22,771 69,539 115,877 177,424
Total Product Revenue 781 1,672 1,333 1,801 1,735 2,972 3,772 4,795 6,421 7,184 8,736 11,208 5,587 13,274 33,548 92,428 149,905 223,467
License Revenue 20 20 22 21 15 15 15 15 15 15 15 15 83 60 60 60 60 60
Total Revenue 801 1,692 1,355 1,822 1,750 2,987 3,787 4,810 6,436 7,199 8,751 11,223 5,670 13,334 33,608 92,488 149,965 223,527
Cost of Product Revenue 482 717 675 1,161 916 2,114 2,619 3,089 3,797 4,342 5,045 5,985 3,035 8,738 19,169 36,383 52,966 72,432
Gross Profit 319 976 680 660 834 872 1,168 1,721 2,639 2,857 3,705 5,238 2,635 4,595 14,439 56,104 96,999 151,095
Operating Expenses:
Research & Development 6,782 6,060 7,891 6,905 6,933 7,800 7,900 8,000 8,200 8,100 8,200 8,300 27,638 30,633 32,800 34,200 35,800 37,400
Sales, General & Administrative 14,353 15,330 12,153 13,378 12,723 12,873 13,323 13,923 14,023 14,123 14,223 14,373 55,214 52,842 56,742 58,692 60,892 66,142
Depreciation & Amortization 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Operating Expense 21,135 21,390 20,044 20,283 19,656 20,673 21,223 21,923 22,223 22,223 22,423 22,673 82,852 83,475 89,542 92,892 96,692 103,542
Operating Income (Loss) (20,816) (20,414) (19,364) (19,623) (18,822) (19,801) (20,055) (20,202) (19,584) (19,366) (18,718) (17,435) (80,217) (78,880)
0 (75,103)
0 (36,788)
0 307
0 47,553
0
Interest & Other Expense (Income) net (198) 2,709 2,582 2,653 2,678 3,330 3,333 3,339 3,344 3,351 3,351 3,355 7,746 12,680 13,400 13,433 13,416 13,348
Pretax Income (Loss) (20,618) (23,123) (21,946) (22,276) (21,500) (23,131) (23,388) (23,541) (22,928) (22,717) (22,068) (20,790) (87,963) (91,560) (88,503) (50,220) (13,109) 34,204
Provision for Income Taxes 184 101 0 211 221 0 0 0 0 0 0 0
Net Income (Loss) - Reported (20,802) (23,224) (21,946) (22,487) (21,721) (23,131) (23,388) (23,541) (22,928) (22,717) (22,068) (20,790) (88,459) (91,781) (88,503) (50,220) (13,109) 34,204
Non-Recurring
Net Income (Loss) - Ongoing (w/ SBC) (20,802) (23,224) (21,946) (22,487) (21,721) (23,131) (23,388) (23,541) (22,928) (22,717) (22,068) (20,790) (88,459) (91,781) (88,503) (50,220) (13,109) 34,204
Diluted EPS (Reported) (0.37) (0.43) (0.41) (0.41) (0.40) (0.42) (0.43) (0.43) (0.42) (0.41) (0.40) (0.38) (1.62) (1.68) (1.60) (0.90) (0.23) 0.60
Diluted EPS (Ongoing, w/ SBC) (0.37) (0.43) (0.41) (0.41) (0.40) (0.42) (0.43) (0.43) (0.42) (0.41) (0.40) (0.38) (1.62) (1.68) (1.60) (0.90) (0.23) 0.60
Avg. Share Outstanding, Diluted 55,640 54,003 54,145 54,188 54,337 54,537 54,737 54,756 54,956 55,156 55,356 55,374 54,494 54,592 55,210 55,829 56,447 57,066
Expense Variables:
Cost of Product Revenue 61.7% 42.8% 50.6% 64.5% 52.8% 71.1% 69.4% 64.4% 59.1% 60.4% 57.8% 53.4% 54.3% 65.8% 57.1% 39.4% 35.3% 32.4%
Research & Development 846.7% 358.1% 582.5% 379.0% 396.1% 261.2% 208.6% 166.3% 127.4% 112.5% 93.7% 74.0% 487.4% 229.7% 97.6% 37.0% 23.9% 16.7%
Selling, General & Administrative 1791.9% 905.8% 897.0% 734.3% 727.0% 431.0% 351.8% 289.5% 217.9% 196.2% 162.5% 128.1% 973.8% 396.3% 168.8% 63.5% 40.6% 29.6%
Total Operating Expenses 2638.6% 1263.9% 1479.5% 1113.3% 1123.1% 692.2% 560.4% 455.8% 345.3% 308.7% 256.2% 202.0% 1461.2% 626.1% 266.4% 100.4% 64.5% 46.3%
Effective Interest Rate, cash 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%
Effective Interest Rate, debt 2.5% 2.5% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 6.8% 11.0% 11.0% 11.0% 11.0% 11.0%
Effective Tax Rate NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 0.0%
Margin Analysis:
Product Gross Margin 38.3% 57.2% 49.4% 35.5% 47.2% 28.9% 30.6% 35.6% 40.9% 39.6% 42.2% 46.6% 45.7% 34.2% 42.9% 60.6% 64.7% 67.6%
Operating Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 0% 21%
Pretax Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 15.3%
Net Income Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 15.3%
YoY Growth Rates: 4 6 7 8 8 11 12 14
Total Revenues 51.1% 142.1% 63.6% -14.1% 118.5% 76.5% 179.5% 164.0% 267.7% 141.0% 131.1% 133.3% 35.7% 135.2% 152.1% 175.2% 62.1% 49.1%
Cost of Goods Sold (Product Sales) 1404.1% 439.4% 253.4% 79.8% 90.1% 195.1% 288.0% 166.0% 314.5% 260.0% 280.0% 300.0% 202.9% 187.9% 119.4% 89.8% 45.6% 36.8%
S, G & A 58.2% 10.2% 24.2% 12.1% 2.2% 28.7% 0.1% 15.9% 18.3% 3.8% 3.8% 3.8% 22.7% -4.3% 7.4% 3.4% 3.7% 8.6%
Operating Expenses 42.7% 25.3% 11.7% 15.8% -7.0% -3.4% 5.9% 8.1% 13.1% 7.5% 5.7% 3.4% 23.0% 0.8% 7.3% 3.7% 4.1% 7.1%
Net Income (Ongoing) NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
EPS NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Balance Sheet Data:
Net Debt (Cash) Per Share ($1.70) ($1.52) ($1.16) ($0.86) ($0.52) ($0.23) $0.17 $0.54 $0.89 $1.14 $1.46 $1.75 ($0.85) $0.54 $1.75 $1.85 $1.56 $0.38
Book Value Per Share $1.91 $1.76 $1.43 $1.06 $0.79 $0.49 $0.18 ($0.18) ($0.45) ($0.70) ($0.94) ($1.22) $1.05 ($0.18) ($1.23) ($1.12) ($0.59) $0.83
Source: Company reports and Piper Jaffray & Co. Current disclosure information for this company is located at
http://www.piperjaffray.com/researchdisclosures

May 9, 2019
IMPORTANT RESEARCH DISCLOSURES
Rating and Price Target History for: Accelerate Diagnostics, Inc. (AXDX) as of 05-08-2019
02/28/17 06/05/17 11/02/17 05/09/18 08/06/18 11/06/18 01/10/19 02/19/19
OW:$30 OW:$32 OW:$26 OW:$25 OW:$24 OW:$21 OW:$17 OW:$22
35
30
25
20
15
10
Q1 Q2 Q3 2017 Q1 Q2 Q3 2018 Q1 Q2 Q3 2019 Q1 Q2
Created by: BlueMatrix
Notes: The boxes on the Rating and Price Target History chart above indicate the date of the fundamental Equity Research Note, the rating and the price
target. Each box represents a date on which an analyst made a change to a rating or price target, except for the first box, which may only represent the
first Note written during the past three years.
Legend:
I: Initiating Coverage
R: Resuming Coverage
T: Transferring Coverage
D: Discontinuing Coverage
S: Suspending Coverage
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review
Distribution of Ratings/IB Services

Piper Jaffray
IB Serv./Past 12 Mos.
Rating Count Percent Count Percent
BUY [OW] 422 65.12 108 25.59
HOLD [N] 215 33.18 17 7.91
SELL [UW] 11 1.70 0 0.00
Note: Distribution of Ratings/IB Services shows the number of companies currently covered by fundamental equity research in each rating category from
which Piper Jaffray and its affiliates received compensation for investment banking services within the past 12 months. FINRA rules require disclosure
of which ratings most closely correspond with "buy," "hold," and "sell" recommendations. Piper Jaffray ratings are not the equivalent of buy, hold or sell,
but instead represent recommended relative weightings. Nevertheless, Overweight corresponds most closely with buy, Neutral with hold and Underweight
with sell. See Stock Rating definitions below.
Analyst Certification — William R. Quirk, CFA, Sr Research Analyst

The views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition, no part of my
compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report.
Piper Jaffray research analysts receive compensation that is based, in part, on overall firm revenues, which include investment banking revenues.
Time of dissemination: 9 May 2019 22:00EDT.

May 9, 2019
Research Disclosures
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April 15, 2019

On The Road/Train With Accelerate
CONCLUSION
PRICE: US$18.76
Management was upbeat in our travels, which we believe reflects ongoing success placing
Price as of the close April 15, 2019
Pheno's following their mix shift towards more reagent rentals in 3Q18. A focus for
TARGET: US$22.00
management is reducing the time from placement to revenue generation from the current 6
months down to 3 months, targeted for YE19. The UCLA/Mayo study continues to generate
o, $1.50 debt/sh.
considerable interest and we expect it will be presented during this year's American Society
for Microbiology meeting (June 20-24 San Francisco). We reiterate our OW rating and William R. Quirk, CFA
believe 2019 could be a transformational year for Accelerate's business.
Daniel H. Macek
• Update With Management: We hosted three days of meetings with management in Research Analyst, Piper Jaffray & Co.
key European cities over the past week. We noticed a management team positioning 612 303-6962, daniel.h.macek@pjc.com
the business on the front foot, rather than on the back heel as was our experience in
Changes Previous Current
2018. Management outlined sales expansion plans, taking the team from 30 in the U.S. Rating — Overweight
to upwards of 50 if their positive 4Q18 trends continue into 1H19 (which will give them a Price Tgt — US$22.00
500-600/annual placement capacity). Accelerate continues to believe their pipeline lower FY19E Rev (mil) — US$13.3
respiratory test's ROI for the hospital will exceed blood culture (giving Accelerate some FY20E Rev (mil) — US$33.7
pricing flexibility). Accelerate is also taking advantage of existing Chinese reimbursement FY19E EPS — US$(1.79)
(approximately $300 across 9 provinces) to fast track its development program, with FY20E EPS — US$(1.65)
commercialization expected in 2021. 52-Week High / Low US$25.35 / US$10.23
• UCLA/Mayo Study: Management remains blinded to the ongoing outcomes study Market Cap. (mil) US$1,016.8
but was enthusiastic about the potential positive impact on the business after data Avg Daily Vol (000) 315
presentation (likely at ASM between June 20-24, San Francisco). As a reminder, the
Net Cash Per Share US$0.86
~600 patient study's primary endpoint is time to antibiotic intervention with 7 additional
Debt to Total Capital 67.7%
secondary endpoints, including mortality. Management noted the study may not be
Yield 0.00%
powered enough to show an absolute mortality benefit (although faster optimal treatment Fiscal Year End Dec
suggests a positive trend, in our opinion). Recall, the analytical results presented
Price Performance - 1 Year
at ECCMID 2018 were consistent with the instrument performance and accuracy USD
demonstrated in several single center studies. 26
24
22
• What To Do With The Stock? Accelerate's launch has not gone according to plan for
20
several reasons, but management was more enthusiastic than in recent meetings, which 18
we believe reflects the positive impact of aligning their business plan with the realities 16
of how US/European lab managers make purchase decisions (i.e. reagent rentals). 14
Their model calls for sequentially higher Pheno placements over the course of 2019, 12
and we are optimistic that they can exceed our 67 system estimate for 1Q19. Between 10
regained placement momentum, a plan to reduce the time to revenue recognition and Apr-18 Jun-18 Aug-18 Oct -18 Dec-18 Feb-19 Apr-19
the upcoming UCLA/Mayo study read-out, we believe 2019 may be the year Accelerate Source: Bloomberg
breaks out on the commercial side and thus we reiterate our OW rating on AXDX shares.
R I S K S TO A C H I E V E M E N T O F P T & R E C O M M E N D AT I O N
Competition, clinical trial outcomes, commercialization and profitability/cash burn.
C O M PA N Y D E S C R I P T I O N

YEAR
2018A 0.8 1.7 1.4 1.8 5.7 178.4x (0.37) (0.43) (0.41) (0.41) (1.62) NM
2019E 1.9 3.0 3.7 4.7 13.3 76.5x (0.45) (0.45) (0.45) (0.44) (1.79) NM
2020E 5.4 7.6 9.1 11.5 33.7 30.2x (0.44) (0.42) (0.41) (0.38) (1.65) NM
Income Statement
2018A 2019E 2020E
Qtr 1 A Qtr 2 A Qtr 3 A Qtr 4 A Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E 2018A 2019E 2020E 2021E 2022E 2023E
Instrument Revenue 469 1,049 515 548 1,031 1,289 1,647 2,151 2,810 2,355 2,593 2,893 2,581 6,119 10,651 22,746 33,916 45,949
Assay Revenue 312 623 818 1,253 870 1,655 2,050 2,569 2,597 5,273 6,516 8,567 3,007 7,144 22,952 69,282 115,641 177,219
License Revenue 20 20 22 21 15 15 15 15 15 15 15 15 83 60 60 60 60 60
Total Revenue 801 1,692 1,355 1,822 1,916 2,959 3,712 4,735 5,422 7,643 9,124 11,475 5,670 13,323 33,663 92,088 149,617 223,227
Cost of Product Revenue 482 717 675 1,161 1,489 2,074 2,566 3,038 3,497 4,430 5,113 6,027 3,035 9,166 19,068 36,217 52,823 72,311
Gross Profit 319 976 680 660 428 885 1,146 1,698 1,925 3,213 4,010 5,448 2,635 4,157 14,596 55,871 96,794 150,917
Operating Expenses:
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 (78,066)
0 (40,091)
0 (2,868)
0 44,255
0
Non-Recurring
Expense Variables:
Margin Analysis:
Operating Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 20%
YoY Growth Rates: 4 6 7 8 8 11 12 14
Total Revenues 51.1% 142.1% 63.6% -14.1% 139.2% 74.8% 174.0% 159.9% 182.9% 158.3% 145.8% 142.3% 35.7% 135.0% 152.7% 173.6% 62.5% 49.2%
S, G & A 58.2% 10.2% 24.2% 12.1% 12.1% 28.7% 0.1% 15.9% 7.9% 3.8% 3.8% 3.8% 22.7% 4.1% 4.2% 3.2% 3.4% 8.5%
Operating Expenses 42.7% 25.3% 11.7% 15.8% 2.5% 2.6% 12.0% 11.9% 6.2% 4.8% 3.3% 3.3% 23.0% 7.1% 4.4% 3.6% 3.9% 7.0%
Balance Sheet Data:
Net Debt (Cash) Per Share ($1.70) ($1.52) ($1.16) ($0.86) ($0.57) ($0.23) $0.12 $0.51 $0.76 $1.03 $1.29 $1.59 ($0.85) $0.51 $1.60 $1.50 $0.94 ($0.58)
Book Value Per Share $1.91 $1.76 $1.43 $1.06 $0.80 $0.50 $0.18 ($0.16) ($0.37) ($0.61) ($0.82) ($1.07) $1.05 ($0.16) ($1.08) ($0.78) $0.01 $1.76

April 15, 2019
02/28/17 06/05/17 11/02/17 05/09/18 08/06/18 11/06/18 01/10/19 02/19/19
35
30
25
20
15
10
Q1 Q2 Q3 2017 Q1 Q2 Q3 2018 Q1 Q2 Q3 2019 Q1 Q2
Legend:
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Piper Jaffray
BUY [OW] 421 65.47 104 24.70
HOLD [N] 211 32.81 16 7.58
SELL [UW] 11 1.71 0 0.00

Time of dissemination: 15 April 2019 22:00EDT.

April 15, 2019
the past 12 months.
Rating Definitions


April 4, 2019

Model Update
CONCLUSION
PRICE: US$19.91
We are updating our model to reflect our expectation of placements to be back half
Price as of the close April 4, 2019.
weighted in 2019. 2H weighting is customary with most systems (even under a heavy
TARGET: US$22.00
reagent rental strategy) and we are not changing the overall number of expected 2019
placements. We recognize our model for consumables usage (one quarter delay from
o, $1.50 debt/sh.
placement) is likely too aggressive and are adjusting that, which has a meaningful impact
in the near-term but should not affect our longer-term projections. William R. Quirk, CFA
• Model Update: Following reflection on timing of typical instruments placements, we Daniel H. Macek
are adjusting the timing of our 2019 placements to reflect a more back-end weighted Research Analyst, Piper Jaffray & Co.
balance (vs a relatively steady approach over the course of the year). The overall number 612 303-6962, daniel.h.macek@pjc.com
and mix (capital v reagent rental) does not change. We are also updating the timing
of consumables usage, reflecting a more conservative ramp over the course of the Rating — Overweight
next two years. Our previous assumption (one quarter lag) was clearly too aggressive Price Tgt — US$22.00
considering Accelerate uses a combination of direct (faster install to consumables usage) FY19E Rev (mil) US$21.8 US$13.3
and distributors (much slower shipment to consumables usage). FY20E Rev (mil) US$49.3 US$33.7
FY19E EPS US$(1.69) US$(1.79)
• Our Thoughts: Despite the push of placements to 2H19, we remain encouraged with FY20E EPS US$(1.43) US$(1.65)
Accelerate's shift to the reagent rental model and the early demonstrated success in 52-Week High / Low US$25.35 / US$10.23
4Q18. Accordingly, our longer-term estimates do not change, which yields an unchanged Shares Out (mil) 54.2
$22 price target. Market Cap. (mil) US$1,079.1
R I S K S TO A C H I E V E M E N T O F P T & R E C O M M E N D AT I O N Book Value/Share US$1.43
Competition, clinical trial outcomes, commercialization and profitability/cash burn. Net Cash Per Share US$0.86
C O M PA N Y D E S C R I P T I O N Debt to Total Capital 67.7%
Yield 0.00%
Fiscal Year End Dec
USD
26
24
22
20
18
16
14
12
10
Apr-18 Jun-18 Aug-18 Oct -18 Dec-18 Feb-19 Apr-19
Source: Bloomberg

YEAR
2018A 0.8 1.7 1.4 1.8 5.7 189.3x (0.37) (0.43) (0.41) (0.41) (1.62) NM
2019E 1.9 3.0 3.7 4.7 13.3 81.1x (0.45) (0.45) (0.45) (0.44) (1.79) NM
2020E 5.4 7.6 9.1 11.5 33.7 32.0x (0.44) (0.42) (0.41) (0.38) (1.65) NM
Income Statement
2018A 2019E 2020E
Qtr 1 A Qtr 2 A Qtr 3 A Qtr 4 A Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E 2018A 2019E 2020E 2021E 2022E 2023E
Instrument Revenue 469 1,049 515 548 1,031 1,289 1,647 2,151 2,810 2,355 2,593 2,893 2,581 6,119 10,651 22,746 33,916 45,949
Assay Revenue 312 623 818 1,253 870 1,655 2,050 2,569 2,597 5,273 6,516 8,567 3,007 7,144 22,952 69,282 115,641 177,219
License Revenue 20 20 22 21 15 15 15 15 15 15 15 15 83 60 60 60 60 60
Total Revenue 801 1,692 1,355 1,822 1,916 2,959 3,712 4,735 5,422 7,643 9,124 11,475 5,670 13,323 33,663 92,088 149,617 223,227
Cost of Product Revenue 482 717 675 1,161 1,489 2,074 2,566 3,038 3,497 4,430 5,113 6,027 3,035 9,166 19,068 36,217 52,823 72,311
Gross Profit 319 976 680 660 428 885 1,146 1,698 1,925 3,213 4,010 5,448 2,635 4,157 14,596 55,871 96,794 150,917
Operating Expenses:
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 (78,066)
0 (40,091)
0 (2,868)
0 44,255
0
Non-Recurring
Expense Variables:
Margin Analysis:
Operating Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 20%
YoY Growth Rates: 4 6 7 8 8 11 12 14
Total Revenues 51.1% 142.1% 63.6% -14.1% 139.2% 74.8% 174.0% 159.9% 182.9% 158.3% 145.8% 142.3% 35.7% 135.0% 152.7% 173.6% 62.5% 49.2%
S, G & A 58.2% 10.2% 24.2% 12.1% 12.1% 28.7% 0.1% 15.9% 7.9% 3.8% 3.8% 3.8% 22.7% 4.1% 4.2% 3.2% 3.4% 8.5%
Operating Expenses 42.7% 25.3% 11.7% 15.8% 2.5% 2.6% 12.0% 11.9% 6.2% 4.8% 3.3% 3.3% 23.0% 7.1% 4.4% 3.6% 3.9% 7.0%
Balance Sheet Data:
Net Debt (Cash) Per Share ($1.70) ($1.52) ($1.16) ($0.86) ($0.57) ($0.23) $0.12 $0.51 $0.76 $1.03 $1.29 $1.59 ($0.85) $0.51 $1.60 $1.50 $0.94 ($0.58)
Book Value Per Share $1.91 $1.76 $1.43 $1.06 $0.80 $0.50 $0.18 ($0.16) ($0.37) ($0.61) ($0.82) ($1.07) $1.05 ($0.16) ($1.08) ($0.78) $0.01 $1.76

April 4, 2019
02/28/17 06/05/17 11/02/17 05/09/18 08/06/18 11/06/18 01/10/19 02/19/19
35
30
25
20
15
10
Q1 Q2 Q3 2017 Q1 Q2 Q3 2018 Q1 Q2 Q3 2019 Q1 Q2
Legend:
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Piper Jaffray
BUY [OW] 418 65.41 112 26.79
HOLD [N] 210 32.86 19 9.05
SELL [UW] 11 1.72 0 0.00


April 4, 2019
the past 12 months.
Rating Definitions


March 18, 2019
Institutional Research
Accelerate Diagnostics, Inc. HOLD

(AXDX – $19.82) Price Target: $18
Lab Checks Of Prior Pheno Users Comes Up Short, Despite New
Alexander Nowak, CFA Reagent Rental Model. Remain On The Sidelines As We Await
Senior Research Analyst Clarity/Confidence In The Reagent Annuity. Reiterate HOLD Rating,
1 612-334-6347 $18 Price Target.
Alex.Nowak@craig-hallum.com
Accelerate Diagnostics is an early stage diagnostics company. Accelerate developed Pheno, a next-
generation microbiology instrument, automating and speeding up complex microbiology testing.
William Fafinski
Research Analyst OUR CALL
1 612-334-6378 Our channel checks are surprising. Exiting Q4, there was a tone shift on
Will.Fafinski@craig-hallum.com
AXDX – the company placed 133 systems in Q4 (almost 3x above
www.craig-hallum.com estimates) and we thought we had perhaps missed out. But, we needed
clarity and confidence on the annuity stream including how quickly does it
Changes Previous Current ramp, are there contract minimums, pricing, etc. As a result, we concocted
Rating - Hold our current channel check: reach out to the labs who know Pheno the best
Fundamental Trend - Stable
Price Target - $18 and see if they adopted Pheno following launch of the reagent rental model.
FY18E Rev (M) - $5.7 This includes labs who participated in AXDX’ clinical studies. Our results
FY19E Rev (M) - $13.5
FY20E Rev (M) - $40.2
were surprising: only 5 out of 15 labs use or plan to adopt Pheno, and 70%
FY18E Adj. EPS - ($1.62) cited high cost as a reason not to buy the system. Our concern is if those
FY19E Adj. EPS - ($1.58) who know Pheno the best (those who used the system previously) are not
FY20E Adj. EPS - ($1.40)
buying Pheno, then who is? We are perhaps not talking to the right
Profile customers but for us, it is back to the drawing board as we attempt to gain
Price: $19.82 more confidence around the reagent annuity stream. Reiterate HOLD, $18
52 Week Range: $10.23 - $26.60
Avg. Daily Vol: 437,686 PT.
Shares Out (M): 54.2  Labs (Who Used Pheno Previously) Reluctant To Adopt: Our goal
Market Cap (M): $1,078.7
Insiders Own %: 45.1% during our latest round of channel checks was to learn more about
Short Interest %: 29.0% Pheno’s reagent rental contract. As a result, we reached out to labs who
Book value/Share: 1.1
4-Yr EPS CAGR 4%
knew Pheno the best and see if they purchased the system following the
Dividend Yield (%) 0% new reagent rental model. This includes microbiology labs that
Net Debt (M): -$46.4 participated in AXDX’ clinical trials, published data on Pheno at ASM
Net Debt/share: -$0.9
Debt / Capital: 67.7% conferences, ID Week, ECCMID, etc. We expected that these labs used
Fiscal Year End: Dec. Pheno previously, saw the benefits first-hand, and would be first to
purchase given AXDX’ recent move to reagent rental. Surprisingly, out
Rev (M) 2018A 2019E 2020E
Mar $0.8 $1.6 $7.6 of 15 centers with experience using Pheno, only 5 have plans to
Jun $1.7 $1.9 $9.2 implement the system: 2 actively use it today, 2 are implementing 1H19
Sep
Dec
$1.4
$1.8
$4.4
$5.5
$10.9
$12.6
and 1 will “probably adopt.” Among the labs not implementing Pheno
FY $5.7 $13.5 $40.2 (10 labs), 7 cited test cost. Other responses included lack of evidence to
justify adoption, physical size of the cartridge creating
Adj. EPS 2018A 2019E 2020E
capacity/logistics issues, software glitches and one lab referenced false
Mar ($0.37) ($0.40) ($0.39)
Jun ($0.43) ($0.41) ($0.35) positives and negatives as well as inconsistency with streptococcus
Sep ($0.41) ($0.39) ($0.34) testing. Several customers did provide praise for Pheno noting a unique
Dec ($0.41) ($0.38) ($0.32)
FY ($1.62) ($1.58) ($1.40)
ability to perform rapid AST and others described it as “amazing” and a
Adj. EPS includes stock-based comp expense “brilliant concept.” Of the 5 labs adopting Pheno, only 1 had a reagent
P/E NA NA NA rental contract, 3 labs purchased the system outright and 1 declined to
EV/ Revenue 182.1x 76.7x 25.7x answer. Among the labs without Pheno, existing systems they use
EV/EBITDA NA NA NA
include BioFire, Verigene, Vitek, MALDI-TOF and conventional
Management techniques. Asked about a rapid lower respiratory test, labs were
Chairman John Patience broadly positive on the indication, noting there is an unmet need,
CEO Lawrence Mehren
CFO Steve Reichling
despite BioFire’s recent introduction (lacks AST, as multiple labs
noted).
See Page 2 for additional checks and our thoughts.
SEE LAST PAGE FOR IMPORTANT DISCLOSURES Page 1 of 5

March 18, 2019
 Tracking Pheno Familiarity: In addition to our checks with AXDX’ clinical

trial customers, we also contacted a random assortment of microbiology labs
to track Pheno awareness. In today’s checks, we spoke with 9 microbiology
labs; 7 were overlaps from our Q3 checks who were not aware of Pheno and
2 were new contacts. 1 lab became aware of Pheno in our checks (who did
not know about Pheno in Q3), while the other 8 were not familiar with
AXDX/Pheno. This compares to 7 out of 20 who knew of Pheno in Q3, but
to be fair we did not recontact those who knew of Pheno initially. For an
apples-to-apples comparison, out of 22 labs, 8 are familiar with Pheno
(36%), compared to 7 out of 20 labs (35%) in Q3. Of the labs in our current
checks, 5 of the 9 use BioFire for blood testing, 3 use Verigene, 3
conventional techniques and 2 Vitek. Other instruments mentioned include
Microscan and BACTEC. Although a small sample size, we will continue
tracking this subgroup as it provides a glimpse into the familiarity of Pheno
in the microbiology community.
 Our Thoughts: Our channel checks are frankly surprising. We exited 2018
with AXDX placing 133 revenue-generating Phenos in Q4 and thought
AXDX had perhaps turned the placement tide with the reagent rental model.
We knew if the reagent rental model held, it would lead to a profitable
annuity on each placement. To gain confidence around the model, we
conducted this channel check. Our thought was: AXDX’ clinical trial sites
already knew of the benefits with Pheno, and given the new reagent rental
model, would be first to jump on board. Our findings were the opposite, with
only one lab with a reagent rental contract and only 5 using Pheno (or
planning to use Pheno). We find this very surprising and question: if those
who know Pheno the best are not yet signing up, then who is? We will
continue to follow this group of labs and see if adoption trends change in the
future. We continue to believe in Pheno and trust it can modernize the
microbiology lab, but given the current stock price and valuation, we need
better visibility on the reagent annuity stream before recommending a
premium-priced stock. For us, it is back to the drawing board as we search
for ways to confirm the durability of the reagent rental model annuity.
STOCK OPPORTUNITY
Our $18 price target represents 18x EV/revenue on our 2020 estimate. We
initially derive our price target from our discounted cash flow model and then use
the DCF equity value to calculate the implied EV/revenue multiple. We use a
WACC of 8%.
RISKS
We believe an investment in Accelerate Diagnostics involves the following risks:
 Adoption & Execution: Accelerate Diagnostics has recently begun to sell
Pheno to microbiology labs. Failure to meet internal as well as external sales
targets could impact forward estimates and the stock price.
 Clinical Trial Results/Regulation: Accelerate will be seeking FDA
approval for its lower respiratory test in the next 12 months. Failure to obtain
approval (or a delay) could impact forward estimates and the stock price.
Accelerate Diagnostics, Inc

Institutional Research Page 2 of 5
March 18, 2019
 Competition: We believe there are no true competiors to Accelerate’s

Pheno. However, microbiology labs may not appreciate the benefits of Pheno
vs. other microbiology products. Further, new instruments that are directly
competitive to Pheno could emerge and fight for Accelrate’s market share.

March 18, 2019
Accelerate Diagnostics (AXDX) Alexander Now ak, CFA

Incom e Statem ent Craig-Hallum Capital Markets
US $ in millions, except w here noted 1 612-334-6347
Updated: 1/13/2019
2018A 2019E 2020E 2021E 2017A 2018A 2019E 2020E 2021E
Q1A Q2A Q3A Q4A Q1E Q2E Q3E Q4E Q1E Q2E Q3E Q4E Q1E Q2E Q3E Q4E
Instruments 0.3 1.0 0.4 0.6 0.4 0.4 0.5 0.5 0.5 0.6 0.6 0.7 0.8 0.8 0.9 0.9 2.3 2.3 1.8 2.3 3.3
Reagents 0.5 0.7 0.9 1.2 1.2 1.5 3.9 5.0 7.1 8.6 10.3 11.9 13.7 17.5 19.9 25.1 1.7 3.2 11.6 37.8 76.1
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1
Total Revenue 0.8 1.7 1.4 1.8 1.6 1.9 4.4 5.5 7.6 9.2 10.9 12.6 14.4 18.3 20.7 26.0 4.2 5.7 13.5 40.2 79.5
Cost of Goods Sold 0.5 0.7 0.7 1.3 1.1 1.3 2.2 2.6 3.2 3.8 4.4 5.0 5.6 6.9 7.7 9.3 1.0 3.2 7.2 16.3 29.4
Gross Profit 0.3 1.0 0.7 0.5 0.5 0.6 2.3 2.9 4.4 5.4 6.5 7.6 8.8 11.5 13.1 16.7 3.2 2.5 6.3 23.9 50.1
Research and Development 6.8 6.1 7.9 6.9 7.1 7.3 7.5 7.7 7.8 7.9 8.0 8.1 8.2 8.3 8.4 8.5 22.3 27.6 29.6 31.8 33.4
S,G&A 14.4 15.3 12.2 13.4 15.0 15.2 15.4 15.6 17.6 17.8 18.0 18.2 20.2 20.4 20.6 20.8 45.1 55.2 61.2 71.6 82.0
Other - - - - -
Operating Incom e (Loss) (20.8) (20.4) (19.4) (19.8) (21.7) (21.9) (20.6) (20.4) (21.0) (20.3) (19.5) (18.7) (19.6) (17.2) (15.9) (12.6) (64.2) (80.4) (84.6) (79.5) (65.3)
Adj. Operating Income (Loss) (20.8) (20.4) (19.4) (19.8) (21.7) (21.9) (20.6) (20.4) (21.0) (20.3) (19.5) (18.7) (19.6) (17.2) (15.9) (12.6) (64.2) (80.4) (84.6) (79.5) (65.3)
Interest Expense (Income) (0.1) 2.4 2.4 2.5 0.3 0.4 0.4 0.5 0.5 0.4 0.4 0.5 (0.2) - - - (0.9) 7.3 1.5 1.7 (0.2)
Other Expense (Income) (0.1) 0.3 0.1 0.1 0.3
Pretax Incom e (Loss) (20.6) (23.1) (22.0) (22.4) (22.0) (22.3) (21.0) (20.8) (21.5) (20.7) (19.9) (19.2) (19.4) (17.2) (15.9) (12.6) (63.5) (88.1) (86.1) (81.2) (65.1)
Income Taxes 0.2 0.1 0.1 (0.2) - - - - - - - - - - - - 0.5 0.2 - - -
NOLs 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4
Net Incom e (Loss) - Reported (20.8) (23.2) (22.1) (22.2) (22.0) (22.3) (21.0) (20.8) (21.5) (20.7) (19.9) (19.2) (19.4) (17.2) (15.9) (12.6) (64.0) (88.3) (86.1) (81.2) (65.1)
Adjustments - - - - -
Net Incom e (Loss) - Adjusted (20.8) (23.2) (22.1) (22.2) (22.0) (22.3) (21.0) (20.8) (21.5) (20.7) (19.9) (19.2) (19.4) (17.2) (15.9) (12.6) (64.0) (88.3) (86.1) (81.2) (65.1)
Diluted EPS (Ongoing) (0.37) (0.43) (0.41) (0.41) (0.40) (0.41) (0.39) (0.38) (0.39) (0.35) (0.34) (0.32) (0.33) (0.29) (0.27) (0.21) (1.19) (1.62) (1.58) (1.40) (1.09)
Diluted EPS (GAAP) (0.37) (0.43) (0.41) (0.41) (0.40) (0.41) (0.39) (0.38) (0.39) (0.35) (0.34) (0.32) (0.33) (0.29) (0.27) (0.21) (1.19) (1.62) (1.58) (1.40) (1.09)
Avg. Shares Outstanding 55.6 54.0 54.1 54.2 54.3 54.5 54.6 54.8 54.9 59.0 59.1 59.3 59.4 59.5 59.6 59.7 53.7 54.5 54.5 58.1 59.5
Expense Analysis:
Gross Margin 38.6% 57.6% 49.8% 28.7% 28.7% 31.3% 51.1% 53.2% 58.0% 59.0% 59.8% 60.4% 61.2% 62.6% 63.1% 64.1% 76.0% 43.8% 46.5% 59.5% 63.0%
Cost of Goods Sold 61.4% 42.4% 50.2% 71.3% 71.3% 68.7% 48.9% 46.8% 42.0% 41.0% 40.2% 39.6% 38.8% 37.4% 36.9% 35.9% 24.0% 56.2% 53.5% 40.5% 37.0%
Operating Margin -2600% -1206.6% -1429.4% -1084.5% -1370.0% -1139.9% -465.9% -367.9% -276.8% -221.5% -178.7% -149.1% -135.8% -93.8% -76.8% -48.5% -1536.6% -1417.5% -627.9% -197.7% -82.2%
Adj. Operating Margin -2600% -1206.6% -1429.4% -1084.5% -1370.0% -1139.9% -465.9% -367.9% -276.8% -221.5% -178.7% -149.1% -135.8% -93.8% -76.8% -48.5% -1536.6% -1417.5% -627.9% -197.7% -82.2%
Research & Development 846.7% 358.2% 582.4% 379.0% 449.6% 380.2% 169.4% 139.2% 102.9% 86.3% 73.4% 64.6% 56.9% 45.3% 40.5% 32.7% 533.9% 487.4% 219.9% 79.1% 42.0%
S,G&A 1791.9% 906.0% 896.9% 734.2% 949.1% 791.0% 347.6% 281.9% 232.0% 194.3% 165.1% 145.0% 140.1% 111.2% 99.3% 80.0% 1078.7% 973.8% 454.4% 178.1% 103.1%
Tax Rate -0.9% -0.4% -0.7% 1.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% -0.8% -0.2% 0.0% 0.0% 0.0%
Net Margin -2598% -1372.6% -1630.8% -1218.0% -1389.3% -1158.3% -474.9% -376.1% -283.4% -225.5% -182.5% -152.8% -134.2% -93.8% -76.8% -48.5% -1532.9% -1557.8% -639.1% -202.0% -81.9%
Adj. Net Margin -2598% -1372.6% -1630.8% -1218.0% -1389.3% -1158.3% -474.9% -376.1% -283.4% -225.5% -182.5% -152.8% -134.2% -93.8% -76.8% -48.5% -1532.9% -1557.8% -639.1% -202.0% -81.9%
Grow th Metrics:
Total Revenue 51.1% 142.1% 63.6% -14.1% 97.3% 13.6% 227.0% 203.8% 380.1% 376.9% 146.0% 126.9% 90.1% 100.2% 90.3% 107.2% 1598.0% 35.7% 137.5% 198.5% 97.8%
Gross Profit -38.7% 72.9% 6.0% -64.4% 46.8% -38.3% 235.5% 462.2% 870.8% 798.2% 188.0% 157.7% 100.5% 112.5% 100.6% 120.1% 1190.5% -21.8% 152.3% 281.9% 109.4%
Adj Operating Profit 45.5% 24.3% 11.9% 22.5% 4.0% 7.3% 6.6% 3.1% -3.0% -7.3% -5.6% -8.1% -6.8% -15.2% -18.3% -32.6% -3.5% 25.2% 5.2% -6.0% -17.8%
Adj Net Income 46.6% 41.1% 29.4% 36.2% 5.5% -4.2% -4.8% -6.2% -2.1% -7.2% -5.5% -7.9% -10.0% -16.7% -20.0% -34.2% -3.5% 25.2% 5.2% -6.0% -17.8%
Ongoing EPS 36.7% 40.0% 32.2% 35.9% 8.1% -5.0% -5.6% -7.1% -3.1% -14.3% -12.7% -14.9% -16.8% -17.4% -20.6% -34.7% -8.0% 36.0% -2.6% -11.4% -21.8%

March 18, 2019
REQUIRED DISCLOSURES
Initiate: May 24, 2018 – Rating: Hold – Price Target: $25
August 6, 2018 – Rating: Hold – Price Target: $22
November 7, 2018 – Rating: Hold – Price Target: $18
Source: FactSet
Ratings definitions:
Buy rated stocks generally have twelve month price targets that are more than 20% above the current price. Hold rated
stocks generally have twelve month price targets near the current price. Sell rated stocks generally have no price target
and we would sell the stock.
Fundamental trend definitions:
Improving means growth rates of key business metrics are generally accelerating. Stable means growth rates of key
business metrics are generally steady. Mixed means growth rates of some key business metrics are positive but others are
negative. Declining means growth rates of key business metrics are generally decelerating.
Ratings Distribution (12/31/2018)
% Of Companies % With Investment

Rating Covered Banking Relationships
Buy 77% 18%
Hold 22% 2%
Sell 1% 0%
Total 100% 14%
Information about valuation methods and risks can be found in the “STOCK OPPORTUNITY”
and “RISKS” sections, respectively, of this report.
CHLM makes a market in this security.
CHLM expects to receive or intends to seek compensation for investment banking services from the subject company in the
next three months.
Analysts receive no direct compensation in connection with the firm’s investment banking business. Analysts may be eligible
for bonus compensation based on the overall profitability of the firm, which takes into account revenues from all of the firm’s
business, including investment banking.
OTHER DISCLOSURES
Although the statements of fact in this report have been obtained from and are based upon recognized statistical services,
issuer reports or communications, or other sources that Craig-Hallum believes to be reliable, we cannot guarantee their
accuracy. All opinions and estimates included in this report constitute Craig-Hallum's judgment as of the date of this report
and are subject to change without notice. Craig-Hallum may effect transactions as principal or agent in the securities
mentioned herein. The securities discussed or recommended in this report may be unsuitable for investors depending on
their specific investment objectives and financial position. This report is offered for informational purposes only, and does
not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such would be
prohibited. Additional information available upon request. Member SIPC.
REGULATION AC CERTIFICATION
I, Alexander Nowak, hereby certify that the views expressed in this research report accurately reflect my personal views
about the subject security and issuer. No part of my compensation was, is or will be directly or indirectly related to the
specific recommendations or views contained herein.
Accelrate Diagnostics Page 5 of 5
Institutional Research © 2019 Craig-Hallum Capital Group LLC
Buy 0 198 Reduce 0 7 Hold 1 128 IBC 1 21-Jul-2015,11-Mar-2014,14-Apr-2016,19-Fe b-2014,17-J ul-2018,0 7-Jan-2 014,13-Aug-2018 ,17-Dec-2015, 24-Apr-201 4,14-Nov-2016, 07-Jul-2 014,0 7-Jan-2014 ,31-Oct-2016,04-Dec-2018,10- Dec-2018,14-Sep-2016 ,03-Jun-2 015,20-May-2010, 07- Sep-201 7,0 7-Jan-2014
Equity Research
March 5, 2019 Medical Technology
Sean Lavin, MD Our Snowbird Healthcare Conference

(212) 527-3570 Updates From The 15 Covered Companies That
slavin@btig.com Attended Our Conference
Andrea Alfonso
72 companies attended our annual Snowbird conference. Takeaways from
(212) 527-3565
our covered companies follow.
aalfonso@btig.com
Marie Thibault   there was no single theme uniting the MedTech space, we
While
(212) 527-3557 found that several management teams had an optimistic outlook for
mthibault@btig.com 2019, noting that investments made and products cleared in 2018
should begin to pay off in 2019. On the other hand, some companies
pointed to plans for increased spending in the year ahead, making
2019 an investment year instead.
  traded companies relevant to our space included:

Publicly
Accelerate Diagnostics (AXDX, Neutral), Accuray (ARAY, Neutral),
Industry Report AngioDynamics (ANGO, Not Rated), Axonics Modulation
Technologies (AXNX, Not Rated), Corindus Vascular Robotics (CVRS,
Not Rated), CryoLife (CRY, Not Rated), Dexcom (DXCM, Neutral),
Edwards Lifesciences (EW, Neutral), electroCore (ECOR, Buy, $14 PT),
Endologix (ELGX, Buy, $4 PT), Establishment Labs (ESTA, Buy, $40
PT), Exact Sciences (EXAS, Buy, $110 PT), HealthEquity (HQY, Not
Rated), Hologic (HOLX, Buy, $50 PT), iRhythm Technologies (IRTC,
Neutral), LeMaitre Vascular (LMAT, Not Rated), Masimo (MASI, Buy,
$137 PT), Medtronic (MDT, Buy, $100 PT), Merit Medical Systems
(MMSI, Not Rated), Obalon (OBLN, Buy, $3 PT), Profound Medical
Corporation (PRN-TSE, Not Rated), Ra Medical Systems (RMED, Not
Rated), RMS Medical Products (REPR, Not Rated), Stereotaxis (STXS,
Not Rated), Strata Skin Sciences (SSKN, Not Rated), Titan Medical
(TMDI, Not Rated), Valeritas (VLRX, Buy, $1 PT), Vapotherm (VAPO,
Buy, $26 PT), Varex Imaging Corporation (VREX, Not Rated), and
VolitionRx (VNRX, Not Rated).
  companies included: 4C Medical Technologies (Private),

Private
Alucent Biomedical (Private), Beta Bionics (Private), Fractyl
Laboratories (Private), GraftWorx (Private), Intuity Medical (Private),
MagnetTx Oncology Solutions (Private), Magnolia Medical
Technologies (Private), Mercator MedSystems (Private), NeuroSigma
(Private), Orchestra BioMed (Private), Progenity (Private), RefleXion
Medical (Private), and Renovia (Private).
 
Takeaways on participating Orthopedic companies will be
published by Ryan Zimmerman in a separate research note.

Attending Covered Companies
(Listed by market capitalization, in descending order). We also spoke with
management from ViewRay (VRAY, Buy, $10 PT) recently and although the
company did not attend the Snowbird Healthcare Conference, we include
highlights from our discussion below.
Medtronic (MDT, Buy, $100 PT)

We met with Vice President of Investor Relations Ryan Weipsfenning and
Director of Investor Relations Mark Wilterding.
Following last quarter’s earnings call, we pressed for more detail on the
robotics program. The company would not divulge detail about design (e.g.,
wristed device like the da Vinci) but cautioned against relying on prior revenue
targets provided at prior Analyst Days (2016 and 2018).
On paclitaxel drug-coated balloons, the company hopes to sponsor more

presentations at upcoming conferences such as the VIVA Vascular Conference
in November and we could see favorable data proving safety in influential
publications like the Journal of the American College of Cardiology (JACC).
Anecdotally, Medtronic added that it continues to see support among doctors
despite the negative publicity following the December 2018 JAMA article on
increased risk of death with paclitaxel DCBs used to treat femoropopliteal
artery disease.
Medtronic’s offerings in neurovascular disease were also a topic of interest. On

prospects for future innovation, the company offered limited detail except to
say that changes to state guidelines on stroke triage continue to drive
thrombectomy usage. Specifically, some states have modified protocol
pushing for first responders to be trained in identifying severe stroke patients
then transporting them to facilities best able to treat them. Previous
guidelines steered stroke patients to the closest hospital, where many patients
have languished as they await transport to hospitals equipped to perform
neuro-endovascular surgery. Rhode Island was one example of a state that
saw a doubling of thrombectomy procedures after stroke guideline changes
were implemented.
Touching on the spine segment, management was asked about Mazor’s

placement strategy and the level of implant pull-through. Management
indicated that it was still in the early days but Mazor X Stealth has been a “door
opener” for the company. On the industry more broadly, the company opined
that the overall spine business is ripe for consolidation with greater use of
enabling technology such as imaging driving M&A. Over time, the company
foresees a business whittled down to 4 players. On its appetite for M&A, the
company was asked regarding interest in acquiring NuVasive (NUVA, Buy, $59
PT, Analyst: Ryan Zimmerman) and while the company would not definitively
confirm or deny, we did not get the sense there was much interest. Down the
line, the company believes that there are opportunities to improve the Mazor
portfolio via enhancements intended to cut procedure times by 40%.

2
Lastly, there was some perspective offered on the Diabetes franchise. The
company agreed with our view that the industry is very much a consumer-
driven model and winning in the market entails product placement and
marketing as close to the patient. Though the company is pleased with its
portfolio particularly in areas like artificial pancreas where it is a clear leader,
the key game-changer will be elimination of the use of finger-sticks.
Edwards Lifesciences (EW, Neutral)

We met with outgoing Vice President of Investor Relations, David Erickson.
We covered an array of topics including 1) litigation with Abbott (ABT,
Neutral), 2) investor expectations for low-risk and 3) perspective on
competition.
On the company’s recently CE Marked mitral repair product PASCAL, Edwards

confirmed that it has sufficient inventory for commercialization but would not
provide a date for when the device might launch in the EU. We suspect this is
related to ongoing litigation brought by Abbott alleging patent infringement.
Though management would not comment on the range of potential
outcomes, it does realistically anticipate litigation could drag on for multiple
years (similar to past lawsuits). Additionally, management reiterated comfort
with mitral/tricuspid revenue guidance of $40M for FY19.
Turning to expectations for PARTNER 3 (low-risk trial) at the upcoming ACC

Conference, management reminded investors in the room that the trial was
clearly designed towards non-inferiority, not superiority. Management opined
that expectations for superiority may be more of a Wall Street issue. On the
size of the addressable low-risk pool, management would not provide a range
except to suggest that previous estimates sizing the low-risk pool as being the
largest cohort dwindled down considerably over the years.
Prospects for DTC marketing of TAVR to patients were also addressed. Here,
management opined that there is no real upside for a broad-based campaign
given the minuscule size of the patient pool (1.2M patients) relative to the
general population. Similar to our observation from last year, it does not
appear as though there is a very concrete strategy but it is unlikely that the
company will opt for a mass DTC campaign.
With respect to Boston Scientific's (BSX, Buy, $45 PT) upcoming Lotus launch,
the company realistically anticipates ceding share. However, the company is
not certain that Lotus will have as broad a label as Medtronic’s CoreValve and
Edwards’ SAPIEN, which could work to their advantage. We had heard that
BSX may not all roll out all valve sizes. There is also the possibility that some
doctors in Europe may not be willing to implant Lotus valves given the more
“tainted” history of market recalls. Some investors also asked about EW’s
current share of the market. Given both valves commercialized within 6
months of each other in EU, CoreValve and SAPIEN share should be fairly close
there (of note, in MDT’s presentation at the CRT conference this week, the
company believes it holds #1 share in Western and Eastern Europe) . In the
U.S., SAPIEN enjoyed a two-year headstart but has clearly ceded share by
now. In Japan, there doesn’t appear to very good data but SAPIEN likely has
the lead there given the head start (at CRT, MDT confirmed CoreValve holds a
#2 position).

3
Hologic (HOLX, Buy, $50 PT)
We met with Vice President of Investor Relations Michael Watts and Manager
of Investor Relations Richard Lepke. Our discussion focused on the factors
underlying the improved performance of the core business (Breast Health and
Diagnostics), the guided growth outlook, and the potential for future M&A.
Management continues to feel that M&A will be important to the Hologic story
in the future but agreed that the company is not likely to target near-term
acquisitions in the Aesthetics space and would instead use in-licensing-type
relationships in this area. We also think the company is unlikely to engage in
large acquisitions over the next couple years. Instead, as discussed on the
recent earnings call, we expect management to prioritize smaller deals as well
as stock repurchases.
Hologic’s leadership is striving to attain consistent, predictable growth. New

products in the Breast Health division, including SmartCurve and Clarity HD,
should support more sustainable growth, as these can be sold into a large
portion of the installed base. The refreshed Breast Health salesforce now
works to sell the entire portfolio instead of mainly capital equipment, allowing
Hologic to sell across the patient continuum – screening, biopsy, and surgery.
While expressing optimism around the core businesses, management noted

that there is more work to do. We continue to view guidance for FY19 as
achievable, helped by higher growth from the International business and
stabilizing performance in the core business.
Dexcom (DXCM, Neutral)

We met with Executive Vice President of Strategy and Corporate Development
Steven Pacelli and Vice President of Corporate Development Matthew Dolan.
Pricing headwinds continued to dominate the investor discussion.
Management emphasized that the higher CGM adoption partially ushered in
by the market entrance of Abbott’s (ABT, Neutral) Libre product is more than
offsetting any competitive threat or pricing pressure. In addition, they
expressed confidence that Dexcom’s G6 product features will fare well in the
face of an anticipated Libre 2.0 launch.
Dexcom continues to prioritize its progress toward expanding manufacturing

capacity and developing pipeline products, including the G6 line extensions
(like Direct-to-Watch) and G7. We like the company’s extensive product
innovation but admit we do not have a good idea of how competition and
pricing will affect the business long term.
Exact Sciences (EXAS, Buy, $110 PT)

We met with CFO Jeff Elliott. Though the group meeting was largely
introductory to clients less familiar with the story, much of the meeting
recapped some of the newer growth drivers including 1) investment and
development of Cologuard 2.0 with a longer test sample life and lower false
positive rate, 2) expansion into the ob-gyn and GI channels, 3) seeking
approval for Cologuard approval in the 45-49 age group and 4) developing new
cancer tests including a pan-cancer diagnostic.

4
The company was also asked about prospects for competition. Management
opined that any credible competitor would be 7-8 years behind if one were to
follow Exact Sciences’ own timeline towards approval. Specifically, it took
Exact Sciences roughly 18 months to enroll a 10,000 patient trial, followed by
another year of follow-up prior to FDA submission. The FDA decision came
after another year. A key variable also is timing around acceptance into
USPSTF guidelines (the next Task Force meeting is scheduled for 2021).
Afterwards, it may take another few years to ramp commercial coverage.
Besides the longer-term growth drivers outlined above, there continues to be

tangible opportunities around greater penetration of hospital systems and
better integration with physician office practices (the company’s partnership
with Epic allows for this).
Masimo (MASI, Buy, $137 PT)

We met with Chief Financial Officer Micah Young and Vice President of
Business Development and Investor Relations Eli Kammerman. Having
recently spent time with Masimo’s management team during a non-deal
roadshow the week of February 11 (link to note), we used our Snowbird
meeting to further discuss pipeline products.
We learned that ORi – yet to receive FDA clearance – can alert clinicians to
both hypoxemia and hyperoxemia (too low and too high oxygen). The
hypoxemia feature would give an early warning, 45 second to one minute
before a patient is anticipated to crash from too low oxygen, giving clinicians
the opportunity to intubate faster. On the other hand, hyperoxemia
monitoring could prevent over-ventilating. Once FDA cleared, potential
customers would include anesthesiologists in the pre-operative setting and
respiratory therapists, hospitalists, and internists in the ICU setting.
Management again expressed enthusiasm for a future in-home monitor for

patients prescribed opioids. Parker’s Bill in Utah has spurred change on a local
level – according to management, a large Utah hospital system already sends
Rad-97 devices home with patients prescribed opioids. MASI envisions a
consumer-friendly, less expensive device that would be available to patients at
hospital discharge, either as a prescription or over the counter. We like MASI’s
operating performance, technology platform, and product pipeline.
iRhythm Technologies (IRTC, Neutral)

We met with CFO Matt Garrett and Executive Vice President of Global
Strategy and Corporate Development, Derrick Sung.
The company was asked about expectations for the Apple Heart Study (AAPL,
Buy, $189 PT, Analyst: Walter Piecyk) late-breaking clinical trial at the
upcoming ACC meeting on Saturday, March 16th. Apple Watch sensitivity and
specificity are expected to be unveiled to the public for the first time.
Whatever the outcome, the company believes that widespread use of ECG
screening will be a net positive to IRTC as increased monitoring of patients
(even those thought to be asymptomatic) may be a feeder to drive patients to
the cardiologist setting. Even so, Apple’s current false positive rates are quite
high with continuous alerts driving more and more unnecessary visits to PCPs

5
and cardiologists. Anecdotally, management has heard reports of some
providers even turning away patients that have booked appointments
following Apple Watch alerts.
Turning to ZIO AT, management continues to be pleased with the ramp and
described uptake as strong without quantifying specifics. For its part,
management believes there are a number of misconceptions in the
marketplace including what is the optimal wear time and whether MCTs are
applicable for all monitoring types (in this regard, management has observed
that not every cardiologist opts for MCTs). iRhythm management noted that
over time, it foresees extended-wear monitors eventually taking share away
from MCTs.
The company remains pleased that previous annual salesforce targets of

$2.5M per rep continue to move upward. Management is still seeing 50%
growth in many of its more mature, sizable accounts like Kaiser and Stanford.
Management credits its salesforce for delivering service beyond the traditional
sale and truly assisting clients with the full process from on-boarding to follow-
up.
Accelerate Diagnostics (AXDX, Neutral)

We met with Steve Reichling, CFO of Accelerate Diagnostics. As the company
recently framed the potential revenue range for FY19 and a multi-year goal,
most of our questions were focused on the building blocks that drive the
company’s confidence.
Recall the company provided a framework for how investors should think
about revenue for FY19 with the goal of 300-400 placements. Although we
would have preferred a more specific range, management suggested that
many investors preferred to work with underlying assumptions on placements,
capital mix and annuity streams. Our view is that given the consistent Street
misses, the gap between the company’s own estimate and investor
expectations needs to be narrowed. On this point, management did reassure
us that internal forecasting has improved substantially and that Q3 and Q4
results met the company’s own estimates.
In terms of geographic mix, the company remains encouraged by strong

demand in the EU. However, Pheno has been mainly been positioned as an
ICU/critical care system so while placement volumes were strong, there was
less test utilization. Management is hopeful that under new EU leadership, it
can develop stronger relationships with clinical champions in the hospital
setting rather than just leaving the systems in triage. In the U.S., the company
is seeing the opposite dynamic in that once systems are placed, tests are run
immediately. On the topic of pushback on test pricing, management
confirmed seeing a handful of cases in accounts that have adopted a molecular
diagnostic-type model; even so, a more flexible reagent model has solidified
Pheno’s value proposition.
We covered a handful of other topics with management conveying optimism

regarding its newly strengthened salesforce - AXDX now has 30 best-in-class
sales reps trained to better deliver the enhanced messaging. Additionally, a
growing body of supportive data on Pheno outcomes should better refine the

6
sales pitch. One potential catalyst is the previously discussed Mayo Clinic-
UCLA study, which could be presented at the American Society of
Microbiology (ASM) conference in May.
Regarding future expansion of Pheno in China, Accelerate is exploring a

potential joint venture or a distributor arrangement. The company is confident
about its prospects here leaning on management’s prior relationships with
distributors in previous positions at Roche (RHHBY, Not Rated).
ViewRay (VRAY, Buy, $10 PT)

While ViewRay didn’t attend this year’s conference, we spoke recently with
Chief Scientific Officer James Dempsey, PhD about the MRIdian system’s real-
time adaptive therapy and the latest 510(k)-cleared advancements to MRIdian
SmartVISION MRI. On real-time adaptive therapy, we learned that the system
is now capable of less than 100 milliseconds of latency. The visualization
improvements give operators a diffusion weighted imaging (DWI) feature
which allows them to see how cancerous tissue is responding to the radiation
treatment.
The enhancements also bring a faster multi-leaf collimator, a doubling in the

speed of MR imaging (8 frames/second, allowing for that lower latency),
doubled image resolution, and a two-fold improvement in the MR signal-to-
noise ratio. In addition, the SmartTARGET feature turns the radiation beam on
and off automatically, adjusting to tumor and organ movement. We like
VRAY’s technology and continual innovation.
Establishment Labs (ESTA, Buy, $40 PT)

We met with Establishment Labs’ management team including CEO Juan Jose
Chacon Quiros, CFO Renee Gaeta, and Chairman Nick Lewin. The meeting
covered an array of topics with special focus on timelines around proprietary
surgery techniques such as the MotivaMINT.
With respect to the upcoming FDA advisory committee panel on General and
Plastic Surgery Devices on March 25th, the company anticipates heavy news
flow given that breast implants tend to be a scrutinized topic in media, more
so following the negative ICIJ reports. The company would not be surprised if
there is considerable negative attention on textured breast implants given
dynamics in Europe but the company appears less concerned here given that
the share of textured implants is already modest at 10% in the U.S. Of note,
Motiva’s Ergonomix implants are considered to be smooth.
Management received many questions on timelines for the minimally invasive

technique (MotivaMINT). The company confirmed that it has completed all the
work on animals and cadavers and is now completing the last pilot work on
humans. Management feels that the most technically challenging aspect is
developing the special delivery system of the implant though the company has
not seen significant delays in R&D yet. Specifically, the implantation procedure
does not require electrocautery and relies on blunt dissection, thereby
minimizing surrounding tissue damage. Procedure time has been very short at
25 minutes with the goal of getting times down to 20 minutes. As a matter of
perspective, some surgeons can perform regular implants as quick as 35

7
minutes while an average surgeon needs 45 minutes to an hour to surgically
implant. Should R&D efforts prove successful, this could appeal to women who
have shied away from surgery given predisposition to keloid scarring and/or
hyperpigmentation (e.g., ethnic groups with high melanin). In terms of
timelines, management hopes to launch in Japan by the end of 2019. Entry
into China might be farther away in 2021; there, management hopes it can
leverage foreign trial data (perhaps data from work done in Korea) as the
Chinese regulators are beginning to accept results from studies performed
overseas. Although management anticipates that uptick of this procedure will
be much faster in Asian countries, there could be a market for smaller, less
invasive implants in the U.S. particularly among women looking to size up only
to 200 cc implants. In terms of how big this could be in the U.S., the company
noted that there are roughly 40M women that use padded bras for extra lift.
Finally, on timing in the EU, the company is exploring the possibility of
submitting a usability study with data covering 12-24 months; if the EU
regulators find this acceptable, the company may obtain CE Marking by mid-
2020.
In terms of new markets for 2019, management is enthusiastic about entry

into Thailand and Taiwan. Thailand is projected to be one of the largest
markets in Asia with about 10,000 women from Australia flying to Thailand
annually for breast implants. Turning to Taiwan, there is also a substantial
opportunity to capture market share given that there are only two
manufacturers marketing implants there – Allergan (AGN, Not Rated) and JNJ
(JNJ, Not Rated).
Accuray (ARAY, Neutral)

We met with Chief Financial Officer Shig Hamamatsu and Vice President of
Finance and Investor Relations Steven Anheier. We spent most of the meeting
focused on the recent China joint venture and the Type A and B license
opportunities there. Management expressed enthusiasm for the JV, noting
that the general manager of TomoKnife, Accuray’s current distributor in China,
is slated to become the CEO of the JV. We think this may reduce the amount of
disruption during the transition from TomoKnife to the JV. In addition, during
the transition TomoKnife should continue pursuing new orders and converting
existing orders to revenue, since there is still an underlying financial incentive.
In our view, it will be important to see whether revenue continues to flow in
from these earlier Chinese orders and we hope Accuray management will be
willing to give some indication of this on future earnings calls.
We continue to think that last quarter’s strong order result from China (16
orders) was driven largely by excitement and momentum around the recently
released quota and licenses. While we hope order demand in China remains
strong throughout the remainder of FY19, we know that capital equipment
orders are hard to predict and often lumpy from quarter to quarter. We do
anticipate that the licenses serve as a strong catalyst in FY20. It is
understandably difficult to predict what market share Accuray might be able
to eventually claim from the quota, but we do expect it to be significantly
higher than the estimated high-single-digit market share the company holds
globally.

8
Outside of China, management noted that the last reported quarter showed
continued strength from Japan, consistent performance in EMEA, and good
growth in the Americas on a relatively weak year-over-year comp.
Vapotherm (VAPO, Buy, $26 PT)

We met with Chief Financial Officer John Landry. With Vapotherm newly
public and yet to report a quarter, much of the discussion focused on the basics
of the business. The new Precision Flow Hi-VNI system launched in mid-
February allows the company to market the system as a mask-free form of
non-invasive ventilation, non-inferior to non-invasive positive pressure
ventilation. The new system is not expected to come with a significantly higher
price point and the disposables can be used with both the latest generation
system and the prior versions. While we think VAPO has a loyal following that
might be open to a small price increase for the disposables, we do not think
the company plans to take this strategy.
However, pipeline products like the IntellO2 may be able to command a

higher price point. Regarding IntellO2, we continue to think that if the product
can offer automated control of FiO2, it may have significant potential beyond
the neonatal ICU (though that clinical work would need to be performed).
electroCore (ECOR, Buy, $14 PT)

We met with Chief Executive Officer Frank Amato and Chief Science and
Strategy Officer JP Errico. Given the focus on revenue-generating gammaCore
prescriptions, much of our discussion with electroCore’s management dealt
with recent insurer wins. In late February, Highmark, a regional Blue Cross Blue
Shield payor for Pennsylvania, Delaware, and West Virgina, announced
coverage of gammaCore. The policy states that the device may be medically
necessary to treat episodic migraine and episodic cluster headache.
Management noted that this policy and the company’s coverage for patients is
expected to result in in-network patients being fully covered and out-of-
network patients paying ~$40/month out of pocket.
We like this win, because the fact that Highmark is a regional insurer means
that a large proportion of patients in that region will have gammaCore
coverage. This should enable electroCore to target prospective prescribers in
that region and after a couple quarters of coverage, should give us a better
understanding of what demand and revenue look like in a well-reimbursed
setting. This may allow us to extrapolate expectations for the entire country
for forecasting purposes. We believe that most doctors, while willing to keep
prescribing gammaCore to truly desperate patients, are waiting for at least
50% patient coverage – in their practice – before becoming consistent
prescribers.
Another recent reimbursement win was the early January announcement of

the five-year Federal Supply Schedule (FSS) contract award. There are ~80 VA
hospitals that will be key targets here, all accounts that can be covered by the
territories managed by the company’s 32 sales reps. We expect this should
help increase revenue conversion in coming quarters.

9
With both FSS and Highmark, electroCore has nearly 60 million covered US
lives. Management expressed continued confidence in its targets of 75 million
covered US lives in Q3 of 2019 and 100 million covered US lives by the end of
2019. We look forward to continued positive updates from PBMs and payors
and expect the gap between revenue and prescriptions to gradually narrow
over the next several quarters.
Endologix (ELGX, Buy, $4 PT)

We met with Chief Executive Officer John Onopchenko. Management is
dedicated to resolving the 2020 debt maturities in the first half of 2019 and
seems to agree with our view that this debt has been an overhang on the
stock. As we’ve written before, we believe that once this debt is addressed,
ELGX shares could move higher. An anticipated announcement of a
transaction to settle these maturities presents, in our view, both a near-term
catalyst for shares and a chance for management to continue to solidify
credibility in the ELGX turnaround story. We continue to recommend ELGX
shares.
Obalon (OBLN, Buy, $3 PT)

We met with CEO Kelly Huang and CFO Bill Plovanic. The main question in our
mind was how commercialization of the Obalon Navigation with Touch
Dispenser was trending. With only a few weeks into the launch, there was not
much new information management could provide to investors. That being
said, management emphasized the difficulty of installing x-ray capabilities as
an adjunct to the practice – from the capital outlay to certification by a
licensed physicist. Management added that in some ways, having Navigation
actually demonstrated the intensity of underlying interest.
We discussed the new physician and patient assistance Ambassador program.

Patient interest continues to be strong but timing of interest-to-consultation
and consultation-to-treatment lags especially among bariatric surgeons and
GIs. Along with call center support and nutritional consultation services, the
Ambassador program is intended to drive pull-through and sustainability.
While the company will be focused on commercial execution in the near-term,

we asked about where innovation can possible trend in the future. Here, the
company suggested there could be some development of a longer duration
balloon or an inflatable passable but these are ways away.
Valeritas (VLRX, Buy, $1 PT)

We met with Chief Financial Officer Erick Lucera. With Valeritas set to report
Q4 earnings later this month, our discussion was limited to the recent
reimbursement wins and efforts to add additional services for V-Go patients.
In January, Valeritas announced that V-Go had received preferred status on

both the Humana Part D and OptumRx formularies. We applaud this win, but
management noted that it is likely too early to expect impact on sales from
this because the product now must be put on each account’s formulary list
individually. The company’s reimbursement team is starting to work on this,
going account by account to request that V-Go be added to the formulary lists.

10
We think that at earliest, preferred status could start to become a tailwind in
the back half of 2019.
In mid-January, Valeritas partnered with digital diabetes coaching company

Cecelia Health to offer expert support to V-Go patients. We find this a
meaningful relationship that could offer both better diabetes management to
patients and allows Valeritas sales reps to spend more time selling into
accounts instead of educating and consulting with patients. On top of this,
management noted that the company put a CRM system in place in mid-2018,
reducing the sales reps’ time devoted to paperwork and administrative tasks.
While this may seem like a small step, we think this extra time could eventually
start to pay off in the form of closer relationships with accounts and higher
sales. We look forward to updates from the company on the feedback from its
recent free goods program and expanding salesforce.
Lastly, we note that in recent days VLRX shares have been hovering around
$0.48, the exercise price level for the Series B warrants. While it’s difficult to
predict timing for when warrant holders may choose to exercise these, we do
think it important for the corresponding cash to become available to Valeritas
over the next couple quarters.

11
ABBOTT LABORATORIES (ABT, Neutral, $N/A PT; Current Price: $78.62; Analyst: Sean.Lavin)
ACCURAY, INC. (ARAY, Neutral, $N/A PT; Current Price: $5.14; Analyst: Sean.Lavin)
APPLE, INC. (AAPL, Buy, $189.00 PT; Current Price: $175.85; Analyst: Walter.Piecyk)
BOSTON SCIENTIFIC CORPORATION (BSX, Buy, $45.00 PT; Current Price: $40.30; Analyst: Sean.Lavin)
DEXCOM, INC. (DXCM, Neutral, $N/A PT; Current Price: $141.50; Analyst: Sean.Lavin)
EDWARDS LIFESCIENCES CORPORATION (EW, Neutral, $N/A PT; Current Price: $171.21; Analyst: Sean.Lavin)
ELECTROCORE, LLC (ECOR, Buy, $14.00 PT; Current Price: $8.50; Analyst: Sean.Lavin)
ENDOLOGIX, INC. (ELGX, Buy, $4.00 PT; Current Price: $0.61; Analyst: Sean.Lavin)
ESTABLISHMENT LABS HOLDINGS INC. (ESTA, Buy, $40.00 PT; Current Price: $26.72; Analyst: Sean.Lavin)
EXACT SCIENCES CORPORATION (EXAS, Buy, $110.00 PT; Current Price: $88.88; Analyst: Sean.Lavin)
HOLOGIC, INC. (HOLX, Buy, $50.00 PT; Current Price: $47.42; Analyst: Sean.Lavin)
IRHYTHM TECHNOLOGIES, INC. (IRTC, Neutral, $NM PT; Current Price: $94.15; Analyst: Sean.Lavin)
MASIMO CORPORATION (MASI, Buy, $137.00 PT; Current Price: $133.68; Analyst: Sean.Lavin)
MEDTRONIC PLC (MDT, Buy, $100.00 PT; Current Price: $92.29; Analyst: Sean.Lavin)
NUVASIVE, INC. (NUVA, Buy, $59.00 PT; Current Price: $58.57; Analyst: Ryan.Zimmerman)
OBALON THERAPEUTICS, INC. (OBLN, Buy, $3.00 PT; Current Price: $1.80; Analyst: Sean.Lavin)
VALERITAS HOLDINGS, INC. (VLRX, Buy, $1.00 PT; Current Price: $0.51; Analyst: Sean.Lavin)
VAPOTHERM INC. (VAPO, Buy, $26.00 PT; Current Price: $19.60; Analyst: Sean.Lavin)
VIEWRAY, INC. (VRAY, Buy, $10.00 PT; Current Price: $8.52; Analyst: Sean.Lavin)

12
Ratings Definitions
BUY – A security which is expected to produce a positive total return of 15% or greater over the 12 months following
the recommendation. The BUY rating may be maintained as long as it is deemed appropriate, notwithstanding
price fluctuations that would cause the target to fall outside of the 15% return.
upon.

of the end of the most recent calendar quarter (December 31, 2018): 331
Distribution of BTIG’s Research Recommendations (as of December 31, 2018):

BUY: 59.8%; NEUTRAL: 38.1%; SELL: 2.1%
Distribution of BTIG’s Investment Banking Services (as of December 31, 2018):

BUY: 27.3%; NEUTRAL: 11.1%; SELL: 0.0%
For purposes of FINRA ratings distribution rules, BTIG’s stock ratings of Buy, Neutral and Sell fall into Buy, Hold and
Sell categories, respectively.
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13
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14

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15
Equity Research
February 19, 2019 Medical Technology
Sean Lavin, MD
slavin@btig.com Little Surprises With Q4 But Outlook For FY19 Is Very
Andrea Alfonso Hard To Predict; Neutral
(212) 527-3565
aalfonso@btig.com AXDX reported Q4 revenue of $1.8M, in-line with the preannouncement. In
Q4, the company added 133 commercially contracted placements vs. 22 in
Marie Thibault 4Q17; to clarify, commercial placements refer to customers that have
(212) 527-3557 agreed to install and run tests (may or may not be active users though we
mthibault@btig.com are not sure why they are no longer called evaluations). Following the
company’s business shift to a reagent rental model, mgmt will disclose this
metric as a measure of volume uptake going forward in lieu of evaluations
and system conversions. On expectations for 2019, mgmt is targeting 300-
400 placements vs. the 202 in 2018 as a full transition to the rental model
AXDX $19.47 and more comprehensive body of positive studies may drive up volumes.
Upsi de
12 month target
%
$#,##0;(#,##0) We feel the material uptick in placements in Q4 is encouraging but cannot

ignore the considerable amount of guesswork around when placements
NEUTRAL begin to generate revenue and when customers commit to a purchase.
With expectations for revenue to be heavily back-end loaded and the fact
52 week range $10.42 - $27.30
that manufacturing investments will pressure gross margin for the next
Dividend
Market Yield
Cap (m) $1,055 couple of quarters, we see fewer ways for investors to be rewarded in the
Price Performance near-term. Q1 is generally a weak capital equipment quarter. If Q1 comes
in lighter than Q4, we could see some of the recent run retraced. We
maintain our Neutral view on shares.
 
Positively, mgmt remains focused on improving sales productivity.
Besides expanding sales headcount by 50%, mgmt believes it can
better entice prospective customers through a growing body of
supportive data including the recent University of AR study on the
impact of Pheno on length of stay. Also, the company continues to
make strides toward seamlessly integrating with hospitals’ lab
information systems, pointing to one go-live process of only 18 days.
  tweaks to our model. We are maintaining our full-year revenue

Slight
estimate of $13M, shifting sales to the back-half. We have trimmed
Source: IDC our gross margin forecast to reflect the impact of investments.
 
Valuation: We maintain our Neutral rating. Risks are on page 2.
Estimates
1Q18 A 2Q18 A 3Q18 A 4Q18 A FY18 A 1Q19 E 2Q19 E 3Q19 E 4Q19 E FY19 E FY20 E
Sales 1 2 1 2 6 1 2 3 7 13 23
Gross Margin (%) 38.6% 57.6% 49.8% 28.8% 43.8% 31.8% 48.8% 36.8% 53.8% 46.9% 57.3%
EBIT (21) (20) (19) (20) (80) (21) (21) (21) (19) (82) (83)
Net Income (Adj.) (21) (23) (22) (22) (88) (21) (21) (21) (19) (82) (83)
Diluted EPS (GAAP) (0.37) (0.43) (0.41) (0.41) (1.62) (0.38) (0.36) (0.36) (0.33) (1.43) (1.41)

Model Changes
We are leaving our full year revenue estimate for FY19 unchanged but have
pushed most of the sales to the back half. On gross margin, we have lowered
our forecast to reflect the impact of manufacturing investment at least
through the 1H of 2019. Though we find management’s commentary
regarding the sales funnel encouraging, we have little to go by and surmise
that our revenue forecasts remain placeholders for now until we see more
encouraging signs of test volumes and capital sales.
New Old Change

FY18A FY19 FY20 FY18E FY19 FY20 FY18A FY19 FY20
Total Revenue ($M) $5.7 $13.1 $22.6 $5.7 $13.1 $22.6 -1% 0% 0%
Net Loss ($M) -$88.3 -$82.2 -$83.4 -$87.1 -$91.5 -$99.4 1% -10% -16%
LPS ($1.62) ($1.43) ($1.41) ($1.60) ($1.58) ($1.68) 2% -10% -16%
Gross Margin 43.8% 46.9% 57.3% 50.7% 55.8% 61.2% -692bps -891bps -382bps
Valuation
Given the string of quarterly misses over the 2 years, the ongoing challenges
commercial strategy, we continue to see risk to achieving Street estimates.
BTIG does not provide price targets on Neutral-rated stocks. Risks to our rating
include company to be acquired, meeting and beating FY19 estimates,
contracting adoption cycles, LRTI data, successful expansion into China,
expansion of healthcare valuations, and drastic change in hospital spending.

2
AXDX Income Statement Dec-14 Dec-15 Dec-16 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Dec-20
$ millions, except EPS and %s FY14 A FY15 A FY16 A FY17 A 1Q18 A 2Q18 A 3Q18 A 4Q18 A FY18 A 1Q19 E 2Q19 E 3Q19 E 4Q19 E FY19 E 1Q20 E 2Q20 E 3Q20 E 4Q20 E FY20 E
License Fees/Royalties 0.12 0.07 0.08 0.08 0.02 0.02 0.02 0.02 0.08 0.02 0.02 0.02 0.02 0.08 0.02 0.02 0.02 0.02 0.08
Product Revenue 0.00 0.08 0.16 4.10 0.78 1.67 1.34 1.80 5.59 0.93 2.08 3.42 6.59 13.02 2.98 3.46 5.63 10.48 22.55
Total Revenue 0.12 0.15 0.25 4.18 0.80 1.69 1.36 1.82 5.67 0.95 2.10 3.44 6.61 13.10 3.00 3.48 5.65 10.50 22.63
y/y growth NM NM NM NM 51.1% 142.1% 63.6% -14.1% 35.7% 18.7% 24.0% 154.1% 262.6% 131.0% 215.8% 66.0% 64.1% 58.9% 72.8%
COGS 0.00 0.00 0.00 1.00 0.49 0.72 0.68 1.30 3.19 0.65 1.07 2.18 3.05 6.95 1.30 1.68 2.16 4.52 9.65
Gross Profit 0.12 0.15 0.25 3.18 0.31 0.975 0.68 0.52 2.48 0.30 1.02 1.27 3.55 6.15 1.70 1.81 3.49 5.97 12.98
R&D 20.05 26.02 28.20 22.30 6.78 6.06 7.89 6.91 27.64 7.00 7.20 7.40 7.50 29.10 7.90 8.10 8.30 8.50 32.80
SG&A 10.70 17.88 36.20 45.06 14.35 15.33 12.15 13.38 55.21 14.20 14.80 15.00 15.20 59.20 15.60 15.80 16.00 16.20 63.60
Total Operating Expenses 31.64 45.70 66.75 67.36 21.14 21.39 20.04 20.28 82.85 21.20 22.00 22.40 22.70 88.30 23.50 23.90 24.30 24.70 96.40
EBIT -31.52 -45.55 -66.50 -64.18 -20.83 -20.41 -19.37 -19.76 -80.37 -20.90 -20.98 -21.13 -19.15 -82.15 -21.80 -22.09 -20.81 -18.73 -83.42
Other (Expense) Income 0.06 0.05 0.39 0.65 0.20 -2.71 -2.58 -2.65 -7.75 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Pretax Income -31.46 -45.50 -66.11 -63.53 -20.63 -23.12 -21.95 -22.41 -88.115 -20.90 -20.98 -21.13 -19.15 -82.15 -21.80 -22.09 -20.81 -18.73 -83.42
Income Taxes (Benefit) -0.53 0.00 -0.27 0.65 -0.18 -0.10 0.15 -0.07 -0.21 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Net Income (Loss) -30.93 -45.50 -66.37 -62.88 -20.81 -23.22 -22.10 -22.34 -88.33 -20.90 -20.98 -21.13 -19.15 -82.15 -21.80 -22.09 -20.81 -18.73 -83.42
EPS -$0.71 -$1.01 -$1.29 -$1.16 -$0.37 -$0.43 -$0.41 -$0.41 -$1.62 -$0.38 -$0.36 -$0.36 -$0.33 -$1.43 -$0.37 -$0.37 -$0.35 -$0.32 -$1.41
Diluted Shares Outstanding 43.63 45.00 51.28 54.07 55.64 54.00 54.15 54.19 54.49 54.35 58.51 58.67 58.83 57.59 58.96 59.09 59.23 59.36 59.16
Margins
Gross Profit NM NM NM 76.0% 38.6% 57.6% 49.8% 28.8% 43.8% 31.8% 48.8% 36.8% 53.8% 46.9% 56.8% 51.9% 61.8% 56.9% 57.3%
EBIT NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
EBITDA NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Pretax Income NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Net Income NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Expenses
COGS as a % of Revenue NM NM NM NM 61.4% 42.4% 50.2% 71.2% 56.2% 68.2% 51.2% 63.2% 46.2% 53.1% 43.2% 48.1% 38.2% 43.1% 42.7%
SG&A as a % of Revenue NM NM NM NM 1791.9% 906.0% 896.9% 734.2% 973.8% 1493.7% 705.3% 435.6% 230.1% 451.9% 519.6% 453.5% 283.2% 154.3% 281.0%
R&D as a % of Revenue NM NM NM NM 846.7% 358.2% 582.4% 379.0% 487.4% 736.4% 343.1% 214.9% 113.5% 222.2% 263.2% 232.5% 146.9% 81.0% 144.9%
Total Operating Expenses NM NM NM NM 2638.6% 1264.2% 1479.3% 1113.2% 1461.2% 2230.1% 1048.4% 650.5% 343.6% 674.1% 782.8% 686.0% 430.1% 235.3% 425.9%
Tax Expense (Income) NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Net operating losses (est.) -223.40 -286.93 -307.56 -330.68 -352.64 -375.05 -375.05 -395.95 -416.92 -438.06 -457.20 -457.20 -479.00 -501.09 -521.90 -540.62 -540.62

3
AXDX Placement/Revenue Model Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Dec-20
FY17 A 1Q18 A 2Q18 A 3Q18 A 4Q18 A FY18 A 1Q19 E 2Q19 E 3Q19 E 4Q19 E FY19 E 1Q20 E 2Q20 E 3Q20 E 4Q20 E FY20 E
U.S.
Capital Equipment
additions 42 7 10 0 2 19
% sold 66% 65% 75% 80% 10% 58%
% reagent rental 35% 35% 25% 20% 90% 43%
ASP of instrument sold (000s) $32 $25 $30 $30 $50 $34
Commercially Contracted Instruments (Cumulative) - New Way of Forecasting 2019 and Beyond 72 77 93 209 209 214 224 234 251 251 281 311 341 394 394
% capital mix 2% 3% 11% 25% 10.3% 2% 3% 11% 25% 10.3%
ASP of instrument sold (000s) $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
U.S. Instrument Revenue ($M) 1.0 0.1 0.2 0.0 0.0 0.3 0.2 0.3 1.3 3.1 5.0 0.3 0.5 1.9 4.9 7.5
Consumables
Active Instruments 39 48 58 65 65 65 32 78 82 113 113 141 156 171 197 197
Price Per Test $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
y/y growth -62.4% -3.7% -50.0% -37.5% 44.2% -20.0% 52.0% -24.0% 0.0% 0.0% 0.0% 0.0%
U.S. Consumables Revenue ($M) 2.3 0.5 1.0 0.6 1.2 3.2 0.4 1.1 1.1 1.5 4.2 1.9 2.1 2.3 2.7 9.1
Total U.S. Revenue ($M) $3.3 $0.6 $1.2 $0.6 $1.2 $3.6 $0.7 $1.4 $2.4 $4.7 $9.2 $2.2 $2.6 $4.2 $7.6 $16.6
OUS
Capital Equipment
additions 28 4 4 4 6 18
% sold 24% 0% 35% 40% 10% 21%
% reagent rental 76% 100% 65% 60% 90% 79%
ASP of instruments sold (000s) $25 $10 $20 $40 $40 $28
Commercially Contracted Instruments (Cumulative) - New Way of Forecasting 2019 and Beyond 71 75 77 80 85 85 95 100 112 145 145
% capital mix 2% 3% 11% 25% 10.3% 2% 3% 11% 25% 10.3%
ASP of instrument sold (000s) $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
OUS Instrument Revenue ($M) 0.2 0.0 0.0 0.1 0.0 0.1 0.1 0.1 0.4 1.1 1.7 0.1 0.2 0.6 1.8 2.7
Consumables
Price Per Test $150 $150 $150 $150 $200 $200 $200 $200 $200 $200 $200 $200
y/y growth -49.0% -8.2% 29.6% -32.9% 166.7% 45.2% 2.9% 33.3% 0.0% 0.0% 0.0% 0.0%
OUS Consumables Revenue ($M) 0.7 0.2 0.4 0.7 0.6 1.9 0.2 0.6 0.6 0.8 2.2 0.7 0.7 0.8 1.0 3.3
Total OUS Revenue ($M) $0.9 $0.2 $0.5 $0.8 $0.6 $2.0 $0.3 $0.7 $1.0 $1.9 $3.9 $0.8 $0.9 $1.4 $2.9 $5.9
WW
Capital Equipment
additions 15 15 4 6
Instrument Revenue ($M) 1.17 0.11 0.25 0.06 0.03 0.47 0.29 0.45 1.73 4.20 6.67 0.38 0.62 2.49 6.74 10.22
Consumables
Tests Per Day Per Active System 0.43 0.79 0.68 0.89
Revenue Per Active System $7,739 $14,169 $12,198 $15,990
Global Consumables Revenue ($M) 2.98 0.66 1.42 1.27 1.77 5.11 0.64 1.63 1.70 2.39 6.35 2.61 2.85 3.14 3.74 12.33
WW Product Revenue ($M) $4.2 $0.8 $1.7 $1.3 $1.8 $5.6 $0.9 $2.1 $3.4 $6.6 $13.0 $3.0 $3.5 $5.6 $10.5 $22.6
y/y growth 51.3% 148.4% 53.3% -14.3% 34.2% 20.6% 24.3% 156.4% 265.5% 133.3% 220.4% 66.7% 64.5% 59.1% 73.2%
sequential growth -63.3% 116.7% -20.2% 35.0% -48.4% 123.3% 64.7% 92.4% -54.7% 16.2% 62.6% 86.1%

4

5
Ratings Definitions
upon.


BUY: 59.8%; NEUTRAL: 38.1%; SELL: 2.1%

BUY: 27.3%; NEUTRAL: 11.1%; SELL: 0.0%

misses over the 2 years, the ongoing challenges within the hospital purchasing environment and changes to the

6
company’s commercial strategy, we continue to see risk to achieving Street estimates. BTIG does not provide
Risks: Risks to our rating include company to be acquired, meeting and beating FY19 estimates, contracting
adoption cycles, LRTI data, successful expansion into China, expansion of healthcare valuations, and drastic
change in hospital spending.

BTIG LLC has received compensation for investment banking services in the past 12 months from:
Accelerate Diagnostics, Inc. (AXDX)
BTIG LLC had an investment banking services client relationship during the past 12 months with:
BTIG LLC managed or co-managed a public offering of securities in the past 12 months for:
Other Disclosures

7
General Disclosures
issue.

8

respectively.

9
19 February 2019
Neutral
Price: $19.47
4Q18 Model Update
Price Target: $16.00
We are updating our Accelerate Diagnostics (AXDX) model following the release Life Science Tools & Diagnostics
of 4Q results and subsequent earnings call. In line with the pre-announcement, Tycho W. Peterson
AC
revenues of $1.8M were yet another miss against then consensus ($2.1M), with (1-212) 622-6568
gross margin also taking a significant dip (from 69% a year ago to 29%) due to tycho.peterson@jpmorgan.com
increased “investment in service and manufacturing capacity ahead of production Bloomberg JPMA PETERSON <GO>
demand” which management did not foresee earlier due to the surge in 4Q Julia Qin, CFA
placements, while on a more positive note, system placements reached a record (1-212) 622-9253
high of 133 (117 in the U.S.), helped by the switch to reagent rental models. julia.qin@jpmchase.com
Tejas Savant
Looking ahead, AXDX expects 300-400 commercial instrument placements in (1-212) 622-5650
2019, with a 10-15% capital sales mix ($50K system ASP). While management tejas.savant@jpmorgan.com
noted strong initial 1Q placement momentum at our conference last month (~30 Eleni Apostolatos
(1-212) 622-0136
instruments in the first couple of weeks of January), in our follow-up
eleni.apostolatos@jpmorgan.com
conversation, it was acknowledged that there was likely a post-holiday carry-over
effect and the company continues to expect quarterly placements to follow typical
seasonality patterns (lowest in 1Q, highest in 4Q, not factoring in any impact from Price Performance
the Mayo/ULCA study readout expected in 1H). On the consumables side, AXDX 30
expects an annuity per instrument of $45K-65K (U.S. above the range, and EMEA 25
below the range) and an average go-live time of six months (hence, consumable $ 20
revenues are expected to pick up in 2H19). Additionally, 2019 revenues will likely 15
benefit from service contracts ($5K per instrument) kicking in after the initial year 10
Feb-18 May-18 Aug-18 Nov-18 Feb-19
of warranty. Moving down the P&L, while growth investments that impacted GM AXDX share price ($)
in 4Q are expected to diminish throughout the year, AXDX expects to make RTY (rebased)
continued investments in S&M (adding ~20 sales reps in 2H19) and R&D YTD 1m 3m 12m
Abs 69.3% 16.2% 46.8% 0.0%
(initiating two independent new outcome studies for BCID with readouts expected Rel 52.5% 10.0% 41.6% 0.0%
in 2H19, plus clinical trials for pneumonia and China approval). Longer-term, the
company expects additional upside from NTAP reimbursement (at >$125 per test,
approval expected in 2H20) and China entry (initiating trial in 2H19, commercial
launch expected in 1H21).
Putting it together, while the pickup in 4Q placements is encouraging, the

sustainability of the initial momentum remains to be proven, and ultimately,
revenue generation remains the more important benchmark for Pheno’s
commercial potential, with the ability to drive top-line growth with opex leverage
also important in the long term. As such, with shares now trading at 53x fwd sales,
we believe the positives are largely priced in, and we remain Neutral, as we
continue to see better risk/reward in other names across our coverage universe.
Accelerate Diagnostics (AXDX;AXDX US)

FYE Dec 2018A 2019E 2019E 2020E 2020E Company Data
(Prev) (Curr) (Prev) (Curr) Price ($) 19.47
Revenue ($ mn) Date Of Price 19-Feb-19
Q1 (Mar) 1 3 3 10 10 52-week Range ($) 27.65-10.23
Q2 (Jun) 2 4 4 11 12 Market Cap ($ mn) 1,051.44
Q3 (Sep) 1 5 6 13 16 Fiscal Year End Dec
Q4 (Dec) 2 6 8 15 18 Shares O/S (mn) 54
FY 6 19 21 49 56 Price Target ($) 16.00
Source: Company data, Bloomberg, J.P. Morgan estimates. Price Target End Date 31-Dec-19
See page 6 for analyst certification and important disclosures.


(1-212) 622-6568 19 February 2019

Income Statement 2014A 2015A 2016A 2017A 2018A 1QE 2QE 3QE 4QE 2019E 1QE 2QE 3QE 4QE 2020E
Capital Sales 0 0 0 2 2 0 1 1 1 3 1 1 1 1 3
Consumable Sales 0 0 0 2 4 2 3 5 7 17 9 11 14 16 50
Total Revenue Revenue 0.1 0.1 0 4 6 3 4 6 8 21 10 12 16 18 56
Cost of goods sold 0 0 0 (1) (3) (1) (2) (2) (3) (8) (4) (4) (5) (5) (18)
Gross Profit 0 0 0 3 2 1 3 4 5 13 6 8 11 13 37
Research and Development (20) (26) (28) (22) (28) (8) (8) (8) (8) (33) (8) (7) (6) (6) (28)
SG&A (11) (18) (36) (45) (55) (13) (15) (18) (27) (73) (28) (28) (28) (29) (112)
Depreciation & Amortization (1) (2) (2) (3) (3) (1) (1) (1) (1) (3) (1) (1) (1) (1) (3)
Operating Profit (Loss) - EBIT (32) (46) (66) (64) (80) (20) (20) (23) (30) (93) (30) (27) (23) (23) (103)
Other income (expense), net 0 0 0 1 (8) (3) (3) (3) (3) (10) (3) (3) (3) (3) (10)
Pretax Income (31) (45) (66) (64) (88) (22) (23) (25) (33) (103) (32) (30) (26) (25) (113)
Income Tax 1 0 0 1 (0) 0 0 0 0 0 0 0 0 0 0
Net Income (Loss) attributable to common (31) (45) (66) (63) (88) (22) (23) (25) (33) (103) (32) (30) (26) (25) (113)
Diluted shares outstanding 43.4 45.0 51.3 54.0 54.5 54.6 54.9 55.2 55.5 55.1 56.0 56.3 56.7 57.0 56.5
GAAP Diluted EPS ($0.71) ($1.01) ($1.29) ($1.16) ($1.62) ($0.41) ($0.41) ($0.46) ($0.59) ($1.87) ($0.57) ($0.53) ($0.46) ($0.44) ($2.00)
Gross Margin 0% 0% 0% 80% 44% 55% 60% 65% 65% 61% 60% 65% 70% 70% 66%
R&D Margin (as % of revenue) 0% 0% 0% 534% 487% 300% 190% 140% 110% 159% 80% 60% 40% 35% 50%
SG&A Margin (as % of revenue) 0% 0% 0% 1079% 974% 500% 350% 300% 350% 355% 280% 230% 180% 160% 202%
Operating (EBIT) Margin 0% 0% 0% -1537% -1417% -745% -480% -375% -395% -451% -300% -225% -150% -125% -185%
Effective Tax Rate 0% 0% 0% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Net Margin 0% 0% 0% -1505% -1558% -841% -541% -417% -428% -501% -326% -246% -166% -139% -203%
Revenue growth (y/y) 0% 0% 55% 1732% 36% 230% 147% 345% 323% 263% 272% 190% 157% 135% 170%
EPS growth (y/y) 39% 9% -4% 12% 45% 15% 41% 29% 0% -26% 7%
2

(1-212) 622-6568 19 February 2019

Revenue ($M) 0 0 0 4 6 21 56 113 191 302 438 593
growth y/y 20% 55% 1732% 36% 263% 170% 103% 70% 58% 45% 35%
EBIT ($M) 0 (46) (67) (64) (80) (93) (103) (80) (21) 65 145 264
EBIT margin 0% NA -29328% -1527% -1408% -451% -185% -71% -11% 22% 33% 45%
Tax-affected EBIT ($M) 0 (46) (67) (63) (80) (93) (103) (80) (23) 45 103 188
Free Cash Flow 0 (44) (67) (72) (75) (93) (105) (85) (31) 34 90 172
growth y/y 160% 92%

2020 - 2025 1.5% 2.0% 2.5% 3.0% 3.5% 1.5% 2.0% 2.5% 3.0% 3.5% 1.5% 2.0% 2.5% 3.0% 3.5%
11.0% (19) 991 1,052 1,120 1,196 1,282 972 1,033 1,101 1,177 1,263 3.5x 3.7x 3.9x 4.2x 4.5x
+ =
11.5% (22) 916 970 1,029 1,095 1,170 895 948 1,007 1,073 1,148 3.2x 3.4x 3.6x 3.8x 4.1x
12.0% (25) 849 897 949 1,006 1,071 825 872 924 982 1,047 2.9x 3.1x 3.3x 3.5x 3.7x
12.5% (27) 789 831 877 928 985 762 804 850 901 957 2.7x 2.9x 3.0x 3.2x 3.4x
13.0% (30) 735 772 813 858 908 705 742 783 828 878 2.5x 2.7x 2.8x 3.0x 3.1x

1.5% 2.0% 2.5% 3.0% 3.5% 1.5% 2.0% 2.5% 3.0% 3.5% 1.5% 2.0% 2.5% 3.0% 3.5%
35 938 998 1,066 1,142 1,229 $17.03 $18.13 $19.36 $20.74 $22.31 102% 102% 102% 102% 101%
- = =
35 860 913 973 1,039 1,113 $15.62 $16.58 $17.66 $18.86 $20.21 102% 102% 102% 102% 102%
35 790 837 889 947 1,012 $14.35 $15.20 $16.15 $17.20 $18.38 103% 103% 103% 103% 102%
35 727 769 815 866 923 $13.21 $13.97 $14.80 $15.73 $16.76 104% 103% 103% 103% 103%
35 671 708 749 794 844 $12.17 $12.85 $13.60 $14.41 $15.32 104% 104% 104% 104% 103%
3

(1-212) 622-6568 19 February 2019

Investment Thesis
Valuation
growth.

4

(1-212) 622-6568 19 February 2019

Income Statement - Annual FY17A FY18A FY19E FY20E FY21E Income Statement - Quarterly 1Q19E 2Q19E 3Q19E 4Q19E
Revenue 4 6 21 56 113 Revenue 3 4 6 8
COGS (1) (3) (8) (18) (32) COGS (1) (2) (2) (3)
Gross profit 3 2 13 37 81 Gross profit 1 3 4 5
SG&A (42) (52) (70) (109) (133) SG&A (12) (14) (17) (26)
Adj. EBITDA (62) (78) (90) (100) (75) Adj. EBITDA (19) (19) (22) (30)
D&A (3) (3) (3) (3) (4) D&A (1) (1) (1) (1)
Adj. EBIT (64) (80) (93) (103) (80) Adj. EBIT (20) (20) (23) (30)
Net Interest 1 (7) (10) (10) (10) Net Interest (3) (3) (3) (3)
Adj. PBT (64) (88) (103) (113) (90) Adj. PBT (22) (23) (25) (33)
Tax 1 (0) 0 0 0 Tax 0 0 0 0
Adj. Net Income (63) (88) (103) (113) (90) Adj. Net Income (22) (23) (25) (33)
Reported EPS (1.16) (1.62) (1.87) (2.00) (1.55) Reported EPS (0.41) (0.41) (0.46) (0.59)
Adj. EPS (1.16) (1.62) (1.87) (2.00) (1.55) Adj. EPS (0.41) (0.41) (0.46) (0.59)
DPS 0.00 0.00 0.00 0.00 0.00 DPS 0.00 0.00 0.00 0.00
Payout ratio 0.0% 0.0% 0.0% 0.0% 0.0% Payout ratio 0.0% 0.0% 0.0% 0.0%
Shares outstanding 54 54 55 56 58 Shares outstanding 55 55 55 56
Accounts receivable 2 1 4 9 17 EBITDA margin (1474.6%) (1367.3%) (438.3%) (179.2%) (66.7%)
Inventories 8 1 1 3 4 EBIT margin (1536.6%) (1417.4%) (451.4%) (184.8%) (70.6%)
Current assets 120 171 339 249 183
PP&E 5 4 4 5 8 ROE (64.0%) (99.7%) (659.0%) 152.2% 57.4%
Other non current assets 0 4 3 2 2 ROCE (66.0%) (54.6%) (35.9%) (35.0%) (37.6%)
Net debt/equity (92.0%) (85.9%) (127.0%) (107.8%) (107.4%)
Other short term liabilities 4 0 2 5 9 P/BV (x) 8.9 18.1 NM NM NM
Current liabilities 6 2 5 10 17 EV/EBITDA (x) NM NM NM NM NM
Other long term liabilities 1 0 (0) 0 0
Shareholders' equity 119 58 (27) (121) (192) Interest cover (x) 67.8 NM NM NM NM
Minority interests - - - - - Operating leverage (0.2%) 70.6% 5.9% 6.2% (21.9%)
BVPS 2.20 1.07 (0.49) (2.14) (3.31) Revenue y/y Growth 1732.0% 35.7% 262.9% 170.1% 102.8%
y/y Growth 44.7% (51.1%) (146.0%) 333.4% 54.4% EBITDA y/y Growth (4.0%) 25.9% 16.3% 10.4% (24.5%)
Net debt/(cash) (109) (50) 35 130 206 Tax rate (1.0%) (0.2%) 0.0% 0.0% 0.0%
Adj. Net Income y/y Growth (5.2%) 40.5% 16.6% 9.5% (20.5%)
Cash flow from operating activities (56) (66) (82) (90) (67) EPS y/y Growth (10.1%) 39.3% 15.4% 6.8% (22.5%)
o/w Changes in working capital (8) (0) 1 1 (1)
as % of sales 71.0% 18.1% 10.0% 7.5% 6.0%
Net change in cash 9 21 166 (94) (74)
Adj. Free cash flow to firm (72) (75) (93) (105) (85)
y/y Growth 6.9% 4.8% 23.3% 13.5% (19.5%)
5

(1-212) 622-6568 19 February 2019
Analyst Certification: All authors named within this report are research analysts unless otherwise specified.The research analyst(s)
denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the
research analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that
the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views
about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be
directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For all Korea-
based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith
and that the views reflect their own opinion, without undue influence or intervention.
 Market Maker: J.P. Morgan Securities LLC makes a market in the securities of Accelerate Diagnostics.
 Market Maker/ Liquidity Provider: J.P. Morgan and/or an affiliate is a market maker and/or liquidity provider in the financial
instruments of/related to Accelerate Diagnostics.
 Lead or Co-manager: J.P. Morgan acted as manager or co-manager in a public offering of securities or financial instruments (as such
term is defined in Directive 2014/65/EU) for Accelerate Diagnostics within the past 12 months.
 Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as investment
banking clients: Accelerate Diagnostics.
 Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation for investment banking services
from Accelerate Diagnostics.
 Debt Position: J.P. Morgan may hold a position in the debt securities of Accelerate Diagnostics, if any.
6

(1-212) 622-6568 19 February 2019
55
OW $32
44
OW $31 Date Rating Share Price Price Target
($) ($)
33 OW $17 OW $25 OW $28 OW $27 OW $25 N $16 24-Mar-16 OW 12.02 17.00
08-Aug-16 OW 21.07 25.00
Price($)
27-Feb-17 OW 26.60 28.00
22 03-May-17 OW 27.60 31.00
03-Aug-17 OW 26.25 32.00
03-Nov-17 OW 19.30 27.00
11
09-May-18 OW 22.40 25.00
07-Nov-18 N 16.30 16.00
0
Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb
16 16 16 16 17 17 17 17 18 18 18 18 19
Initiated coverage Mar 24, 2016. All share prices are as of market close on the previous business day.
period.
J.P. Morgan Equity Research Ratings Distribution, as of January 02, 2019

(buy) (hold) (sell)
IB clients* 53% 47% 37%
IB clients* 75% 65% 56%
*Percentage of subject companies within each of the "buy," "hold" and "sell" categories for which J.P. Morgan has provided investment banking services
within the previous 12 months.
For purposes only of FINRA ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating
category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above.
This information is current as of the end of the most recent calendar quarter.
7

(1-212) 622-6568 19 February 2019
Analysts' Compensation: The research analysts responsible for the preparation of this report receive compensation based upon various
factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues.
Other Disclosures
J.P. Morgan is a marketing name for investment banking businesses of JPMorgan Chase & Co. and its subsidiaries and affiliates worldwide.
representative.
Any data discrepancies in this report could be the result of different calculations and/or adjustments.
Options and Futures related research: If the information contained herein regards options or futures related research, such information is available only
to persons who have received the proper options or futures risk disclosure documents. Please contact your J.P. Morgan Representative or visit
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(1-212) 622-6568 19 February 2019
"Other Disclosures" last revised January 19, 2019.

10
Completed 19 Feb 2019 08:14 PM EST Disseminated 19 Feb 2019 08:26 PM EST
February 19, 2019

4Q18 Revenue In Line With Preannouncement; Placements Bright Note
CONCLUSION
PRICE: US$19.47
Accelerate reported revenue consistent with the preannouncement. EPS of ($0.41) was
Price as of the close February 19, 2019
just above the Street's ($0.42) estimate. We continue to believe the reagent rental shift
TARGET: US$22.00
is the correct market approach for Pheno, and look forward to increasing placements in
14x FY21E EV/Rev; revs: $93.3M, 55.9M
the coming quarters. Management reiterated their 300-400 guidance and suggested that
s/o, $1.56 debt/sh.
1Q19 was tracking well (with expectations for 4Q19 being the heaviest placement quarter).
Placements appear to be tracking above guidance and thus we are raising our target William R. Quirk, CFA
multiple to 14x (was 11x) our 2021E EV/Rev.
Daniel H. Macek
• 4Q18 Results: Accelerate announced 4Q18 revenues of $1.8M (~75% Research Analyst, Piper Jaffray & Co.
consumables/25% instruments), below Consensus and our $2.7M estimate back on 612 303-6962, daniel.h.macek@pjc.com
January 6th. They placed 133 instruments in the quarter, well above our 48 estimate,
more than doubling the US install base in the quarter alone. All in, EPS was ($0.41), just Rating — Overweight
above the Street's ($0.42). Price Tgt US$17.00 US$22.00
FY19E Rev (mil) US$21.9 US$21.8
• Management Update: Management continues to be upbeat about instrument FY20E Rev (mil) — US$49.3
placements following the shift to a reagent rental model. After securing a reimbursement FY19E EPS US$(1.70) US$(1.69)
pathway, they will initiate their Chinese clinical trial for sepsis in 2H19, with a targeted FY20E EPS — US$(1.43)
launch date of 1H21. Management also reiterated initiating their lower respiratory clinical 52-Week High / Low US$27.65 / US$10.23
trial in 1H19, with a YE19 target (510(k) pathway). They will also pursue a simultaneous Shares Out (mil) 54.2
outcomes study that will read out ~1 quarter later (or ~1Q20). We believe having Market Cap. (mil) US$1,055.3
outcomes data will help drive a faster product launch as this is a common customer ask Avg Daily Vol (000) 388
(on blood culture).
• 2019 Guidance: Management reiterated their guidance of 300-400 placements (vs. 133 Yield 0.00%
in 4Q18) with 10%-15% of those being capital placements. They reiterated average Fiscal Year End Dec
consumables utilization of $45k-$65k (on a ~6 month lag post install) with the U.S. near Price Performance - 1 Year
the higher end and EMEA on the lower end. Given the timing of recent placements, we USD
believe the 2H19 should have a more pronounced increase in consumables than 1H19. 30
Management noted their 1Q19 placements are tracking well (they placed 30 in the first
25
week of 2019), but declined to speak further how 1Q19 was tracking. Management did
not endorse a specific revenue target for 2019, but our math suggests approximately 20
$22M.
15
• Our Thoughts: We continue to believe Accelerate has figured out the right domestic
model. The immediate success of the reagent rental model gives us incremental 10
Feb-18 Apr-18 Jun-18 Aug-18 Oct -18 Dec-18 Feb-19
confidence in management's 2023 revenue target of $350M-$500M (we are currently
modeling $229M) and anticipate that continued success may lead to upside to our Source: Bloomberg
numbers. Accordingly, we are raising our target multiple to 14x our 2021E EV/Rev
estimate (was 11x), increasing our price target to $22.
YEAR
2018A 0.8 1.7 1.4 1.8 5.7 185.1x (0.37) (0.43) (0.41) (0.41) (1.62) NM
2019E 2.9 4.6 5.9 8.3 21.8 48.4x (0.44) (0.43) (0.42) (0.40) (1.69) NM
2020E 9.4 10.9 12.7 16.3 49.3 21.4x (0.39) (0.37) (0.36) (0.31) (1.43) NM
Income Statement
2018A 2019E 2020E
Qtr 1 A Qtr 2 A Qtr 3 A Qtr 4 A Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E 2017A 2018A 2019E 2020E 2021E 2022E 2023E
Instrument Revenue 469 1,049 515 548 1,031 1,352 1,722 2,201 2,860 3,296 3,736 4,186 3,195 2,581 6,307 14,078 22,131 32,671 44,254
Assay Revenue 312 623 818 1,253 1,893 3,259 4,166 6,109 6,505 7,638 8,949 12,065 900 3,007 15,427 35,158 71,142 122,635 184,493
Total Product Revenue 781 1,672 1,333 1,801 2,924 4,611 5,888 8,310 9,365 10,934 12,685 16,251 4,095 5,587 21,733 49,236 93,273 155,306 228,746
License Revenue 20 20 22 21 15 15 15 15 15 15 15 15 83 83 60 60 60 60 60
Total Revenue 801 1,692 1,355 1,822 2,939 4,626 5,903 8,325 9,380 10,949 12,700 16,266 4,178 5,670 21,793 49,296 93,333 155,366 228,806
Cost of Product Revenue 482 717 675 1,161 1,943 2,625 3,211 3,934 4,534 5,059 5,689 6,676 1,002 3,035 11,713 21,959 35,822 53,499 72,885
Gross Profit 319 976 680 660 997 2,001 2,692 4,391 4,846 5,890 7,011 9,590 3,176 2,635 10,081 27,337 57,511 101,867 155,921
Operating Expenses:
Research & Development 6,782 6,060 7,891 6,905 7,600 7,800 7,900 8,000 8,200 8,100 8,200 8,300 22,300 27,638 31,300 32,800 34,200 35,800 37,400
Sales, General & Administrative 14,353 15,330 12,153 13,378 14,253 14,353 14,753 14,903 15,003 15,103 15,203 15,353 44,988 55,214 58,262 60,662 62,562 64,662 70,062
Depreciation & Amortization 0 0 0 0 0 0 0 0 0 0 0 0 70 0 0 0 0 0 0
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Operating Expense 21,135 21,390 20,044 20,283 21,853 22,153 22,653 22,903 23,203 23,203 23,403 23,653 67,358 82,852 89,562 93,462 96,762 100,462 107,462
Operating Income (Loss) (20,816) (20,414) (19,364) (19,623) (20,856) (20,152) (19,961) (18,512) (18,357) (17,313) (16,392) (14,063) (64,182) (80,217) (79,481)
0 (66,125)
0 (39,251)
0 1,405
0 48,459
0
Interest & Other Expense (Income) net (198) 2,709 2,582 2,653 3,269 3,272 3,275 3,279 3,283 3,287 3,285 3,286 (1,300) 7,746 13,095 13,141 13,128 13,095 13,010
Pretax Income (Loss) (20,618) (23,123) (21,946) (22,276) (24,125) (23,424) (23,236) (21,791) (21,640) (20,600) (19,677) (17,349) (62,882) (87,963) (92,576) (79,266) (52,379) (11,690) 35,449
Net Income (Loss) - Reported (20,802) (23,224) (21,946) (22,487) (24,125) (23,424) (23,236) (21,791) (21,640) (20,600) (19,677) (17,349) (62,927) (88,459) (92,576) (79,266) (52,379) (11,690) 35,449
Non-Recurring
Net Income (Loss) - Ongoing (w/ SBC) (20,802) (23,224) (21,946) (22,487) (24,125) (23,424) (23,236) (21,791) (21,640) (20,600) (19,677) (17,349) (62,860) (88,459) (92,576) (79,266) (52,379) (11,690) 35,449
Diluted EPS (Reported) (0.37) (0.43) (0.41) (0.41) (0.44) (0.43) (0.42) (0.40) (0.39) (0.37) (0.36) (0.31) (1.16) (1.62) (1.69) (1.43) (0.94) (0.21) 0.62
Diluted EPS (Ongoing, w/ SBC) (0.37) (0.43) (0.41) (0.41) (0.44) (0.43) (0.42) (0.40) (0.39) (0.37) (0.36) (0.31) (1.16) (1.62) (1.69) (1.43) (0.94) (0.21) 0.62
Avg. Share Outstanding, Diluted 55,640 54,003 54,145 54,188 54,388 54,588 54,788 54,807 55,007 55,207 55,407 55,425 54,073 54,494 54,643 55,261 55,880 56,498 57,117
Expense Variables:
Cost of Product Revenue 61.7% 42.8% 50.6% 64.5% 66.4% 56.9% 54.5% 47.3% 48.4% 46.3% 44.8% 41.1% 24.5% 54.3% 53.9% 44.6% 38.4% 34.4% 31.9%
Research & Development 846.7% 358.1% 582.5% 379.0% 258.6% 168.6% 133.8% 96.1% 87.4% 74.0% 64.6% 51.0% 533.8% 487.4% 143.6% 66.5% 36.6% 23.0% 16.3%
Selling, General & Administrative 1791.9% 905.8% 897.0% 734.3% 484.9% 310.3% 249.9% 179.0% 159.9% 137.9% 119.7% 94.4% 1076.8% 973.8% 267.3% 123.1% 67.0% 41.6% 30.6%
Total Operating Expenses 2638.6% 1263.9% 1479.5% 1113.3% 743.4% 478.9% 383.7% 275.1% 247.4% 211.9% 184.3% 145.4% 1612.2% 1461.2% 411.0% 189.6% 103.7% 64.7% 47.0%
Effective Interest Rate, cash 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%
Effective Interest Rate, debt 2.5% 2.5% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 5.0% 6.8% 11.0% 11.0% 11.0% 11.0% 11.0%
Effective Tax Rate NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 0.0%
Margin Analysis:
Product Gross Margin 38.3% 57.2% 49.4% 35.5% 33.6% 43.1% 45.5% 52.7% 51.6% 53.7% 55.2% 58.9% 75.5% 45.7% 46.1% 55.4% 61.6% 65.6% 68.1%
Operating Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 1% 21%
Pretax Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 15.5%
Net Income Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 15.5%
YoY Growth Rates:
Total Revenues 51.1% 142.1% 63.6% -14.1% 267.0% 173.3% 335.7% 356.9% 219.1% 136.7% 115.1% 95.4% 1598.3% 35.7% 284.4% 126.2% 89.3% 66.5% 47.3%
Cost of Goods Sold (Product Sales) 1404.1% 439.4% 253.4% 79.8% 303.1% 266.4% 375.7% 238.7% 133.4% 92.7% 77.2% 69.7% NM 202.9% 285.9% 87.5% 63.1% 49.3% 36.2%
S, G & A 58.2% 10.2% 24.2% 12.1% 12.1% 28.7% 0.1% 15.9% 7.9% 3.8% 3.8% 3.8% 24.3% 22.7% 5.5% 4.1% 3.1% 3.4% 8.4%
Operating Expenses 42.7% 25.3% 11.7% 15.8% 3.4% 3.6% 13.0% 12.9% 6.2% 4.7% 3.3% 3.3% 0.9% 23.0% 8.1% 4.4% 3.5% 3.8% 7.0%
Net Income (Ongoing) NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
EPS NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Balance Sheet Data:
Net Debt (Cash) Per Share ($1.70) ($1.52) ($1.16) ($0.86) ($0.57) ($0.25) $0.07 $0.41 $0.62 $0.84 $1.04 $1.27 ($2.02) ($0.85) $0.41 $1.28 $1.56 $1.18 ($0.28)
Book Value Per Share $1.91 $1.76 $1.43 $1.06 $0.81 $0.52 $0.23 ($0.07) ($0.23) ($0.42) ($0.58) ($0.77) $2.22 $1.05 ($0.07) ($0.77) ($0.82) $0.01 $1.82

February 19, 2019
02/28/17 06/05/17 11/02/17 05/09/18 08/06/18 11/06/18 01/10/19
OW:$30 OW:$32 OW:$26 OW:$25 OW:$24 OW:$21 OW:$17
35
30
25
20
15
10
2016 Q1 Q2 Q3 2017 Q1 Q2 Q3 2018 Q1 Q2 Q3 2019 Q1
Legend:
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Piper Jaffray
BUY [OW] 419 65.26 114 27.21
HOLD [N] 212 33.02 18 8.49
SELL [UW] 11 1.71 0 0.00

Time of dissemination: 19 February 2019 22:00EST.

February 19, 2019
the past 12 months.
Within the past 12 months Piper Jaffray was a managing underwriter of a public offering of, or dealer manager of a tender offer for, the securities of
Accelerate Diagnostics, Inc. or the securities of an affiliate.
Rating Definitions

February 19, 2019


January 23, 2019

The Curious Case Of Accelerate's PLA Code Filing
CONCLUSION
PRICE: US$16.56
Accelerate applied for a PLA code for it's Phenotest BC. This is the first step in getting
TARGET: US$17.00
incremental reimbursement (via the NTAP program) for Medicare recipients. From start 11x FY21E EV/Rev; revs: $93.3M, 56.0M
to finish, we believe the process could take ~15 months, implying ~2Q20 reimbursement. s/o, $1.82 debt/sh.
NTAP payment is an add on (~$125/test) which we believe will make it incrementally easier
William R. Quirk, CFA
to place the system in more price sensitive accounts. We remain enthusiastic about the
increased placements of Pheno and after a couple false starts, believe the company is 612 303-6858, william.r.quirk@pjc.com
making the right moves to increase adoption. Accordingly, we remain Overweight AXDX
Daniel H. Macek
shares. Research Analyst, Piper Jaffray & Co.
612 303-6962, daniel.h.macek@pjc.com
• What's New? The new round of PLA (Proprietary Laboratory Analysis) codes were just Changes Previous Current
released by the American Medical Association. Accelerate Diagnostics filed for a new Rating — Overweight
code for its PhenoTest BC kit as the first step towards getting NTAP (New Technology Price Tgt — US$17.00
Add-on Payment). After public comment, the new PLA codes will be issued in mid FY18E Rev (mil) — US$5.7
February and then Accelerate will also seek a CPT code. Once issued (in October), FY19E Rev (mil) — US$21.9
they can apply for the NTAP reimbursement. This process typically takes ~6 months, FY18E EPS — US$(1.63)
suggesting Accelerate could garner incremental reimbursement in ~2Q20. FY19E EPS — US$(1.70)
52-Week High / Low US$30.35 / US$10.23
• What Is NTAP? NTAP is a program that incrementally reimburses hospitals for the cost Shares Out (mil) 54.0
Market Cap. (mil) US$894.2
of adopting new technology that is designed to lower overall Medicare spending. In the
case of Accelerate's Pheno, they will argue the new technology add-on payment is more
than offset by a shorter length of stay (which was demonstrated in the Arkansas study).
The NTAP payment runs for between two to three years; essentially until the appropriate Debt to Total Capital 60.3%
DRG code can be rebalanced to capture the new technology value. Yield 0.00%
Fiscal Year End Dec
• Why Does This Matter? Based on the list price of PhenoTest BC, we believe the add- Price Performance - 1 Year
on payment will be ~$125 (50% of the list price). $125 is modest in comparison with USD
35
the cost of treatment, but we believe could be enough to incrementally push more price
sensitive customers to adopt Pheno. Bottom line: Accelerate is taking incremental steps 30
to drive longer-term adoption and we remain enthusiastic about their new reagent rental-
25
focused sales approach.
20
Competition, clinical trial outcomes, commercialization and profitability/cash burn. 10
C O M PA N Y D E S C R I P T I O N Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19
Accelerate is commercializing disruptive technology for microbiology. Source: Bloomberg

YEAR
2017A 0.5 0.7 0.8 2.1 4.2 212.9x (0.27) (0.31) (0.31) (0.27) (1.16) NM
2018E 0.8A 1.7A 1.4A 1.8 5.7 156.9x (0.37)A (0.43)A (0.41)A (0.42) (1.63) NM
2019E 2.9 4.6 6.0 8.4 21.9 40.8x (0.45) (0.45) (0.41) (0.38) (1.70) NM
Income Statement
2018E 2019E 2020E
Qtr 1 A Qtr 2 A Qtr 3 A Qtr 4 E Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E 2017A 2018E 2019E 2020E 2021E 2022E 2023E
Assay Revenue 312 623 818 1,253 1,893 3,259 4,211 6,163 6,505 7,638 8,949 12,065 900 3,007 15,526 35,158 71,142 122,635 184,493
License Revenue 20 20 22 21 15 15 15 15 15 15 15 15 83 83 60 60 60 60 60
Total Revenue 801 1,692 1,355 1,831 2,939 4,626 5,960 8,392 9,380 10,959 12,710 16,266 4,178 5,679 21,918 49,316 93,333 155,366 228,806
Gross Profit 319 976 680 669 997 1,966 2,699 4,444 4,846 5,900 7,021 9,590 3,176 2,644 10,105 27,357 57,511 101,867 155,921
Operating Expenses:
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 (66,305)
0 (38,651)
0 2,005
0 49,059
0
Non-Recurring
Expense Variables:
Margin Analysis:
YoY Growth Rates:
Total Revenues 51.1% 142.1% 63.6% -13.7% 267.0% 173.3% 340.0% 358.4% 219.1% 136.9% 113.2% 93.8% 1598.3% 35.9% 285.9% 125.0% 89.3% 66.5% 47.3%
S, G & A 58.2% 10.2% 24.2% 26.6% 18.0% 33.7% 3.9% 6.4% 6.3% 0.0% 0.0% 0.0% 24.3% 20.5% 6.4% 5.0% 2.3% 3.4% 8.4%
Balance Sheet Data:
Net Debt (Cash) Per Share ($1.70) ($1.52) ($1.16) ($0.90) ($0.64) ($0.26) $0.06 $0.37 $0.59 $0.85 $1.08 $1.36 ($2.02) ($0.89) $0.37 $1.37 $1.82 $1.72 $0.64
Book Value Per Share $1.91 $1.76 $1.43 $1.14 $0.86 $0.54 $0.26 $0.00 ($0.20) ($0.42) ($0.62) ($0.83) $2.22 $1.14 $0.00 ($0.84) ($1.09) ($0.55) $0.89

January 23, 2019
02/28/17 06/05/17 11/02/17 05/09/18 08/06/18 11/06/18 01/10/19

OW:$30 OW:$32 OW:$26 OW:$25 OW:$24 OW:$21 OW:$17
35
30
25
20
15
10
2016 Q1 Q2 Q3 2017 Q1 Q2 Q3 2018 Q1 Q2 Q3 2019 Q1
Legend:
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Piper Jaffray
BUY [OW] 420 65.02 117 27.86
HOLD [N] 215 33.28 18 8.37
SELL [UW] 11 1.70 0 0.00

Time of dissemination: 23 January 2019 22:01EST.

January 23, 2019
the past 12 months.
Rating Definitions

January 23, 2019


10 January 2019
Neutral
Price: $15.67
J.P. Morgan Healthcare Conference Takeaways - 10 Jan 2019
ALERT
Accelerate Diagnostics (AXDX) CEO Larry Mehren presented at our healthcare Life Science Tools & Diagnostics
conference yesterday. Key takeaways are below. Tycho W. Peterson
AC
 Thoughts on pre-announcement. Recall that earlier this week, AXDX (1-212) 622-6568
preannounced mostly disappointing 4Q results with revenues of $1.8M (vs.
Bloomberg JPMA PETERSON <GO>
Street/JPMe at $2.7M/$1.7M) registering a 14% y/y decline. More
Eleni Apostolatos
encouragingly, commercially contracted instrument placements in the U.S. are
(1-212) 622-0136
expected to come in significantly above our estimate (117 vs. JPMe 23) while eleni.apostolatos@jpmorgan.com
EMEA placements are expected to come in-line (16 vs. JPMe 16), with the Tejas Savant
company essentially doubling its commercially contracted installed base in 4Q. (1-212) 622-5650
AXDX pointed to the reagent rental model that was rolled out in August (put tejas.savant@jpmorgan.com
into practice by a well-equipped sales team) as the key catalyst of the Julia Qin
meaningful acceleration in the volume ramp, while on the negative side, the (1-212) 622-9253
company generated materially less revenue per commercial contract relative to julia.qin@jpmchase.com
expectations. In particular, management attributed this dynamic to: (1) an
unfavorable capital sales mix (~25%), which came in significantly below
internal expectations of >50%, and (2) a longer placements-to-clinical go-live
time (~5 months), which was almost double the internal forecast.
 Revamped commercial strategy. The company took active measures in 2018
to reaccelerate volume growth and overcome hospital capital budget constraints,
such as increasing the number of instruments used in verification, providing
more support during evaluation with a better trained sales team and, as
previously described, building out the reagent rental model to work around
hospital budgets’ limitations. With many of these changes having seen
impressive traction with placement volumes in the U.S. (as well as with broad-
based adoption across many important hospitals, including five of the top 10
children's hospitals, many leading cancer hospitals and key regional hospitals),
management noted plans to keep growing its U.S. sales team (with 20
salespeople additions expected in 2019) while also applying the same
commercial strategy to its EU business.
 Reimbursement progress should support sustained momentum, while
China opens up a significant market. Management discussed plans to pursue
New Technology Add-on Payments (NTAP) reimbursement from CMS, with
new clinical outcomes data releases expected in 1H19, followed by submission
for NTAP reimbursement in 2H19 and approval in 2H20, which should help
acquire sensitive accounts. Furthermore, management highlighted the significant
market opportunity in China (a ~$725M addressable market) as the test has the
potential to be uniquely reimbursed at ~$300. AXDX is confident in its ability to
obtain reimbursement in China, after having successfully completed a
reimbursement and market assessment study along with National Medical
Products Administration (NMPA) registration partners, while also establishing a
strong network of provincial KOLs that support the technology, and plans to
initiate the NMPA clinical trial in 2H19, expecting trial completion in 1H20 and
commercial launch / first patient sample testing in 1H21.

(1-212) 622-6568 10 January 2019
 2019 guidance. Looking ahead, management expects 300-400 commercial

instrument placements in 2019, which is a bit shy of our estimate (JPMe at 420),
while the company started off 1Q very strong, already placing ~30 instruments
over the first couple of weeks. In 2019, the company targets a 10-15% capital
sales mix along with an annuity per instrument of $45K-65K as well as a
reduction in go-live time to 4-9 months. In addition, management sees a clear
pathway towards >70% gross margin as the business scales.
 Menu expansion. The company still aims to expand its menu into respiratory.
In the U.S., the company plans to begin clinical trial for the severe pneumonia
assay in 1Q (morbidity/mortality rates will be tracked, which is expected to
facilitate hospital capital committee discussions once the assay is in the market).
With an addressable market opportunity of ~$475MM, and considering
encouraging early data that indicates meaningful improvement in clinical
outcomes as well as inadequacy of current methods, the severe pneumonia assay
is expected to become a significant revenue contributor in 2020+. In particular,
management noted encouraging pulmonologist enthusiasm around a better
testing option for severe pneumonia.
2

(1-212) 622-6568 10 January 2019
Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research
analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document
individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views
expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of
any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views
expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per
KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or
intervention.
 Market Maker: JPMS makes a market in the stock of Accelerate Diagnostics.

 Market Maker/ Liquidity Provider: J.P. Morgan Securities plc and/or an affiliate is a market maker and/or liquidity provider in
securities issued by Accelerate Diagnostics.
 Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Accelerate
Diagnostics within the past 12 months.
 Other Significant Financial Interests: J.P. Morgan owns a position of 1 million USD or more in the debt securities of Accelerate
Diagnostics.
3

(1-212) 622-6568 10 January 2019
55
OW $32
44
($) ($)
08-Aug-16 OW 21.07 25.00
Price($)
27-Feb-17 OW 26.60 28.00
22 03-May-17 OW 27.60 31.00
03-Aug-17 OW 26.25 32.00
03-Nov-17 OW 19.30 27.00
11
09-May-18 OW 22.40 25.00
07-Nov-18 N 16.30 16.00
0
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan
16 16 16 16 17 17 17 17 18 18 18 18 19
Initiated coverage Mar 24, 2016.
period.

(buy) (hold) (sell)
IB clients* 53% 47% 37%
IB clients* 75% 65% 56%
*Percentage of investment banking clients in each rating category.
For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold
rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table
above.
4

(1-212) 622-6568 10 January 2019
Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation based
upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues.
Other Disclosures
J.P. Morgan ("JPM") is the global brand name for J.P. Morgan Securities LLC ("JPMS") and its affiliates worldwide. J.P. Morgan Cazenove is a marketing
name for the U.K. investment banking businesses and EMEA cash equities and equity research businesses of JPMorgan Chase & Co. and its subsidiaries.
representative.
Options related research: If the information contained herein regards options related research, such information is available only to persons who have
received the proper option risk disclosure documents. For a copy of the Option Clearing Corporation's Characteristics and Risks of Standardized Options,
please contact your J.P. Morgan Representative or visit the OCC's website at https://www.theocc.com/components/docs/riskstoc.pdf
Private Bank Clients: Where you are a client of the private banking businesses offered by JPMorgan Chase & Co. and its subsidiaries (“J.P. Morgan
Private Bank”), research is issued to you by J.P. Morgan Private Bank and not by any other division of J.P. Morgan, including but not limited to the J.P.
Morgan corporate and investment bank and its research division.

5

(1-212) 622-6568 10 January 2019
Dubai, UAE.

third party or outside New Zealand without the prior written consent of JPMSAL. Canada: The information contained herein is not, and under no
circumstances is to be construed as, a prospectus, an advertisement, a public offering, an offer to sell securities described herein, or solicitation of an offer
to buy securities described herein, in Canada or any province or territory thereof. Any offer or sale of the securities described herein in Canada will be
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Dubai: This report has been issued to persons regarded as professional clients as defined under the DFSA rules. Brazil: Ombudsman J.P. Morgan: 0800-
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6

(1-212) 622-6568 10 January 2019

7
Completed 10 Jan 2019 06:46 PM EST Disseminated 10 Jan 2019 06:47 PM EST
January 14, 2019

Q4 Miss And 2019 Guide Down. But Are We Reaching A Turning
Alexander Nowak, CFA Point? Remain HOLD Rated Until We Gain Confidence In The
Senior Research Analyst Reagent Annuity Stream.
1 612-334-6347
Alex.Nowak@craig-hallum.com Accelerate Diagnostics is an early stage diagnostics company. Accelerate developed Pheno, a next-
William Fafinski OUR CALL
Research Analyst
1 612-334-6378 Accelerate Diagnostics reported preliminary Q4 results and guided 2019
Will.Fafinski@craig-hallum.com sales below the Street. The miss is from the reagent rental model, and to a
lesser degree a lower annuity. Despite the miss and guide down, we believe
www.craig-hallum.com AXDX is nearing a turning point with estimates potentially low enough for
beats and raises. We remain HOLD rated as we try to gain confidence in the
Rating - Hold annuity stream (now AXDX’ only revenue driver). If it proves to be
Fundamental Trend - Stable durable, we may need to reassess our rating at a later date.
Price Target - $18
FY18E Rev (M) $6.7 $5.7  Preliminary 4Q18 Results: Accelerate reported top-line revenue of
FY19E Rev (M) $26.2 $20.1 $1.8M, below the Street’s $2.7M forecast. Accelerate placed 133
FY20E Rev (M) $64.0 $53.5
FY18E Adj. EPS ($1.59) ($1.63) revenue-generating Phenos in the quarter, beating our 45 system target.
FY19E Adj. EPS ($1.48) ($1.61) The upside to placements, but miss to revenue was driven by the
FY20E Adj. EPS ($1.17) ($1.32) reagent rental program announced in Q2 (subsidizing upfront system
Profile costs through a longer-term consumable revenue stream) and we
Price: $15.03 believe ~85-90% of customers opted for this model in the quarter. This
52 Week Range: $10.23 - $30.35 dragged down overall system ASPs, but allowed for more placements.
Avg. Daily Vol: 404,073
Shares Out (M): 54.2 Instrument revenue was ~$0.6M (CH est: $0.9M) and consumable sales
Market Cap (M): $814.6 were ~$1.2M (CH est: $1.9M) with the annuity stream ending 2018 at
Insiders Own %: 45.1%
Short Interest %: 28.1%
~$40,000 per system per year.
Book value/Share: 2.1  2019 Expectations: Management did not give explicit 2019 guidance,
4-Yr EPS CAGR 3%
Dividend Yield (%) 0% but provided enough color to derive a sales range. The company
Net Debt (M): -$81.9 expects 300-400 commercial placements in 2019, ahead of our 280
Debt / Capital: 0.0%
target. 10-15% of placements should be capital with capital ASPs at
Fiscal Year End: Dec. $50,000. For reagents, management is guiding to an annuity of
$45,000-65,000 per system per year. This is below our $80,000 annuity
Rev (M) 2018E 2019E 2020E
Mar $0.8A $2.3 $9.2
assumed in the model, driven by slower reagent uptake in EMEA. All-
Jun $1.7A $4.5 $12.3 in, we believe management expects 2019 sales of $16-$24M (consensus
Sep $1.4A $5.6 $14.1 was $29M).
Dec $1.8 $7.7 $17.9
FY $5.7 $20.1 $53.5  Our Thoughts: 2018 was a challenging year for AXDX with multiple
estimate resets. That said, the Q4 results and 2019 guidance could be
Adj. EPS 2018E 2019E 2020E
Mar ($0.37)A ($0.42) ($0.40) the turning point: 1) placements are finally ramping, 2) estimates are
Jun ($0.43)A ($0.40) ($0.33) reset and 3) the reagent annuity appears to be generating consistent
Sep ($0.41)A ($0.40) ($0.32) sales, albeit smaller than our original forecasts. In addition, the
Dec ($0.42) ($0.38) ($0.28)
FY ($1.63) ($1.61) ($1.32) Mayo/UCLA trial read-out is likely at ECCMID (April 13-16) or ASM
Adj. EPS includes stock-based comp expense (June 20-24), which if positive should further help system placements
P/E NA NA NA and the annuity. Our original HOLD thesis was based on a novel system
EV/ Revenue 132.6x 37.4x 14.0x that could revolutionize the microbiology lab, but estimates were too
EV/EBITDA NA NA NA
high. With estimates reset, what precludes us from issuing a BUY
Management rating? We would like additional confidence in the resiliency of the
Chairman John Patience reagent annuity stream. However, we believe Accelerate is nearing
CEO Lawrence Mehren
CFO Steve Reichling beats and raises, which could drive the stock higher. If the reagent
stream proves consistent, durable and growing, we believe it would be
fair to reassess our rating.

January 14, 2019
STOCK OPPORTUNITY
Our $18 price target represents 18x EV/revenue on our 2020 estimate. We
initially derive our price target from our discounted cash flow model and then use
the DCF equity value to calculate the implied EV/revenue multiple. We use a
WACC of 8%.
RISKS
Accelerate Diagnostics, Inc

Institutional Research Page 2 of 4
January 14, 2019

Updated: 1/13/2019
2017A 2018E 2019E 2020E 2015A 2016A 2017A 2018E 2019E 2020E
Q1A Q2A Q3A Q4A Q1A Q2A Q3A Q4E Q1E Q2E Q3E Q4E Q1E Q2E Q3E Q4E
Instruments 0.5 0.5 0.2 1.1 0.3 1.0 0.4 0.6 0.5 0.5 0.6 0.7 0.6 0.7 0.8 0.8 2.3 2.3 2.3 2.9
Reagents - 0.2 0.6 1.0 0.5 0.7 0.9 1.2 1.8 3.9 5.0 7.1 8.6 11.6 13.4 17.1 1.7 3.2 17.8 50.6
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1
Total Revenue 0.5 0.7 0.8 2.1 0.8 1.7 1.4 1.8 2.3 4.5 5.6 7.7 9.2 12.3 14.1 17.9 0.1 0.2 4.2 5.7 20.1 53.5
Cost of Goods Sold 0.0 0.1 0.2 0.7 0.5 0.7 0.7 2.4 1.7 2.5 3.0 3.7 4.0 5.1 5.8 7.0 - - 1.0 4.3 10.9 21.8
Gross Profit 0.5 0.6 0.6 1.5 0.3 1.0 0.7 (0.6) 0.6 2.0 2.6 4.0 5.2 7.2 8.4 10.9 0.1 0.2 3.2 1.4 9.2 31.7
Research and Development 4.3 5.5 6.4 6.1 6.8 6.1 7.9 8.0 8.2 8.4 8.6 8.8 8.9 9.0 9.1 9.2 27.1 29.6 22.3 28.7 34.0 36.2
S,G&A 10.5 11.5 11.6 11.5 14.4 15.3 12.2 14.0 15.0 15.2 15.4 15.6 17.6 17.8 18.0 18.2 18.6 37.2 45.1 55.8 61.2 71.6
Other - - - - - -
Operating Incom e (Loss) (14.3) (16.4) (17.3) (16.1) (20.8) (20.4) (19.4) (22.6) (22.6) (21.6) (21.4) (20.4) (21.3) (19.6) (18.7) (16.5) (45.5) (66.5) (64.2) (83.2) (86.0) (76.1)
Adj. Operating Income (Loss) (14.3) (16.4) (17.3) (16.1) (20.8) (20.4) (19.4) (22.6) (22.6) (21.6) (21.4) (20.4) (21.3) (19.6) (18.7) (16.5) (45.5) (66.5) (64.2) (83.2) (86.0) (76.1)
Interest Expense (Income) (0.1) 0.0 (0.3) (0.5) (0.1) 2.4 2.4 0.3 0.3 0.4 0.5 0.5 0.6 0.4 0.5 0.5 (0.1) (0.5) (0.9) 5.0 1.7 2.0
Other Expense (Income) 0.0 (0.1) 0.0 0.3 (0.1) 0.3 0.1 0.0 0.1 0.3
Pretax Incom e (Loss) (14.2) (16.3) (17.0) (16.0) (20.6) (23.1) (22.0) (22.8) (23.0) (22.0) (21.8) (20.9) (21.9) (20.0) (19.2) (17.0) (45.5) (66.1) (63.5) (88.5) (87.7) (78.1)
Income Taxes - 0.2 0.0 0.3 0.2 0.1 0.1 - - - - - - - - - - 0.3 0.5 0.4 - -
NOLs 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4
Net Incom e (Loss) - Reported (14.2) (16.5) (17.1) (16.3) (20.8) (23.2) (22.1) (22.8) (23.0) (22.0) (21.8) (20.9) (21.9) (20.0) (19.2) (17.0) (45.5) (66.4) (64.0) (89.0) (87.7) (78.1)
Adjustments - - - - - -
Net Incom e (Loss) - Adjusted (14.2) (16.5) (17.1) (16.3) (20.8) (23.2) (22.1) (22.8) (23.0) (22.0) (21.8) (20.9) (21.9) (20.0) (19.2) (17.0) (45.5) (66.4) (64.0) (89.0) (87.7) (78.1)
Diluted EPS (Ongoing) (0.27) (0.31) (0.31) (0.30) (0.37) (0.43) (0.41) (0.42) (0.42) (0.40) (0.40) (0.38) (0.40) (0.33) (0.32) (0.28) (1.01) (1.30) (1.19) (1.63) (1.61) (1.32)
Diluted EPS (GAAP) (0.27) (0.31) (0.31) (0.30) (0.37) (0.43) (0.41) (0.42) (0.42) (0.40) (0.40) (0.38) (0.40) (0.33) (0.32) (0.28) (1.01) (1.30) (1.19) (1.63) (1.61) (1.32)
Avg. Shares Outstanding 51.9 53.6 55.3 54.1 55.6 54.0 54.1 54.2 54.3 54.5 54.7 54.8 54.9 60.4 60.5 60.7 45.0 51.2 53.7 54.5 54.6 59.1
Expense Analysis:
Gross Margin 95.1% 80.7% 76.9% 69.3% 38.6% 57.6% 49.8% -31.7% 24.6% 43.7% 47.1% 52.3% 56.3% 58.7% 59.3% 60.9% 100.0% 100.0% 76.0% 24.4% 45.8% 59.2%
Cost of Goods Sold 4.9% 19.3% 23.1% 30.7% 61.4% 42.4% 50.2% 131.7% 75.4% 56.3% 52.9% 47.7% 43.7% 41.3% 40.7% 39.1% 0.0% 0.0% 24.0% 75.6% 54.2% 40.8%
Operating Margin -- -- -- -761.2% -2600% -1206.6% -1429.4% ####### ####### -482.3% -381.3% -262.8% -230.6% -159.7% -132.3% -92.2% -- -- -1536.6% -1468.4% -428.0% -142.1%
Adj. Operating Margin -- -- -- -761.2% -2600% -1206.6% -1429.4% ####### ####### -482.3% -381.3% -262.8% -230.6% -159.7% -132.3% -92.2% -- -- -1536.6% -1468.4% -428.0% -142.1%
Research & Development -- -- -- 289.4% 846.7% 358.2% 582.4% 440.2% 362.8% 187.2% 153.5% 113.6% 96.3% 73.3% 64.4% 51.4% -- -- 533.9% 507.2% 169.2% 67.6%
S,G&A -- -- -- 541.1% 1791.9% 906.0% 896.9% 770.4% 663.6% 338.8% 274.8% 201.5% 190.5% 145.0% 127.3% 101.7% -- -- 1078.7% 985.6% 304.6% 133.7%
Tax Rate 0.0% -1.1% -0.3% -1.7% -0.9% -0.4% -0.7% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 0.0% -0.4% -0.8% -0.5% 0.0% 0.0%
Net Margin -- -- -- -768.7% -2598% -1372.6% -1630.8% ####### ####### -491.0% -389.3% -269.3% -236.6% -163.1% -135.7% -95.1% -- -- -1532.9% -1570.7% -436.3% -145.8%
Adj. Net Margin -- -- -- -768.7% -2598% -1372.6% -1630.8% ####### ####### -491.0% -389.3% -269.3% -236.6% -163.1% -135.7% -95.1% -- -- -1532.9% -1570.7% -436.3% -145.8%
Grow th Metrics:
Total Revenue 225.2% 3395.0% 3350.0% 5335.9% 51.1% 142.1% 63.6% -14.3% 182.2% 165.2% 313.5% 326.1% 308.7% 173.5% 152.4% 131.1% -- 67.3% 1598.0% 35.6% 254.7% 166.5%
Gross Profit 209.2% 2720.0% 2554.2% 3668.2% -38.7% 72.9% 6.0% -139.2% 79.9% 101.0% 290.6% -802.7% 835.3% 267.6% 218.3% 169.4% -- 67.3% 1190.5% -56.4% 565.4% 244.5%
Adj Operating Profit -6% -8.2% -0.6% 0.7% 45.5% 24.3% 11.9% 39.9% 8.7% 6.0% 10.3% -9.9% -5.9% -9.5% -12.4% -19.0% -- 46.0% -3.5% 29.6% 3.4% -11.5%
Adj Net Income -6% -7.9% -1.3% 1.0% 46.6% 41.1% 29.4% 40.2% 10.4% -5.1% -1.3% -8.7% -4.9% -9.2% -12.0% -18.4% -- 46.0% -3.5% 29.6% 3.4% -11.5%
Ongoing EPS -7% -11.9% -8.6% -4.2% 36.7% 40.0% 32.2% 39.7% 13.0% -6.0% -2.2% -9.7% -5.9% -18.0% -20.6% -26.3% -- 28.1% -8.0% 36.9% -1.6% -17.8%

January 14, 2019
Source: FactSet

Buy 77% 18%
Hold 22% 2%
Sell 1% 0%
Total 100% 14%
next three months.
OTHER DISCLOSURES
January 10, 2019

Wrap-Up: 4Q18 Strong Placements Offset By Reagent Rental Shift
CONCLUSION
PRICE: US$15.67
Accelerate reported revenue guidance below Consensus. Strong instrument placements
Price as of the close January 10, 2019
were offset by the shift to the reagent rental business model (which ironically delivered
TARGET: US$17.00
a better than expected placement result). Management guidance for 2019 suggests a
significant shift to reagent rentals (85%-90% of placements) which is higher than our
s/o, $1.82 debt/sh.
expectations, so we are prudently lowering our instrument estimates. We continue to
believe Pheno can revolutionize the microbiology market, and that the reagent rental model William R. Quirk, CFA
is the correct long-term approach for Accelerate, justifying a premium multiple. We remain
Overweight with a lower $17 PT based on 11x 2021E EV/Rev (was 2020E).
Daniel H. Macek
Research Analyst, Piper Jaffray & Co.
• 4Q18 Preliminary Results: On Monday, Accelerate announced preliminary 4Q18 612 303-6962, daniel.h.macek@pjc.com
revenues of $1.8M (~75% consumables/25% instruments), below Consensus and our
$2.7M estimate. However, they placed 133 instruments in the quarter, well above our Rating — Overweight
48 estimate, more than doubling its US install base in the quarter alone, reflecting some Price Tgt US$21.00 US$17.00
early success after shifting the model to more reagent rentals in late 2Q18. FY18E Rev (mil) US$6.5 US$5.7
• Management Update: Management was understandably upbeat about their system FY18E EPS US$(1.61) US$(1.63)
placements, stating that they believe they have "cracked the code." Management's FY19E EPS US$(1.44) US$(1.70)
longer-term plans include expansion into China (commercial launch ~1H21) and they 52-Week High / Low US$30.35 / US$10.23
reiterated starting the respiratory clinical trial in 1H19. Shares Out (mil) 54.0
Market Cap. (mil) US$846.2
• Outlook And Our Updated Model: Management provided informal revenue guidance
during an investor presentation on Wednesday. The company guided 300-400
placements (vs. 133 in 4Q18 and our previous FY19 estimate of ~570) with 10%-15% Debt to Total Capital 60.3%
of those being capital placements. They noted they have already placed 30 instruments Yield 0.00%
in 1Q19 (consistent with the strong 4Q18 placement number). We believe the new Fiscal Year End Dec
guidance is reasonable (based on 4Q18 + early 1Q19 placements and management's Price Performance - 1 Year
confidence in the deal funnel), and we are updating our model to 380 placements with USD
a conservative 10% of those capital placements (at $50k/instrument). Management 35
further guided consumables of $45K-$65K with about a ~6 month average lag to bring 30
instrument into production mode. This implies 2019 revenue guidance around $22M.
They also spoke to longer-term targets (not "guidance") of $350M/500M for 2023 (by 25
comparison, we are introducing a $229M FY23 estimate). 20
15
• Our Thoughts: While the revenue miss is disappointing, the high placements are very
encouraging and an early sign that mgmnt has figured out the right domestic model. 10
Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19
However, we had not anticipated the capital to reagent shift to be as pronounced going
forward, and thus we are lowering our estimates. We continue to believe Accelerate Source: Bloomberg
can disrupt the microbiology market. Shifting our valuation methodology to 2021E and
maintaining the same multiple lowers our target to $17 (was $21).
YEAR
2017A 0.5 0.7 0.8 2.1 4.2 201.5x (0.27) (0.31) (0.31) (0.27) (1.16) NM
2018E 0.8A 1.7A 1.4A 1.8 5.7 148.5x (0.37)A (0.43)A (0.41)A (0.42) (1.63) NM
2019E 2.9 4.6 6.0 8.4 21.9 38.6x (0.45) (0.45) (0.41) (0.38) (1.70) NM
Income Statement
2018E 2019E 2020E
Qtr 1 A Qtr 2 A Qtr 3 A Qtr 4 E Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E 2017A 2018E 2019E 2020E 2021E 2022E 2023E
Assay Revenue 312 623 818 1,253 1,893 3,259 4,211 6,163 6,505 7,638 8,949 12,065 900 3,007 15,526 35,158 71,142 122,635 184,493
License Revenue 20 20 22 21 15 15 15 15 15 15 15 15 83 83 60 60 60 60 60
Total Revenue 801 1,692 1,355 1,831 2,939 4,626 5,960 8,392 9,380 10,959 12,710 16,266 4,178 5,679 21,918 49,316 93,333 155,366 228,806
Gross Profit 319 976 680 669 997 1,966 2,699 4,444 4,846 5,900 7,021 9,590 3,176 2,644 10,105 27,357 57,511 101,867 155,921
Operating Expenses:
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 (66,305)
0 (38,651)
0 2,005
0 49,059
0
Non-Recurring
Expense Variables:
Margin Analysis:
YoY Growth Rates:
Total Revenues 51.1% 142.1% 63.6% -13.7% 267.0% 173.3% 340.0% 358.4% 219.1% 136.9% 113.2% 93.8% 1598.3% 35.9% 285.9% 125.0% 89.3% 66.5% 47.3%
S, G & A 58.2% 10.2% 24.2% 26.6% 18.0% 33.7% 3.9% 6.4% 6.3% 0.0% 0.0% 0.0% 24.3% 20.5% 6.4% 5.0% 2.3% 3.4% 8.4%
Balance Sheet Data:
Net Debt (Cash) Per Share ($1.70) ($1.52) ($1.16) ($0.90) ($0.64) ($0.26) $0.06 $0.37 $0.59 $0.85 $1.08 $1.36 ($2.02) ($0.89) $0.37 $1.37 $1.82 $1.72 $0.64
Book Value Per Share $1.91 $1.76 $1.43 $1.14 $0.86 $0.54 $0.26 $0.00 ($0.20) ($0.42) ($0.62) ($0.83) $2.22 $1.14 $0.00 ($0.84) ($1.09) ($0.55) $0.89

January 10, 2019
02/28/17 06/05/17 11/02/17 05/09/18 08/06/18 11/06/18
OW:$30 OW:$32 OW:$26 OW:$25 OW:$24 OW:$21
35
30
25
20
15
10
2016 Q1 Q2 Q3 2017 Q1 Q2 Q3 2018 Q1 Q2 Q3 2019 Q1
Legend:
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Piper Jaffray
BUY [OW] 413 64.23 120 29.06
HOLD [N] 218 33.90 18 8.26
SELL [UW] 12 1.87 0 0.00

Time of dissemination: 10 January 2019 22:00EST.

January 10, 2019
the past 12 months.
Rating Definitions
Stock Ratings: Piper Jaffray ratings are indicators of expected total return (price appreciation plus dividend) within the next 12 months. At times analysts
may specify a different investment horizon or may include additional investment time horizons for specific stocks. Stock performance is measured
relative to the group of stocks covered by each analyst. Lists of the stocks covered by each are available at www.piperjaffray.com/researchdisclosures.
Stock ratings and/or stock coverage may be suspended from time to time in the event that there is no active analyst opinion or analyst coverage, but
the opinion or coverage is expected to resume. Research reports and ratings should not be relied upon as individual investment advice. As always,
an investor’s decision to buy or sell a security must depend on individual circumstances, including existing holdings, time horizons and risk tolerance.
Piper Jaffray sales and trading personnel may provide written or oral commentary, trade ideas, or other information about a particular stock to clients or
internal trading desks reflecting different opinions than those expressed by the research analyst. In addition, Piper Jaffray offers technical and event-
driven research products that are based on different methodologies, may contradict the opinions contained in fundamental research reports, and could
impact the price of the subject security. Recommendations based on technical or event-driven analysis are intended for the professional trader, while
fundamental opinions are typically suited for the longer-term institutional investor.
• Overweight (OW): Anticipated to outperform relative to the median of the group of stocks covered by the analyst.
• Neutral (N): Anticipated to perform in line relative to the median of the group of stocks covered by the analyst.
• Underweight (UW): Anticipated to underperform relative to the median of the group of stocks covered by the analyst.


07 January 2019
Neutral
Price: $13.03
Disappointing Close to 2018; Record-High Placements 04 Jan 2019
(N=133) Again Not Translating into Revenues -
ALERT
Heading into our healthcare conference, Accelerate (AXDX) preannounced Life Science Tools & Diagnostics
another significant topline miss to close out 2018, despite again processing record- Tycho W. Peterson
AC
high system placements. Key takeaways are below. (1-212) 622-6568
 Disappointing finish to 2018. For 4Q18, AXDX expects total revenues Bloomberg JPMA PETERSON <GO>
of $1.8M (vs. Street/JPMe at $2.7M/$1.7M) which is a 14% y/y decline. Eleni Apostolatos
That said, commercially contracted instrument placements in the U.S. (1-212) 622-0136
are expected to come in significantly above our estimate (117 vs. JPMe eleni.apostolatos@jpmorgan.com
23; >2x q/q increase in total U.S. commercial base), while EMEA Tejas Savant
(1-212) 622-5650
placements are expected to come in-line (16 vs. JPMe 16), albeit tejas.savant@jpmorgan.com
generating materially less revenue per commercial contract relative to Julia Qin
our model. In recent quarters, management cited hospital budget (1-212) 622-9253
constraints as a major bottleneck, while the reagent rental model that julia.qin@jpmchase.com
was rolled out in August to address the issue has seen limited traction on J.P. Morgan Securities LLC
the topline.
 No updates yet on the U.S. clinical trial timeline for the severe
pneumonia assay. Regarding the severe pneumonia assay in the
pipeline, AXDX had originally expected U.S. clinical trials to start by
3Q18, though management noted a delay to 1Q19 on the 3Q18 call due
to FDA pushback tied to the lack of reproducibility of the reference
method, with no additional updates provided since. During AXDX’s
presentation at our healthcare conference later this week, we look for
additional color on progress with talks with the FDA.
 AXDX presents at JPM on Wednesday. CEO Larry Mehren is

scheduled to present at our conference at 2:30 p.m. PST on Wednesday
(1/9).


(1-212) 622-6568 07 January 2019
intervention.

Diagnostics.
2

(1-212) 622-6568 07 January 2019
55
OW $32
44
($) ($)
08-Aug-16 OW 21.07 25.00
Price($)
27-Feb-17 OW 26.60 28.00
22 03-May-17 OW 27.60 31.00
03-Aug-17 OW 26.25 32.00
03-Nov-17 OW 19.30 27.00
11
09-May-18 OW 22.40 25.00
07-Nov-18 N 16.30 16.00
0
16 16 16 16 17 17 17 17 18 18 18 18 19
period.

(buy) (hold) (sell)
IB clients* 53% 47% 37%
IB clients* 75% 65% 56%
above.
3

(1-212) 622-6568 07 January 2019
Other Disclosures
representative.

4

(1-212) 622-6568 07 January 2019
Dubai, UAE.

5

(1-212) 622-6568 07 January 2019

6
Completed 07 Jan 2019 02:51 AM EST Disseminated 07 Jan 2019 02:51 AM EST
HOT COMMENT
November 29, 2018

Update From The 30th Annual Piper Jaffray Healthcare Conference
CONCLUSION
PRICE: US$14.02
Despite the challenging launch of Pheno, CEO Lawrence Mehren and CFO Steve Reichling
carried forward their upbeat tone from the 3Q18 earnings call into the Piper Jaffray TARGET: US$21.00
Healthcare Conference with their best month ever (November). The team is excited 11x FY20E EV/Rev; revs: $109.4M, 55.5M
about the turnaround in the Pheno's commercialization (i.e., reagent rental shift), reduced s/o, $0.30 debt/sh.
validation times and they elaborated on several upcoming studies as well as on the pipeline
sample prep device. William R. Quirk, CFA
• Positive tone: Management's tone became more positive starting with the 3Q18 612 303-6858, william.r.quirk@pjc.com
earnings call and carried into our conference. They described November as the Daniel H. Macek
company's best month yet, driven by better commercial progress of the Pheno. They Research Analyst, Piper Jaffray & Co.
612 303-6962, Daniel.H.Macek@pjc.com
believe they now have the right sales team in place, the right sales process, the right
marketing and the last piece (and most important one) is changing the way customers
R I S K S TO A C H I E V E M E N T O F
are contracted. A revamped sales team and marketing effort is seeing positive interest/ P T & R E C O M M E N D AT I O N
sentiment from potential customers who no longer have to go through the arduous capital Competition, clinical trial outcomes,
budgeting process. commercialization and profitability/cash burn.

• Pheno Placements: Management expect the majority of instrument placements under USD
evaluation to convert to revenue generating systems over the course of the launch (we 35
estimate 90%). Further, they still believe it is too early to tell the exact mix between
30
reagent and capital sales given the large number of deals in validation, but believe the
longer-term mix will shift toward reagent rentals. This is consistent with our thinking and 25
how most systems are placed in the U.S. and Europe. The team believes that reagent
20
rental gets them into labs (adding that most stuck in evaluation desperately want system
but lack capital budget) demonstrated by improved November metrics. 15
10
• Pipeline: Accelerate's pipeline sample prep system accepts a wide variety of sample Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18
sample types and automates several centrifugation and wash steps concentrating and Source: Bloomberg
purifying bacteria. Accelerate has 40 systems available for the lower respiratroy clinical
trial and believes they will be used in future pipeline products (not yet disclosed).
• Studies: The Mayo/UCLA study is continuing to track to a 1H19 release, with the bias
toward a presentation at a major microbiology conference (our guess is ASM in June),
but management suggested the top line results may be released earlier by the principal
investigator. The team is blinded to the study, which is designed to show economic
benefit of Pheno in blood culture and will likely lead to improvements in overall mortality
(although it is not powered for this endpoint). We continue to believe the Mayo/UCLA
study will be important for the ongoing commercial efforts.
• Bottom Line: Management remains enthusiastic about their near-term prospects and
we believe they are close to turning a corner in the commercial launch.
HOT COMMENT
November 29, 2018
12/16/15 02/28/17 06/05/17 11/02/17 05/09/18 08/06/18 11/06/18
I:OW:$25 OW:$30 OW:$32 OW:$26 OW:$25 OW:$24 OW:$21
35
30
25
20
15
10
Q3 2016 Q1 Q2 Q3 2017 Q1 Q2 Q3 2018 Q1 Q2 Q3 2019
Legend:
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Piper Jaffray
BUY [OW] 406 62.85 120 29.56
HOLD [N] 228 35.29 20 8.77
SELL [UW] 12 1.86 0 0.00

Time of dissemination: 29 November 2018 11:44EST.

HOT COMMENT
November 29, 2018
Piper Jaffray has received compensation for investment banking services from or has had a client relationship with Accelerate Diagnostics, Inc. within the
past 12 months.
Rating Definitions

Jaffray & Co. Additional information is available upon request.Copyright 2018 Piper Jaffray. All rights reserved.

07 November 2018
▼ Neutral
Previous: Overweight
Price: $16.30
3Q18 Recap: Not Exactly the “Acceleration” We Had
▼ Price Target: $16.00
Hoped For; Downgrading to Neutral After Another Previous: $25.00
Miss & Pipeline Delay
After the close, Accelerate Diagnostics (AXDX) announced another significant Life Science Tools & Diagnostics
miss ($1.7M vs. Street at $3.1M), despite again processing record-high system AC
Tycho W. Peterson
placements (with a +40% increase in U.S. commercial contracts), as the company (1-212) 622-6568
continues to be bottlenecked by hospital budget constraints, while the reagent tycho.peterson@jpmorgan.com
rental model that was rolled out in August to address the issue has seen limited Bloomberg JPMA PETERSON <GO>
traction, as most customers struggle to secure off budget cycle capital. While we Tejas Savant
remain encouraged by the long-term potential of the flagship Pheno instrument (1-212) 622-5650
(see our AMP recap for additional insights on the phenotype vs. genotype AST tejas.savant@jpmorgan.com
debate), uptake post-launch a year ago and particularly, the revenue ramp, have Julia Qin
been much weaker than originally anticipated. Turning to the pipeline, despite (1-212) 622-9253
julia.qin@jpmchase.com
expectations for the severe bacterial pneumonia test to start clinical trial testing in
3Q18, AXDX registered yet another delay due to FDA pushback tied to the lack
of reproducibility, and now expects to start the clinical trial in 1Q19. Putting it Price Performance
together, following another disappointing quarter (i.e. revenue miss coming in at 30
~60% of consensus) and with yet another unexpected pipeline delay, we are re- 26
evaluating our investment thesis and lowering our rating to Neutral, while $ 22
reducing our Dec 2019 PT to $16. While we note that our diligence continues to 18
suggest decent customer interest in Pheno (see our June survey for more color), 14
the ramp is clearly taking longer than expected and with shares still trading at 17x Nov-17 Feb-18 May-18 Aug-18 Nov-18
AXDX share price ($)

fwd sales, we now see better risk/reward in other parts of our coverage universe. RTY (rebased)
YTD 1m 3m 12m
 Operational initiatives remain a positive to longer-term growth, although Abs -37.8% -19.1% -25.2% -16.0%
timing remains uncertain. In addition to discussing the quarter, management Rel -39.1% -14.4% -17.6% -19.9%
also used the call to outline several developments that are expected to fuel
growth going forward, including: (1) recent contracts with all four GPOs
(covering all 2,500 hospitals) after having signed the last (and largest) this
quarter, which should expedite the contracting process in the future; (2) a
reagent rental model launched in August with >100 customers being presented
scores, although traction remains weak due to most customers struggling to
secure off budget cycle capital; (3) pending publication of data from multiple
randomized prospective clinical trials, which should provide more evidence of
the clinical and economic benefits of Pheno, including the previously-
highlighted Mayo Clinic and UCLA independent study (with enrollment now
completed), and three others. We continue to believe that progress on
operational initiatives coupled with customer interest in Pheno should provide
longer-term growth opportunities, although timing remains largely uncertain.
Revenue ($ mn) Date Of Price 06 Nov 18
Q1 (Mar) 1 1A 1A 7 3 52-week Range ($) 30.35-14.20
Q2 (Jun) 1 2A 2A 10 4 Market Cap ($ mn) 880.25
Q3 (Sep) 1 3 1A 13 5 Fiscal Year End Dec
Q4 (Dec) 2 6 2 15 6 Shares O/S (mn) 54
FY 4 12 6 45 19 Price Target ($) 16.00

(1-212) 622-6568 07 November 2018
 Pipeline sees additional delay due to negative FDA feedback. Regarding the
pipeline, AXDX had previously agreed with FDA on a 510(k) pathway for
severe pneumonia assays (which was expected to lead to expedited approval)
and had thus planned to begin the U.S. clinical trial by 3Q (which was already a
slight delay from late 2Q, as previously expected). On the call, management
noted an additional delay to 1Q19 due to FDA pushback tied to the lack of
reproducibility for the reference method, as the pre-clinical data obtained by
AXDX in preparation of the clinical trial showed high variability in quantitative
culture methods.
 Downgrading to Neutral, as the Pheno ramp is clearly taking longer than

anticipated, while valuation (17x fwd sales) provides little room for support.
Following another disappointing quarter (i.e. revenue miss coming in at ~60%
of consensus) and with an unexpected pipeline delay, we are re-evaluating our
investment thesis and lowering our rating to Neutral, while reducing our
December 2019 PT to $16. Our diligence continues to suggest decent customer
interest in Pheno, although the ramp is clearly taking longer than expected and
with shares still trading at 17x fwd sales, we now see better risk/reward in other
parts of our coverage universe.
2

(1-212) 622-6568 07 November 2018

Investment Thesis
Valuation
growth.

3

(1-212) 622-6568 07 November 2018

Income Statement 2014A 2015A 2016A 1QA 2QA 3QA 4QA 2017A 1QA 2QA 3QA 4QE 2018E 2019E CAGR
(in millions, except per share amounts) Mar Jun Sep Dec Mar Jun Sep Dec 17-20
Capital Sales 0 0 0 1 1 0 1 2 0 1 0 1 2 8
Total Revenue Revenue 0.1 0.1 0 1 1 1 2 4 1 2 1 2 6 19 127%
Gross Profit 0 0 0 1 1 1 1 3 0 1 1 1 3 12
SG&A (11) (18) (36) (11) (11) (12) (11) (45) (14) (15) (12) (16) (58) (12)
Other income (expense), net 0 0 0 0 0 0 0 1 0 (3) (3) (2) (8) (10)

Pretax Income (31) (45) (66) (14) (16) (17) (16) (64) (21) (23) (22) (24) (90) (15)
Income Tax 1 0 0 0 (0) (0) 1 1 (0) (0) (0) 0 (0) 0
GAAP Diluted EPS ($0.71) ($1.01) ($1.29) ($0.27) ($0.31) ($0.31) ($0.27) ($1.16) ($0.37) ($0.43) ($0.41) ($0.43) ($1.63) ($0.27)
Gross Margin 0% 0% 0% 95% 81% 77% 69% 80% 39% 58% 50% 60% 52% 65%
Effective Tax Rate 0% 0% 0% 0% -1% 0% 5% 1% -1% 0% -1% 0% 0% 0%
Net Margin 0% 0% 0% -2677% -2354% -2063% -715% -1505% -2598% -1373% -1631% -1395% -1619% -81%
Revenue growth (y/y) 0% 0% 55% 225% 34850% 3350% 5336% 1732% 51% 142% 64% -19% 33% 234%
EPS growth (y/y) 37% 40% 32% 58% 40% -84%
4

(1-212) 622-6568 07 November 2018

Target Period: Dec 2019
Revenue ($M) 0 0 0 4 6 19 49 101 175 269 383 601
growth y/y 20% 55% 1732% 33% 234% 163% 107% 73% 54% 42% 57%
EBIT ($M) 0 (46) (67) (64) (82) (5) 2 14 33 65 111 198
EBIT margin 0% NA -29328% -1527% -1465% -28% 5% 14% 19% 24% 29% 33%
Tax-affected EBIT ($M) 0 (46) (67) (63) (82) (5) 2 13 26 48 81 142
Free Cash Flow 0 (44) (67) (72) (78) (5) 1 9 21 42 72 126
growth y/y 1680% 134% 102% 71% 75%

2020 - 2025 1.5% 2.0% 2.5% 3.0% 3.5% 1.5% 2.0% 2.5% 3.0% 3.5% 1.5% 2.0% 2.5% 3.0% 3.5%
11.2% 168 700 742 788 841 900 868 910 956 1,009 1,068 4.1x 4.3x 4.5x 4.7x 5.0x
+ =
11.7% 165 648 685 725 771 822 812 849 890 936 987 3.8x 4.0x 4.2x 4.4x 4.6x
12.2% 162 601 634 670 710 754 763 795 831 871 916 3.6x 3.7x 3.9x 4.1x 4.3x
12.7% 158 559 588 620 655 694 717 747 778 814 853 3.4x 3.5x 3.7x 3.8x 4.0x
13.2% 155 521 547 575 607 641 676 702 731 762 797 3.2x 3.3x 3.4x 3.6x 3.7x

1.5% 2.0% 2.5% 3.0% 3.5% 1.5% 2.0% 2.5% 3.0% 3.5% 1.5% 2.0% 2.5% 3.0% 3.5%
(78) 946 988 1,034 1,087 1,146 $16.75 $17.49 $18.31 $19.24 $20.29 81% 82% 82% 83% 84%
- = =
(78) 890 927 968 1,014 1,065 $15.76 $16.42 $17.14 $17.95 $18.86 80% 81% 81% 82% 83%
(78) 840 873 909 949 994 $14.88 $15.46 $16.10 $16.81 $17.60 79% 80% 81% 81% 82%
(78) 795 824 856 892 931 $14.08 $14.60 $15.16 $15.79 $16.48 78% 79% 80% 81% 81%
(78) 754 780 809 840 874 $13.35 $13.81 $14.32 $14.87 $15.48 77% 78% 79% 80% 80%
5

(1-212) 622-6568 07 November 2018

Income Statement - Annual FY16A FY17A FY18E FY19E FY20E Income Statement - Quarterly 1Q18A 2Q18A 3Q18A 4Q18E
Revenue 0 4 6 19 49 Revenue 1A 2A 1A 2
COGS 0 (1) (3) (7) (16) COGS (0)A (1)A (1)A (1)
Gross profit 0 3 3 12 33 Gross profit 0A 1A 1A 1
SG&A (36) (42) (55) (10) (19) SG&A (13)A (15)A (12)A (16)
Adj. EBITDA (64) (62) (79) (3) 5 Adj. EBITDA (20)A (20)A (19)A (21)
D&A (2) (3) (3) (2) (3) D&A (1)A (1)A (1)A (1)
Adj. EBIT (66) (64) (82) (5) 2 Adj. EBIT (21)A (20)A (19)A (21)
Net Interest 0 1 (7) (10) (10) Net Interest 0A (2)A (2)A (2)
Adj. PBT (66) (64) (90) (15) (7) Adj. PBT (21)A (23)A (22)A (24)
Tax 0 1 (0) 0 0 Tax (0)A (0)A (0)A 0
Adj. Net Income (66) (63) (90) (15) (7) Adj. Net Income (21)A (23)A (22)A (24)
Reported EPS (1.29) (1.16) (1.63) (0.27) (0.13) Reported EPS (0.37)A (0.43)A (0.41)A (0.43)
Adj. EPS (1.29) (1.16) (1.63) (0.27) (0.13) Adj. EPS (0.37)A (0.43)A (0.41)A (0.43)
DPS 0.00 0.00 0.00 0.00 0.00 DPS 0.00A 0.00A 0.00A 0.00
Payout ratio 0.0% 0.0% 0.0% 0.0% 0.0% Payout ratio 0.0%A 0.0%A 0.0%A 0.0%
Shares outstanding 51 54 55 56 58 Shares outstanding 56A 54A 54A 56
Accounts receivable 0 2 1 3 7 EBITDA margin (28132.5%) (1474.6%) (1424.1%) (16.1%) 10.2%
Inventories 0 8 0 1 2 EBIT margin (29164.9%) (1536.6%) (1475.5%) (28.0%) 5.0%
Current assets 79 120 193 198 214
PP&E 4 5 3 3 5 ROE (62.9%) (64.0%) (90.2%) (18.2%) (8.2%)
Other non current assets 0 0 1 1 1 ROCE (63.1%) (66.0%) (52.3%) (2.6%) 1.2%
Net debt/equity (100.0%) (92.0%) (92.0%) (92.9%) (92.0%)
Other short term liabilities 3 4 0 1 4 P/BV (x) 10.7 7.4 11.1 11.0 9.8
Current liabilities 4 6 1 4 9 EV/EBITDA (x) NM NM NM NM 159.1
Other long term liabilities 1 1 0 0 0
Shareholders' equity 78 119 81 84 96 Interest cover (x) 330.6 67.8 NM NM 0.5
Minority interests - - - - - Operating leverage 83.5% (0.2%) 84.1% (40.0%) (90.2%)
BVPS 1.52 2.20 1.47 1.48 1.66 Revenue y/y Growth 55.1% 1732.0% 33.2% 234.0% 163.0%
y/y Growth (48.6%) 44.7% (33.1%) 0.9% 11.7% EBITDA y/y Growth 46.6% (4.0%) 28.7% (96.2%) (266.8%)
Net debt/(cash) (78) (109) (74) (78) (88) Tax rate 0.0% (1.0%) (0.5%) 0.0% 0.0%
Adj. Net Income y/y Growth 45.8% (5.2%) 43.2% (83.3%) (51.0%)
Cash flow from operating activities (53) (56) (67) 6 15 EPS y/y Growth 28.0% (10.1%) 40.4% (83.7%) (52.2%)
o/w Changes in working capital 1 (8) 2 1 0
as % of sales 1056.6% 71.0% 18.1% 10.0% 7.5%
Net change in cash (101) 9 31 4 11
Adj. Free cash flow to firm (67) (72) (78) (5) 1
y/y Growth 53.2% 6.9% 8.6% (93.6%) (110.0%)
6

(1-212) 622-6568 07 November 2018
intervention.

Diagnostics.
7

(1-212) 622-6568 07 November 2018
50 OW $32
OW $31
40 Date Rating Share Price Price Target
($) ($)
OW $17 OW $25 OW $28 OW $27 OW $25
24-Mar-16 OW 12.02 17.00
30
Price($) 08-Aug-16 OW 20.97 25.00
27-Feb-17 OW 25.50 28.00
20 03-May-17 OW 27.40 31.00
03-Aug-17 OW 25.15 32.00
10 03-Nov-17 OW 18.00 27.00
09-May-18 OW 19.02 25.00
0
Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov
15 16 16 16 16 17 17 17 17 18 18 18 18
period.
Health Inc (SYNH), Thermo Fisher Scientific (TMO), Varian Medical (VAR), Waters (WAT)
J.P. Morgan Equity Research Ratings Distribution, as of October 01, 2018

(buy) (hold) (sell)
IB clients* 54% 49% 37%
IB clients* 75% 66% 53%
above.
8

(1-212) 622-6568 07 November 2018
Other Disclosures
representative.

9

(1-212) 622-6568 07 November 2018
Dubai, UAE.

10

(1-212) 622-6568 07 November 2018
"Other Disclosures" last revised October 20, 2018.

11
Completed 07 Nov 2018 12:35 AM EST Disseminated 07 Nov 2018 12:40 AM EST
Equity Research
November 6, 2018 Medical Technology
Sean Lavin, MD
slavin@btig.com Performance Not So Pheno-menal; Uncertainty About
Andrea Alfonso Model Keeps Us Cautious; Maintain Neutral
(212) 527-3565
aalfonso@btig.com AXDX reported Q3 of $1.36M, well below consensus’ estimate of $3M. In
the U.S., the number of evaluations was flat sequentially although the
Marie Thibault number of active instruments was 92 (up 40%). The company would not
(212) 527-3557 divulge numbers around how much potential revenue has shifted to
mthibault@btig.com reagent rentals following the revised contracting strategy except to say
that there has been significant interest among smaller and larger
institutions alike (one prominent hospital with seemingly less challenging
capital needs opted to go the reagent route). On the LRTI front, mgmt
continues to still be in dialogue with the FDA regarding trial design.
AXDX $16.30 Combined with the desire to fine-tune the assays ahead of the trial, mgmt
Upsi de
12 month target
%
$#,##0;(#,##0) now expects study commencement in 1Q19. We remain believers in the

value of the technology but feel that ambiguity around the changes in the
NEUTRAL commercial strategy, success of new salesforce and most importantly,
hospital buying patterns, make it less likely that shares will outperform in
52 week range $14.40 - $30.00
the near-term. Further, we feel there is a fair amount of risk that
Dividend
Market Yield
Cap (m) $883 customers may never purchase reagent rentals. Thus, we reiterate our
Price Performance Neutral rating.
 
We have limited confidence in our estimates. Mgmt again would not
commit to a guidance range or quantify how much of the funnel would
shift to the reagent model. For its part, mgmt expects a significant
amount of conversions over the next couple of quarters. Even so, we
remain concerned that a flexible trialing model may lead to perverse
incentives and we are not entirely convinced this will lead to long-term
commitments down the line. We do model a sequential improvement
but admittedly, our estimates seem like placeholders for now.
 NewGPO contract a positive. Mgmt confirmed inking an agreement

with another GPO, HealthTrust (Private). HealthTrust works with over
1,600 hospitals and we expect this broadens AXDX’s salesforce access.
Source: IDC
 
Valuation: Maintain our Neutral rating. Risks follow on page 3.
Estimates
1Q17 A 2Q17 A 3Q17 A 4Q17 A FY17 A 1Q18 A 2Q18 A 3Q18 A 4Q18 E FY18 E FY19 E
Sales 1 1 1 2 4 1 2 1 3 6 14
Gross Margin (%) - 80.7% 76.9% 69.3% 76.0% 38.6% 57.6% 49.8% 50.3% 50.7% 56.3%
EBIT (14) (16) (17) (16) (64) (21) (20) (19) (21) (82) (91)
Net Income (Adj.) (14) (16) (17) (17) (63) (21) (23) (22) (21) (87) (91)
Diluted EPS (GAAP) (0.27) (0.31) (0.31) (0.30) (1.16) (0.37) (0.43) (0.41) (0.39) (1.59) (1.57)

Variance Analysis
Total revenue was $1.36M, down from $1.7M last quarter. The company
reported having signed agreements for 458 instruments vs. the tally of 430 at
the end of Q2. Contracts for customer evaluations totaled 311 instruments,
which was flat sequentially. The company continues to make progress on the
expansion of reagent rental program to date with many customers previously
under evaluation now going straight to a reagent rental model.
Gross margin was 49.8%, much weaker than our 58% estimate. Gross margin
was also well below the 58% reported last quarter. SG&A of $12.15M came in
better than our $15M forecast. R&D of $7.9M was above last quarter’s $6.1M
and higher than we forecast. All told, the net loss of $22.1M equated to a LPS
of $0.41.
Exhibit 1. Variance Analysis
Variance Analysis
3Q18
Actuals BTIG Est. % Variance
Total Revenue ($M) $1.36 $3.62 -$2.26
COGS ($M) $0.68 $1.51 -55.1%
Gross Profit $0.68 $2.10 -67.9%
SG&A ($M) $12.15 $15.00 -19.0%
R&D ($M) $7.89 $6.70 17.8%
Other OpEx ($M) $0.00 $0.00 NM
Operating Expenses ($M) $20.04 $21.70 -7.6%
Taxes ($M) $0.15 $0.00 NM
Net Income ($M) -$22.10 -$19.60 12.8%
EPS ($0.41) ($0.36) 12.8%
Gross Margin 49.8% 58.1% -831 bps
SG&A Spend % 896.9% 414.7% NM
R&D Spend % 582.4% 185.2% NM
EBIT Margin NM NM NM
Tax Rate NM NM NM
Model Changes
We are trimming our FY18 revenue estimate to account for the Q3 miss and a
greater mix of reagent rental revenue (vs. capital sale) going forward. Though
we find management’s commentary regarding the sales funnel encouraging, it
seems the company’s own estimates also remain in flux. Admittedly, we have
little to go by and surmise that our revenue forecasts are placeholders for now
until we see more encouraging signs of conversion.

2
New Old Change

Total Revenue ($M) $6.4 $14.1 $30.6 $12.0 $29.2 $55.8 -47% -52% -45%
Net Loss ($M) -$86.7 -$90.9 -$94.2 -$82.2 -$80.4 -$74.8 6% 13% 26%
LPS ($1.59) ($1.57) ($1.59) ($1.51) ($1.39) ($1.26) 6% 13% 26%
Valuation
Given the string of quarterly misses over the last year, the ongoing challenges
commercial strategy, we continue to see considerable risk to achieving Street
estimates. BTIG does not provide price targets on Neutral-rated stocks. Risks
to our rating include company to be acquired, not meeting FY18 estimates,
lengthening adoption cycles, LRTI data, building out the salesforce and OUS
expansion, competition, any changes to FDA regulation, the need for more
capital, a retraction in healthcare stock valuations, and a hospital spending
slow down.

3
AXDX Income Statement Dec-14 Dec-15 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Dec-19 Dec-20
$ millions, except EPS and %s FY14 A FY15 A FY16 A 1Q17 A 2Q17 A 3Q17 A 4Q17 A FY17 A 1Q18 A 2Q18 A 3Q18 A 4Q18 E FY18 E 1Q19 E 2Q19 E 3Q19 E 4Q19 E FY19 E FY20 E
Product Revenue 0.00 0.08 0.16 0.51 0.68 0.81 2.10 4.10 0.78 1.67 1.34 2.49 6.28 2.32 2.87 3.95 4.85 13.99 30.56
Total Revenue 0.12 0.15 0.25 0.53 0.70 0.83 2.12 4.18 0.80 1.69 1.36 2.51 6.36 2.34 2.89 3.97 4.87 14.07 30.64
y/y growth NM NM NM NM NM NM NM NM 51.1% 142.1% 63.6% 18.4% 52.2% 192.3% 70.5% 193.3% 93.8% 121.2% 117.8%
COGS 0.00 0.00 0.00 0.03 0.14 0.19 0.65 1.00 0.49 0.72 0.68 1.25 3.14 1.11 1.31 1.72 2.01 6.15 11.69
Gross Profit 0.12 0.15 0.25 0.50 0.56 0.64 1.47 3.18 0.31 0.975 0.68 1.26 3.22 1.23 1.58 2.25 2.86 7.92 18.95
R&D 20.05 26.02 28.20 4.29 5.53 6.35 6.13 22.30 6.78 6.06 7.89 6.80 27.53 7.20 7.40 7.50 7.70 29.80 33.60
SG&A 10.70 17.88 36.20 10.53 11.46 11.60 11.47 45.06 14.35 15.33 12.15 15.50 57.34 15.80 16.50 17.50 19.20 69.00 79.60
EBIT -31.52 -45.55 -66.50 -14.31 -16.42 -17.32 -16.13 -64.18 -20.83 -20.41 -19.37 -21.04 -81.65 -21.77 -22.32 -22.75 -24.04 -90.88 -94.25
Other (Expense) Income 0.06 0.05 0.39 0.11 0.14 0.28 0.12 0.65 0.20 -2.71 -2.58 0.00 -5.09 0.00 0.00 0.00 0.00 0.00 0.00
Pretax Income -31.46 -45.50 -66.11 -14.20 -16.28 -17.03 -16.02 -63.53 -20.63 -23.12 -21.95 -21.04 -86.74 -21.77 -22.32 -22.75 -24.04 -90.88 -94.25
Income Taxes (Benefit) -0.53 0.00 -0.27 0.00 -0.18 0.05 0.78 0.65 -0.18 -0.10 0.15 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Net Income (Loss) -30.93 -45.50 -66.37 -14.20 -16.46 -17.08 -16.80 -62.88 -20.81 -23.22 -22.10 -21.04 -86.74 -21.77 -22.32 -22.75 -24.04 -90.88 -94.25
EPS -$0.71 -$1.01 -$1.29 -$0.27 -$0.31 -$0.31 -$0.30 -$1.16 -$0.37 -$0.43 -$0.41 -$0.39 -$1.59 -$0.40 -$0.38 -$0.39 -$0.41 -$1.57 -$1.59
Margins
Gross Profit NM NM NM NM 80.7% 76.9% 69.3% 76.0% 38.6% 57.6% 49.8% 50.3% 50.7% 52.7% 54.7% 56.7% 58.7% 56.3% 61.9%
Expenses
COGS as a % of Revenue NM NM NM NM 19.3% 23.1% 30.7% NM 61.4% 42.4% 50.2% 49.7% 49.3% 47.3% 45.3% 43.3% 41.3% 43.7% 38.1%
SG&A as a % of Revenue NM NM NM NM 1639.5% 1401.1% 541.0% NM 1791.9% 906.0% 896.9% 617.3% 901.7% 674.9% 571.9% 440.4% 394.5% 490.5% 259.8%
R&D as a % of Revenue NM NM NM NM 790.7% 767.0% 289.3% NM 846.7% 358.2% 582.4% 270.8% 433.0% 307.5% 256.5% 188.7% 158.2% 211.8% 109.7%
Total Operating Expenses NM NM NM NM 2430.2% 2168.1% 830.4% NM 2638.6% 1264.2% 1479.3% 888.1% 1334.6% 982.4% 828.4% 629.1% 552.7% 702.3% 369.5%

4
AXDX Placement/Revenue Model Mar-17 Jun-17 Sep-17 Dec-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Dec-19 Dec-20
1Q17 A 2Q17 A 3Q17 A 4Q17 A FY17 A 1Q18 A 2Q18 A 3Q18 A 4Q18 E FY18 E 1Q19 E 2Q19 E 3Q19 E 4Q19 E FY19 E FY20 E
U.S.
Capital Equipment
Instruments Under Contract Evaluation (Cumulative - Beginning of Quarter) 0 8 115 139 164 157 194 270 381 460 544 628
Quarterly Additions 122 31 42 10 60 90 130 100 110 112 160
Quarterly Conversions 15 7 12 7 10 0 5 7 10 12 15
Quarterly Fallouts 0 0 5 10 13 14 14 14 16 16 18
Instruments Under Contract Evaluation (Cumulative - End of Quarter) 8 115 139 164 164 157 194 270 381 381 460 544 628 755 755 1,145
Active Instruments (As of Quarter End) 14 29 36 48 48 55 65 65 70 70 77 87 99 114 114 178
additions 8 15 7 12 42 7 10 0 5 22 7 10 12 15 44 64
% sold 65% 80% 40% 77% 66% 65% 75% 80% 75% 74% 75% 75% 75% 75% 75% 75%
% reagent rental 35% 20% 60% 23% 35% 35% 25% 20% 25% 26% 25% 25% 25% 25% 25% 25%
# of instruments sold 5 12 3 9 29 5 8 0 4 16 5 8 9 11 33 48
ASP of instrument sold (000s) $25 $30 $30 $42 $32 $25 $30 $30 $50 $34 $50 $50 $50 $50 $50 $50
Consumables
Price Per Test $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
y/y growth -62.4% -3.7% -50.0% -37.5% 89.8% 5.3% 100.0% 0.0%
OUS
Capital Equipment
Quarterly Additions 40 106 4 20 0 60 70 90 50 70 80 110
Quarterly Conversions NM 12 6 10 4 4 4 6 8 10 12 14
Quarterly Fallouts 0 0 0 6 10 12 14 16 12 14 18 20
Instruments Under Contract Evaluation (Cumulative - End of Quarter) 8 102 100 104 104 90 134 186 254 254 284 330 380 456 456 626
additions 0 12 6 10 28 4 4 4 6 18 8 10 12 14 44 76
% sold 20% 20% 20% 35% 24% 0% 35% 40% 45% 30% 35% 35% 35% 35% 35% 35%
% reagent rental 80% 80% 80% 65% 76% 100% 65% 60% 55% 70% 65% 65% 65% 65% 65% 65%
ASP of instruments sold (000s) $20 $20 $20 $40 $25 $10 $20 $40 $40 $28 $40 $40 $40 $40 $40 $40
Consumables
Price Per Test $150 $150 $150 $150 $150 $150 $150 $150 $145 $145 $145 $145
y/y growth -49.0% -8.2% 29.6% 14.1% 93.3% 26.4% 41.7% 19.4%
WW
Capital Equipment
additions 23 13 19 15 15 4 10 14 19 23 28
Consumables
y/y growth 51.3% 148.4% 53.3% 18.4% 50.8% 200.8% 71.4% 196.2% 94.6% 123.1% 118.5%
sequential growth 2734% 132.0% 129.4% 241.6% -63.3% 116.7% -20.2% 86.6% -6.8% 23.4% 38.0% 22.6%

5

6
Ratings Definitions
upon.

of the end of the most recent calendar quarter (September 30, 2018): 298
Distribution of BTIG’s Research Recommendations (as of September 30, 2018):

BUY: 58.4%; NEUTRAL: 38.3%; SELL: 3.4%
Distribution of BTIG’s Investment Banking Services (as of September 30, 2018):

BUY: 28.2%; NEUTRAL: 10.5%; SELL: 0.00%

misses over the last year, the ongoing challenges within the hospital purchasing environment and changes to the

7
company’s commercial strategy, we continue to see considerable risk to achieving Street estimates. BTIG does
not provide price targets on Neutral-rated stocks.
Risks: Risks to our rating include company to be acquired, not meeting FY18 estimates, lengthening adoption
cycles, LRTI data, building out the salesforce and OUS expansion, competition, any changes to FDA regulation,
the need for more capital, a retraction in healthcare stock valuations, and a hospital spending slow down.

Other Disclosures

8
General Disclosures
issue.

9

respectively.

10
November 7, 2018

Q3 Is Another Reset Quarter; Reagent Rental Model Weighs On
Alexander Nowak, CFA Instrument Sales. We Are Close, But Still Several Quarters Until
Senior Research Analyst Beat/Raise Territory. Reiterate HOLD Rating, Lowering Price Target
1 612-334-6347
To $18 (From $22).
Accelerate Diagnostics is an early stage diagnostics company. Accelerate developed Pheno, a next-
www.craig-hallum.com OUR CALL
Changes Previous Current Accelerate’s Q3 was another reset quarter, with the company severely
Rating - Hold missing revenue forecasts due to the new expanded reagent rental model:
Fundamental Trend - Stable Q3 revenue was $1.3M vs. the Street’s $3.1M forecast. Instrument
Price Target $22 $18
FY18E Rev (M) $11.1 $6.7 placements also missed our forecast and the company is delaying the lower
FY19E Rev (M) $37.4 $26.2 respiratory clinical trial by 6 months. The company continued to not
FY20E Rev (M) $82.0 $64.0
FY18E Adj. EPS ($1.55) ($1.59)
provide guidance. We are lowering our forward revenue estimates as the
FY19E Adj. EPS ($1.31) ($1.48) expanded reagent rental model will weigh on near-term instrument sales.
FY20E Adj. EPS ($0.94) ($1.19) We believe Accelerate is doing everything it needs to for longer-term
Profile adoption (sales force reorg, GPO contracts, clinical trials including
Price: $16.30 Mayo/UCLA), but we are still several quarters away from seeing
52 Week Range: $14.54 - $30.35 Accelerate’s novel Pheno system drive revenue beats. We reiterate our
Shares Out (M): 54.1 HOLD rating and are lowering our price target to $18 (was $22).
Market Cap (M):
Insiders Own %:
$802.7
44.3%
 Quarterly Results: Accelerate reported top-line revenue of $1.3M,
Short Interest %: 24.5% well below the Street’s $3.1M forecast and our $3.7M estimate.
Book value/Share: 2.1 Accelerate placed 29 revenue-generating Phenos in the quarter also
4-Yr EPS CAGR NA
Dividend Yield (%) 0%
falling short of our 55 system target. There are now 311 evaluation
Net Debt (M): -$81.9 systems in the funnel, down from 312 in Q2. Accelerate announced an
Net Debt/share: -$1.5 expanded reagent rental model last quarter (subsidizing the upfront
Fiscal Year End: Dec. system costs through consumables) and we believe most customers
opted for this model in the quarter. As a result, instrument revenue was
Rev (M) 2018E 2019E 2020E ~$0.4M, compared to our $2.2M forecast. Consumable sales were
Mar $0.8A $4.3 $11.6
Jun $1.7A $5.5 $14.7 ~$0.9M, also below our $1.4M expectation. Gross margin and
Sep $1.4A $7.4 $17.4 operating expenses were better than expected and EPS of ($0.41) was in
Dec $2.8 $9.0 $20.4
FY $6.7 $26.2 $64.0
line with the Street and our estimates.
3Q18 Results
Adj. EPS 2018E 2019E 2020E Actuals Street Delta CH Est.
Mar ($0.37)A ($0.39) ($0.35)
Jun ($0.43)A ($0.38) ($0.31) Total Revenue 1.3 3.1 -1.8 3.7
Sep ($0.41)A ($0.36) ($0.28) Gross Margin 49.8% 61.3% -650 bps 56.3%
Dec ($0.38) ($0.35) ($0.25) R&D 7.9 6.7 1.4 6.5
FY ($1.59) ($1.48) ($1.19)
Adj. EPS includes stock-based comp expense SG&A 12.2 15.6 -3.3 15.5
EPS Adj. (0.41) (0.41) 0.00 (0.41)
P/E NA NA NA
Source: Company reports, Factset & Craig Hallum Estimates
EV/ Revenue 107.9x 27.4x 11.2x
EV/EBITDA NA NA NA
 Guidance: Given the launch of the expanded reagent rental model,
Management management is continuing to not give revenue guidance.
Chairman John Patience Estimate Changes
CEO Lawrence Mehren
CFO Steve Reichling 4Q18 New 4Q18 Prev FY18 New FY18 Prev FY19 New FY19 Prev
Total Revenue 2.8 5.0 6.7 11.1 26.2 37.4
R&D 8.0 6.7 28.7 26.042 34.0 28.8
Gross Margin 53.4% 58.0% 52.0% 56.0% 61.3% 64.4%
SG&A 14.0 16 55.8 61.183 61.2 65.2
EPS Adj. (0.38) (0.37) (1.59) (1.55) (1.48) (1.31)
Source: Company reports, Factset & Craig Hallum Estimates

November 7, 2018
 Business Update: Accelerate continues to make operational changes to

improve the sales cycle including signing GPO agreements, building out a
dedicated LIS team and moving to an expanded reagent rental model
(removing the upfront capital requirement). As a result, management believes
the sales cycle is averaging 6-7 months from the time of first contact to go-
live. Clinical study data continues to build with management reiterating the
results of the University of Arkansas data (3 day length of stay improvement
when using Pheno, prospective, but not randomized). The highly-anticipated
Mayo/UCLA study just finished enrolling and with a 90 day follow-up, we
anticipate data emerging at the ASM or ECCMID conference. As
Mayo/UCLA is a prospective, randomized trial, we believe the results will be
important for future adoption. Accelerate is delaying the lower respiratory
cartridge as it discusses study design with the FDA. The trial was originally
scheduled to start end of 3Q18 and is now delayed six months to 1Q19.
 Estimate Revision: Q3 was another reset quarter for Accelerate with the
expanded reagent rental model severely impacting near-term instrument
revenue. As a result, we are lowering our instrument revenue going forward.
Our consumable sales also decline due to lower instrument placements (due
to the instrument miss in the quarter plus lower respiratory delay). We are
modestly lowering our operating expenses given better spend in the quarter.
STOCK OPPORTUNITY
Our $18 price target (was $22) represents 14x EV/revenue on our 2020 estimate.
We initially derive our price target from our discounted cash flow model and
then use the DCF equity value to calculate the implied EV/revenue multiple. We
use a WACC of 14.5%, which is the discount rate implied in AXDX’s recent
convertible note offering. We model the WACC slowly declining to a “market”
discount rate through our time horizon.
RISKS

November 7, 2018

Updated: 11/6/2018
2017A 2018E 2019E 2020E 2015A 2016A 2017A 2018E 2019E 2020E
Instruments 0.5 0.5 0.2 1.1 0.3 1.0 0.4 0.9 1.4 1.6 1.9 2.1 3.0 3.3 3.6 3.9 2.3 2.6 7.0 13.8
Reagents - 0.2 0.6 1.0 0.5 0.7 0.9 1.9 3.0 3.9 5.5 6.9 8.5 11.4 13.8 16.4 1.7 4.0 19.1 50.1
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1
Total Revenue 0.5 0.7 0.8 2.1 0.8 1.7 1.4 2.8 4.3 5.5 7.4 9.0 11.6 14.7 17.4 20.4 0.1 0.2 4.2 6.7 26.2 64.0
Gross Profit 0.5 0.6 0.6 1.5 0.3 1.0 0.7 1.5 2.6 3.3 4.5 5.7 7.5 9.7 11.5 13.5 0.1 0.2 3.2 3.5 16.1 42.3
S,G&A 10.5 11.5 11.6 11.5 14.4 15.3 12.2 14.0 15.0 15.2 15.4 15.6 17.6 17.8 18.0 18.2 18.6 37.2 45.1 55.8 61.2 71.6
Other - - - - - -
Other Expense (Income) 0.0 (0.1) 0.0 0.3 (0.1) 0.3 0.1 0.0 0.1 0.3
Income Taxes - 0.2 0.0 0.3 0.2 0.1 0.1 - - - - - - - - - - 0.3 0.5 0.4 - -
NOLs 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4
Diluted EPS (GAAP) (0.27) (0.31) (0.31) (0.30) (0.37) (0.43) (0.41) (0.38) (0.39) (0.38) (0.36) (0.35) (0.35) (0.31) (0.28) (0.25) (1.01) (1.30) (1.19) (1.59) (1.48) (1.19)
Expense Analysis:
Gross Margin 95.1% 80.7% 76.9% 69.3% 38.6% 57.6% 49.8% 53.4% 58.8% 60.0% 61.8% 63.0% 65.2% 65.9% 66.3% 66.6% 100.0% 100.0% 76.0% 52.0% 61.3% 66.1%
Operating Margin -- -- -- -761.2% -2600% -1206.6% -1429.4% -727.8% -474.9% -369.1% -264.8% -207.0% -163.9% -116.5% -89.5% -68.1% -- -- -1536.6% -1217.1% -301.6% -102.3%
Adj. Operating Margin -- -- -- -761.2% -2600% -1206.6% -1429.4% -727.8% -474.9% -369.1% -264.8% -207.0% -163.9% -116.5% -89.5% -68.1% -- -- -1536.6% -1217.1% -301.6% -102.3%
S,G&A -- -- -- 541.1% 1791.9% 906.0% 896.9% 497.1% 345.1% 276.3% 209.5% 172.6% 152.2% 121.2% 103.4% 89.4% -- -- 1078.7% 837.9% 233.3% 111.9%
Tax Rate 0.0% -1.1% -0.3% -1.7% -0.9% -0.4% -0.7% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 0.0% -0.4% -0.8% -0.5% 0.0% 0.0%
Net Margin -- -- -- -768.7% -2598% -1372.6% -1630.8% -737.4% -482.3% -376.1% -270.7% -212.4% -168.5% -119.9% -92.6% -71.0% -- -- -1532.9% -1304.0% -307.8% -105.7%
Adj. Net Margin -- -- -- -768.7% -2598% -1372.6% -1630.8% -737.4% -482.3% -376.1% -270.7% -212.4% -168.5% -119.9% -92.6% -71.0% -- -- -1532.9% -1304.0% -307.8% -105.7%
Grow th Metrics:
Total Revenue 225.2% 3395.0% 3350.0% 5335.9% 51.1% 142.1% 63.6% 32.8% 442.7% 225.1% 442.5% 220.9% 166.1% 167.1% 136.7% 125.2% -- 67.3% 1598.0% 59.5% 293.7% 144.0%
Gross Profit 209.2% 2720.0% 2554.2% 3668.2% -38.7% 72.9% 6.0% 2.3% 727.3% 238.4% 572.5% 278.7% 195.0% 193.5% 154.0% 137.9% -- 67.3% 1190.5% 9.1% 364.6% 162.9%
Adj Operating Profit -6% -8.2% -0.6% 0.7% 45.5% 24.3% 11.9% 27.0% -0.9% -0.6% 0.5% -8.7% -8.2% -15.7% -20.0% -25.9% -- 46.0% -3.5% 26.4% -2.5% -17.2%
Adj Net Income -6% -7.9% -1.3% 1.0% 46.6% 41.1% 29.4% 27.4% 0.7% -10.9% -10.0% -7.6% -7.0% -14.9% -19.0% -24.7% -- 46.0% -3.5% 26.4% -2.5% -17.2%
Ongoing EPS -7% -11.9% -8.6% -4.2% 36.7% 40.0% 32.2% 27.0% 3.1% -11.8% -10.8% -8.6% -8.0% -19.3% -23.2% -28.6% -- 28.1% -8.0% 33.7% -7.2% -19.7%

November 7, 2018

Revenue Statem ent Craig-Hallum Capital Markets
Updated: 11/6/2018
2017A 2018E 2019E 2020E 2015A 2016A 2017A 2018E 2019E 2020E
- - - - - -
Instruments 0.5 0.5 0.2 1.1 0.3 1.0 0.4 0.9 1.4 1.6 1.9 2.1 3.0 3.3 3.6 3.9 - 0.2 2.3 2.6 7.0 13.8
Reagents - 0.2 0.6 1.0 0.5 0.7 0.9 1.9 3.0 3.9 5.5 6.9 8.5 11.4 13.8 16.4 - - 1.7 4.0 19.1 50.1
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1
Total Revenue 0.5 0.7 0.8 2.1 0.8 1.7 1.4 2.8 4.3 5.5 7.4 9.0 11.6 14.7 17.4 20.4 0.1 0.2 4.2 6.7 26.2 64.0
Instrum ent Build
Cumulative Systems:
Total Systems In-Field 191 265 295 337 345 430 458 -- -- -- -- -- -- -- -- -- 337 -- -- --
Evaluation Systems 169 220 239 259 256 312 311 -- -- -- -- -- -- -- -- -- 259 -- -- --
Revenue-Generating System s 22 45 56 78 89 118 147 192 247 312 387 472 572 682 802 932 78 192 472 932
Quarter Increase In Systems:

QOQ Total Systems In-Field 191 74 30 42 8 85 28 - 337 121 - -
QOQ Evaluation Systems 169 51 19 20 (3) 56 -1 - 259 52 - -
QOQ Revenue-Generating Systems 22 23 11 22 11 29 29 45 55 65 75 85 100 110 120 130 - 78 114 280 460
12 Month Conversion Ratio 46% 40% 33% 38% 44% 62% 62% 77% -- -- -- -- --
Instrument Sales Price (Thousands) $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Instrument ASP (Thousands) $23 $22 $22 $49 $30 $33 $15 $20 $25 $25 $25 $25 $30 $30 $30 $30 $30.1 $23.1 $25.0 $30.0
Instrum ent Revenue ($M) $0.5 $0.5 $0.2 $1.1 $0.3 $1.0 $0.4 $0.9 $1.4 $1.6 $1.9 $2.1 $3.0 $3.3 $3.6 $3.9 $0.2 $2.3 $2.6 $7.0 $13.8
Reagent Build
Revenue-Generating Systems Installed 22 45 56 78 89 118 147 192 247 312 387 472 572 682 802 932 78 192 472 932
Average Cartridges Per Day Per System 0.4 0.7 1.0 0.4 0.5 0.5 0.8 1.0 1.0 1.1 1.1 1.1 1.2 1.2 1.2 1.0 0.8 1.1 1.2
Cartridges Per Quarter (Thousands) 0.80 2.83 5.11 2.3 3.6 4.1 8.6 13.4 17.5 24.8 31.3 38.8 51.7 62.6 74.7 - 8.7 18.5 87.0 227.8
ASP Per Cartridge $200 $200 $200 $200 $200 $220 $220 $220 $220 $220 $220 $220 $220 $220 $220 $200 $214 $220 $220
Reagent Revenue ($M) $0.2 $0.6 $1.0 $0.45 $0.7 $0.9 $1.9 $3.0 $3.9 $5.5 $6.9 $8.5 $11.4 $13.8 $16.4 $0.0 $1.7 $4.0 $19.1 $50.1
Used For Modeling Instrument Placements
Cost of Goods Build
Total Cost of Goods $0.0 $0.1 $0.2 $0.7 $0.5 $0.7 $0.7 $1.3 $1.8 $2.2 $2.8 $3.3 $4.0 $5.0 $5.9 $6.8 $1.0 $3.2 $10.1 $21.7
Number of Instruments 22 11 29 29 45 55 65 75 85 100 110 120 130 78 114 280 460

Instrument Cost (Thousand) $18.0 $28.4 $15.2 $12.8 $15.0 $15.0 $15.0 $15.0 $15.0 $15.0 $15.0 $15.0 $15.0 $18.0 $17.8 $15.0 $15.0
Number of Cartridges (Thousand) 5.1 2.3 3.6 4.1 8.6 13.4 17.5 24.8 31.3 38.8 51.7 62.6 74.7 8.7 18.5 87.0 227.8
Cartridge Cost $50 $80 $78 $76 $74 $72 $70 $68 $66 $65 $65 $65 $65 $50 $77 $69 $65
Overhead - - - - - - - - - - - - -
OPEX Analysis
2007 2008 2009
Cepheid OPEX 73 94 90
Cepheid OPEX / Install Base 148.3 99.2 65.3
AXDX OPEX / Install Base 440.5 201.7 115.7

November 7, 2018

Balance Sheet Craig-Hallum Capital Markets
Updated: 11/6/2018
2017A 2018E 2019E 2020E 2015A 2016A 2017A 2018E 2019E 2020E
Cash & Cash Equivalents 63.9 135.2 121.3 109.2 193.6 197.4 180.6 159.8 134.6 114.4 93.6 74.6 91.4 70.1 51.5 34.1 132.4 109.2 109.2 159.8 74.6 34.1
Accounts Receivable 0.6 0.7 1.1 1.9 1.1 1.8 1.4 2.5 3.8 4.8 6.3 7.7 9.9 12.5 14.5 16.9 0.1 0.0 1.9 2.5 7.7 16.9
Inventories 4.4 5.7 7.3 8.1 10.1 11.3 9.4 8.6 9.8 9.6 10.8 11.0 13.2 16.4 19.2 22.3 1.6 - 8.1 8.6 11.0 22.3
Prepaid Expenes & Other Current Assets 1.5 1.7 1.5 1.3 2.3 2.1 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 0.0 0.7 1.3 1.4 1.4 1.4
Total Current Assets 70.3 143.3 131.3 120.5 207.1 212.6 192.9 172.3 149.6 130.2 112.1 94.7 115.9 100.5 86.6 74.7 134.2 109.8 120.5 172.3 94.7 74.7
Property, Plant & Equipment 3.9 4.8 4.7 4.9 5.9 5.4 7.4 12.1 17.1 22.0 26.8 31.5 36.7 41.7 46.6 51.5 5.0 4.3 4.9 12.1 31.5 51.5
Goodw ill & Intangible Assets 0.1 0.1 0.1 0.1 0.1 0.2 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.2 0.1 0.1 0.4 0.4 0.4
Other Non-Current Assets - - - - - - - - - - - - - - - - - -
Total Assets 74.4 148.3 136.1 125.5 213.1 218.3 200.7 184.7 167.0 152.6 139.2 126.6 152.9 142.5 133.6 126.6 139.3 114.3 125.5 184.7 126.6 126.6
Accounts Payable & Accrued Expenses 4.2 5.1 5.1 5.7 7.3 7.7 5.1 4.3 2.0 2.4 3.1 3.7 4.4 5.5 6.4 7.4 5.2 4.0 5.7 4.3 3.7 7.4
Other Current Liabilities 1.0 1.1 1.1 1.1 0.1 0.2 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.1 0.0 1.1 0.4 0.4 0.4
Total Current Liabilities 5.2 6.2 6.2 6.8 7.5 7.8 5.5 4.7 2.4 2.8 3.5 4.0 4.8 5.9 6.8 7.8 5.3 4.0 6.8 4.7 4.0 7.8
Long-term Debt 99.2 115.5 117.8 115.5 115.5 115.5 115.5 115.5 115.5 115.5 115.5 115.5 - - 115.5 115.5 115.5
Income Taxes Payable - - - - - - - - - - - - - - - - -
Other Non-Current Liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 1.0 0.0 0.0 0.0 0.0
Total Liabilities 5.3 6.2 6.2 6.8 106.6 123.4 123.3 120.2 117.9 118.3 119.0 119.6 120.3 121.4 122.3 123.4 6.3 5.0 6.8 120.2 119.6 123.4
Common Stock & APIC 261.4 350.6 355.5 360.7 369.2 381.1 381.1 381.1 381.1 381.1 381.1 381.1 381.1 381.1 381.1 381.1 243.9 255.3 360.7 381.1 381.1 381.1
Retained Earnings (192.3) (208.6) (225.6) (242.0) (262.8) (286.2) (303.7) (316.6) (331.9) (346.8) (360.9) (374.1) (348.5) (359.9) (369.8) (377.9) (110.9) (146.1) (242.0) (316.6) (374.1) (377.9)
Total Stockholders' Equity 69.1 142.0 129.9 118.7 106.5 94.9 77.4 64.5 49.2 34.2 20.2 7.0 32.6 21.1 11.3 3.2 133.0 109.2 118.7 64.5 7.0 3.2
Liabilities + Stockholder's Equity 74.4 148.3 136.1 125.5 213.1 218.3 200.7 184.7 167.0 152.6 139.2 126.6 152.9 142.5 133.6 126.6 114.3 125.5 184.7 126.6 126.6
TTM Adjusted Return on Assets -88.0% -43.2% -46.9% -51.0% -33.1% -35.5% -41.1% -47.1% -52.1% -55.4% -59.1% -63.8% -51.8% -53.5% -54.2% -53.5% -58% -51% -47% -64% -53%
TTM Adjusted Return on Equity -94.7% -45.1% -49.2% -53.9% -66.3% -81.6% -106.5% -134.8% -177.1% -246.8% -407.0% -1154.2% -243.4% -360.6% -641.5% -2110.3% -61% -54% -135% -1154% -2110%
Total Working Capital 0.7 1.3 3.4 4.3 3.9 5.5 5.8 6.8 11.6 12.0 13.9 15.0 18.7 23.5 27.3 31.8 (4.0) 4.3 6.8 15.0 31.8
Change In Working Capital 0.7 0.6 2.1 0.9 3.9 1.6 0.3 1.0 11.6 0.4 1.9 1.1 18.7 4.8 3.8 4.5 (4.0) 8.3 2.5 8.2 16.8
Change in WC/Change in Revenue 1.4 3.3 16.2 0.7 4.8 1.8 (0.8) 0.7 2.7 0.3 1.0 0.6 1.6 1.5 1.4 1.5 (40.07) 2.10 0.99 0.42 0.44
Gross Cash Per Share 1.23 2.52 2.19 2.02 3.48 3.66 3.34 2.95 2.48 2.10 1.71 1.36 1.66 1.22 0.89 0.59 2.13 2.03 2.93 1.37 0.60
Net Cash (Debt) Per Share 1.23 2.52 2.19 2.02 1.70 1.52 1.16 0.82 0.35 (0.02) (0.40) (0.75) (0.44) (0.79) (1.11) (1.41) 2.13 2.03 0.81 (0.75) (1.43)
Book Value Per Share 1.33 2.65 2.35 2.20 1.91 1.76 1.43 1.19 0.90 0.63 0.37 0.13 0.59 0.37 0.20 0.06 2.13 2.21 1.18 0.13 0.06
Total Debt/Total Assets 0.0% 0.0% 0.0% 0.0% 46.5% 52.9% 58.7% 62.5% 69.1% 75.7% 83.0% 91.3% 75.5% 81.0% 86.4% 91.3% 0.0% 0.0% 62.5% 91.3% 91.3%
Total Debt/Equity 0.0% 0.0% 0.0% 0.0% 93.1% 121.7% 152.1% 179.2% 234.9% 337.3% 571.1% 1651.0% 354.6% 546.6% 1023.2% 3601.9% 0.0% 0.0% 179.2% 1651.0% 3601.9%
Total Debt/Total Debt + Equity 0.0% 0.0% 0.0% 0.0% 46.5% 52.9% 58.7% 62.5% 69.1% 75.7% 83.0% 91.3% 75.5% 81.0% 86.4% 91.3% 0.0% 0.0% 62.5% 91.3% 91.3%
Perform ance Ratios

Days of Sales Outstanding 95 89 123 84 122 99 97 80 80 80 78 78 78 78 76 76 50 170 135 107 96
Days of Inventory In Stock 15,333 3,877 3,517 1,134 1,883 1,444 1,266 600 500 400 350 300 300 300 300 300 #DIV/0! 2,936 981 394 375
Days of A/P & Accruals Outstanding 14,805 3,487 2,444 804 1,364 977 683 300 100 100 100 100 100 100 100 100 #DIV/0! 2,081 491 131 125
Working Capital Turnover 0.9 1.3 1.2 1.7 1.2 1.2 1.2 1.2 1.3 1.4 1.6 2.0 2.1 2.2 2.3 2.5 (0.1) 0.5 2.7 3.2 3.8
Fixed Asset & Intangible Life 6 8 8 2 11 14 19 12 12 12 12 12 12 12 12 12 2 2 8 19 16
Current Ratio 13.4 23.0 21.2 17.8 27.8 27.1 35.3 36.7 63.7 46.5 32.3 23.4 24.2 17.1 12.7 9.5 27.2 17.8 36.7 23.4 9.5
Quick Ratio 12.3 21.8 19.8 16.4 26.1 25.4 33.3 34.5 58.9 42.6 28.8 20.3 21.1 14.1 9.7 6.5 27.1 16.4 34.5 20.3 6.5
Cash Ratio 12.2 21.7 19.6 16.1 26.0 25.2 33.0 34.0 57.3 40.9 27.0 18.4 19.1 11.9 7.6 4.4 27.0 16.1 34.0 18.4 4.4

November 7, 2018

Cash Flow Statem ent Craig-Hallum Capital Markets
Updated: 11/6/2018
2017A 2018E 2019E 2020E 2015A 2016A 2017A 2018E 2019E 2020E
Net Income (14.2) (16.5) (17.1) (16.3) (20.8) (23.2) (22.1) (20.8) (21.0) (20.7) (19.9) (19.2) (19.5) (17.6) (16.1) (14.4) (45.5) (66.4) (64.0) (86.9) (80.7) (67.7)
Depreciation & Amortization 0.6 0.6 0.6 0.6 0.5 0.4 0.4 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.8 2.7 2.5 1.5 1.7 3.3
Stock-Based Comp Expense 3.2 4.2 3.5 3.0 5.6 3.4 3.5 3.6 3.7 3.8 3.9 4.0 4.1 4.2 4.3 4.4 8.4 8.8 13.9 16.0 15.3 16.9
Other Non-Cash Items - 0.0 (0.0) 0.2 0.2 2.3 2.5 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 0.2 0.0 0.2 6.1 4.0 4.0
Change in Assets & Liabilities (5.1) (1.0) (1.5) (0.8) (1.6) (1.1) (3.5) (1.0) (4.9) (0.4) (1.9) (1.1) (3.7) (4.8) (3.8) (4.5) 0.0 1.4 (8.4) (7.2) (8.2) (16.8)
Net Cash From Operating Activities (15.5) (12.6) (14.4) (13.2) (16.1) (18.2) (19.2) (17.0) (20.9) (16.0) (16.5) (14.7) (17.4) (16.5) (13.8) (12.6) (35.1) (53.4) (55.7) (70.5) (68.1) (60.3)
Capital Expenditures (0.2) (1.4) (0.4) (0.9) (1.3) (0.6) 1.1 (4.8) (5.3) (5.3) (5.3) (5.3) (5.8) (5.8) (5.8) (5.8) (3.7) (2.4) (3.0) (5.6) (21.1) (23.2)
Business Acqusitions - - - - - - - - - - - - - - - - -
Other Cash From Investing Activities (31.6) (0.1) (0.2) (0.2) (0.0) (0.0) 0.2 12.8 30.9 (32.0) 0.1 - -
Net Cash from Investing Activities (31.8) (1.5) (0.6) (1.1) (1.3) (0.6) 1.3 (4.8) (5.3) (5.3) (5.3) (5.3) (5.8) (5.8) (5.8) (5.8) 9.2 28.5 (35.0) (5.5) (21.1) (23.2)
Debt Proceeds (Repayments) 105 21 40 - - 166.5 - -

Stock Proceeds (Repurchse) 2.0 85.2 1.0 2.1 1.2 1.8 (43.9) 1.0 1.0 1.0 1.0 1.0 40.0 1.0 1.0 1.0 105.0 (0.6) 90.4 (39.9) 4.0 43.0
Acqusition Consideration Payments - - - - -
Other Cash from Financing Acitivities (4) (0.66) 4.91 (0.1) 2.4 - (0.1) - -
Net Cash from Financing Activities 2.0 85.2 1.0 2.1 101.8 22.6 1.1 1.0 1.0 1.0 1.0 1.0 40.0 1.0 1.0 1.0 104.8 1.762 90.4 126.5 4.0 43.0
FX Impact On Cash 0.1 0.1 0.1 0.0 0.0 (0.1) 0.1 0.0 0.0 0.0 0.0 - 0.0 0.0 0.0 - - (0.1) 0.3 0.0 0.0 0.0
Net Increase (Decrease) In Cash (45.2) 71.3 (13.9) (12.2) 84.4 3.8 (16.8) (20.8) (25.2) (20.2) (20.8) (19.0) 16.8 (21.3) (18.6) (17.4) 78.9 (23.3) (0.0) 50.6 (85.2) (40.5)
Cash Beginning of Period 109.2 63.9 135.2 121.3 109.2 193.6 197.4 180.6 159.8 134.6 114.4 93.6 74.6 91.4 70.1 51.5 53.6 132.4 109.2 109.2 159.8 74.6
Cash End of Period 63.9 135.2 121.3 109.2 193.6 197.4 180.6 159.8 134.6 114.4 93.6 74.6 91.4 70.1 51.5 34.1 132.4 109.2 109.2 159.8 74.6 34.1

Discounted Cash Flow Model Craig-Hallum Capital Markets
Updated: 11/6/2018
2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2033E Term inal
Revenue 7 26 64 189 318 401 498 538 581 627 907 934
EBIT Margin -1217% -302% -102% 6% 28% 27% 31% 30% 29% 28% 24% 24%
EBIT (81) (79) (66) 12 88 107 155 161 167 174 220 227
Tax Rate 0% 0% 0% 0% 0% 0% 0% 19% 19% 19% 19% 19%
EBIT (1-T) (82) (79) (66) 12 88 107 155 161 167 174 178 184
+ Depreciation 1 2 3 4 6 8 10 10 10 10 14 15
+ Other Non-Cash Items 22 19 21 22 23 24 24 25 26 27 32 33
- Capex 6 21 23 26 28 31 34 36 38 41 52 53
- Working Capital 7 8 17 38 48 36 41 43 46 48 62 63
FCFF (71) (88) (81) (25) 40 71 114 117 119 122 110 115
Terminal CF 115
Terminal Cost of Capital 7.8%
Terminal Value 2,404
PV (Term Value) 679
PV (CF Non-Term) 230
Sum of PV 909
- Debt 115 2020 Revenue $ 64.0
- Minority Interests - Enterpise Value From DCF 909
+ Cash 160 Im plied EV/rev From DCF 14.2
+Non-Op Assets -
Value of Equity 954
Shares 54
Value of Shares 18
Cost of Capital (Used for DCF) 14.5% 14.1% 13.7% 13.2% 12.8% 12.4% 12.0% 11.6% 11.2% 10.7% 8.2% 7.8%
Assumptons 2018 2019 2020 2021 2022 2023 2024 2025-2028 2029-2033 Terminal
Total Revenue 60% 294% 144% 196% 68% 26% 24% 8% 6% 3.0%
EBIT Grow th 26% -2% -17% -118% 641% 22% 45% 4% 4% 3%

November 7, 2018
Source: FactSet

Buy 77% 18%
Hold 21% 2%
Sell 1% 0%
Total 100% 14%
next three months.
OTHER DISCLOSURES

November 6, 2018

With 3Q18 Out Of The Way; Expecting Reagent Rentals To Increase In 4Q18
CONCLUSION
PRICE: US$16.30
AXDX shares are indicating 7% lower after reporting 3Q18 revenue and EPS that missed
Price as of the close November 6, 2018
Consensus expectations. The Mayo/UCLA study is fully enrolled and should complete
TARGET: US$21.00
follow up in late 2018/first week of 2019, putting it on track for a possible ECCMID (April,
2019) presentation. We remain OW, but our lower forecast trims our price target to $21
s/o, $0.30 debt/sh.
(was $24).
William R. Quirk, CFA
• 3Q18 Results: Accelerate reported $1.4M in revenue, below the Street's estimate 612 303-6858, william.r.quirk@pjc.com
of $3.1M. Accelerate installed 458 cumulative Pheno modules, an increase of 28
sequentially (was 430 modules). This consists of 29 new revenue-generating installs vs. Changes Previous Current
Rating — Overweight
29 in 2Q18, below our 44 3Q18 estimate (for a total of 147 revenue generating systems)
Price Tgt US$24.00 US$21.00
and 311 modules under evaluation. Gross margin for the quarter was 49.4% (PJC est:
47.4%). Total operating expenses were better than our estimates with SG&A of $12.2M
(PJC est: $17.1M) and R&D of $7.9M (PJC est: $7.4M). All in, EPS of ($0.41) was in line FY18E EPS US$(1.73) US$(1.61)
with the Street's ($0.41) estimate. Accelerate exited the quarter with $180M in cash. FY19E EPS US$(1.56) US$(1.44)
• Guidance: Consistent with the 2Q18 call, management did not give guidance. They were Shares Out (mil) 54.0
more upbeat than in recent calls, perhaps owing to the expectation of several capital Market Cap. (mil) US$880.2
deals getting funded for the 2019 budget cycle. Management cut the sales cycle time Avg Daily Vol (000) 278
to 5 months for reagent rental deals, which suggests (as we had assumed) that 4Q18 Book Value/Share US$1.43
could be the start of improving system placements. Net Cash Per Share US$1.16
Yield 0.00%
• Business Update: The important Mayo/UCLA study (an outcomes study) has completed Fiscal Year End Dec
enrollment and has entered the 90 day follow up period, which suggests it could be
finished by end of year/first week of 2019. Assuming normal data collection/analysis USD
timelines; we believe the top line results could be presented as soon as ECCMID (April 35
13-16 in Amsterdam). We continue to believe this is a pivotal study to demonstrate the

30
real world cost savings and mortality improvements of Pheno. Interestingly, the sponsor,
ARLG, secured funding to expand the study OUS, which implies positive early results. 25
Lastly, the lower respiratory trial is nearing the start after management changed the
20
reference method to one that delivered more consistent results across the various trial
sites. Accelerate will also use their new sample prep system (and have build 40 to support 15
the trial). The net effect is another delay, but management signaled a 1Q19 trial start. 10
Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18
• What To Do With The Stock: It has been a tumultuous journey in the initial Source: Bloomberg
commercialization for Pheno; the silver lining is the timing of the reagent rental shift and
the associated shortening of the sales cycle should begin to be reflected in 4Q18 results .
We are encouraged for the 2019 budgets, but are trimming numbers to reflect a stronger
reagent rental system mix. Accordingly, our price target drops to $21 (was $24), which
is based on 11x our 2020 EV/Rev estimate.
YEAR
2017A 0.5 0.7 0.8 2.1 4.2 209.6x (0.27) (0.31) (0.31) (0.27) (1.16) NM
2018E 0.8A 1.7A 1.4A 2.6 6.5 135.4x (0.37)A (0.43)A (0.41)A (0.40) (1.61) NM
2019E 6.4 7.7 10.9 13.6 38.6 22.8x (0.40) (0.40) (0.34) (0.31) (1.44) NM
Income Statement
2017A 2018E 2019E
Qtr 1 A Qtr 2 E Qtr 3 A Qtr 4 A Qtr 1 A Qtr 2 A Qtr 3 A Qtr 4 E Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E 2016A 2017A 2018E 2019E 2020E
Instrument Revenue 510 583 482 1,620 469 1,049 515 1,129 3,192 3,569 4,944 6,175 149 3,195 3,162 17,881 33,763
Assay Revenue - 97 324 479 312 623 818 1,475 3,225 4,116 5,902 7,402 14 900 3,228 20,645 75,529
Total Product Revenue 510 679 806 2,099 781 1,672 1,333 2,604 6,417 7,685 10,846 13,577 163 4,095 6,390 38,526 109,293
License Revenue 20 20 22 21 20 20 22 21 15 15 15 15 83 83 83 60 60
Total Revenue 530 699 828 2,120 801 1,692 1,355 2,625 6,432 7,700 10,861 13,592 246 4,178 6,473 38,586 109,353
Cost of Product Revenue 32 133 191 646 482 717 675 1,193 2,861 3,461 4,638 5,619 0 1,002 3,067 16,579 34,199
Gross Profit 498 566 637 1,474 319 976 680 1,431 3,571 4,239 6,223 7,973 246 3,176 3,406 22,006 75,154
Operating Expenses:
Research & Development 4,288 5,500 6,351 6,161 6,782 6,060 7,891 7,800 8,000 8,100 8,200 8,300 28,196 22,300 28,533 32,600 34,200
Sales, General & Administrative 10,526 11,500 11,601 11,361 14,353 15,330 12,153 12,353 14,003 14,653 13,303 13,503 36,200 44,988 54,189 55,462 58,562
Depreciation & Amortization 0 70 0 0 0 0 0 0 0 0 0 0 2,351 70 0 0 0
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Operating Expense 14,814 17,070 17,952 17,522 21,135 21,390 20,044 20,153 22,003 22,753 21,503 21,803 66,747 67,358 82,722 88,062 92,762
Operating Income (Loss) (14,316) (16,504) (17,315) (16,047) (20,816) (20,414) (19,364) (18,722) (18,432) (18,514) (15,280) (13,830) (66,501) (64,182) (79,316) (66,056)
0 (17,608)
0
Interest & Other Expense (Income) net (110) (5) (285) (900) (198) 2,709 2,582 3,207 3,215 3,218 3,221 3,223 (393) (1,300) 8,300 12,877 12,881
Pretax Income (Loss) (14,206) (16,499) (17,030) (15,147) (20,618) (23,123) (21,946) (21,929) (21,646) (21,732) (18,501) (17,054) (66,108) (62,882) (87,616) (78,933) (30,489)
Net Income (Loss) - Reported (14,206) (16,499) (17,075) (15,147) (20,802) (23,224) (21,946) (21,929) (21,646) (21,732) (18,501) (17,054) (66,375) (62,927) (87,901) (78,933) (30,489)
Non-Recurring 67
Net Income (Loss) - Ongoing (w/ SBC) (14,139) (16,499) (17,075) (15,147) (20,802) (23,224) (21,946) (21,929) (21,646) (21,732) (18,501) (17,054) (66,375) (62,860) (87,901) (78,933) (30,489)
Diluted EPS (Reported) (0.27) (0.31) (0.31) (0.27) (0.37) (0.43) (0.41) (0.40) (0.40) (0.40) (0.34) (0.31) (1.29) (1.16) (1.61) (1.44) (0.55)
Diluted EPS (Ongoing, w/ SBC) (0.27) (0.31) (0.31) (0.27) (0.37) (0.43) (0.41) (0.40) (0.40) (0.40) (0.34) (0.31) (1.29) (1.16) (1.61) (1.44) (0.55)
Avg. Share Outstanding, Diluted 51,887 53,668 55,316 55,421 55,640 54,003 54,145 54,345 54,545 54,745 54,945 54,964 51,272 54,073 54,533 54,800 55,464
Expense Variables:
Cost of Product Revenue 6.3% 19.6% 23.7% 30.8% 61.7% 42.8% 50.6% 45.8% 44.6% 45.0% 42.8% 41.4% NM 24.5% 48.0% 43.0% 31.3%
Research & Development 809.1% 786.7% 766.7% 290.6% 846.7% 358.1% 582.5% 297.2% 124.4% 105.2% 75.5% 61.1% 11461.8% 533.8% 440.8% 84.5% 31.3%
Selling, General & Administrative 1986.0% 1644.8% 1400.5% 535.8% 1791.9% 905.8% 897.0% 470.6% 217.7% 190.3% 122.5% 99.3% 14715.4% 1076.8% 837.2% 143.7% 53.6%
Total Operating Expenses 2795.1% 2441.5% 2167.3% 826.3% 2638.6% 1263.9% 1479.5% 767.8% 342.1% 295.5% 198.0% 160.4% 27132.9% 1612.2% 1278.0% 228.2% 84.8%
Effective Interest Rate, cash 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%
Effective Interest Rate, debt 5.0% 5.0% 5.0% 5.0% 2.5% 2.5% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 5.0% 5.0% 6.8% 11.0% 11.0%
Effective Tax Rate NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Margin Analysis:
Product Gross Margin 93.7% 80.4% 76.3% 69.2% 38.3% 57.2% 49.4% 54.2% 55.4% 55.0% 57.2% 58.6% NM 75.5% 52.0% 57.0% 68.7%
Operating Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Pretax Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Net Income Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
YoY Growth Rates:
Total Revenues 225.2% 3395.8% 3351.4% 5336.9% 51.1% 142.1% 63.6% 23.8% 703.0% 355.0% 701.7% 417.8% 67.3% 1598.3% 54.9% 496.1% 183.4%
Cost of Goods Sold (Product Sales) NM NM NM NM 1404.1% 439.4% 253.4% 84.7% 493.5% 383.0% 587.1% 370.9% NM NM 206.1% 440.6% 106.3%
S, G & A -41.7% -40.5% -15.7% 51.3% 58.2% 10.2% 24.2% 26.6% 18.0% 33.7% 3.9% 6.4% 102.4% 24.3% 20.5% 2.3% 5.6%
Operating Expenses -3.4% -4.7% 2.9% 9.1% 42.7% 25.3% 11.7% 15.0% 4.1% 6.4% 7.3% 8.2% 46.1% 0.9% 22.8% 6.5% 5.3%
Net Income (Ongoing) NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
EPS NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Balance Sheet Data:
Net Debt (Cash) Per Share ($1.23) ($2.52) ($2.19) ($1.97) ($1.70) ($1.52) ($1.16) ($0.89) ($0.58) ($0.29) ($0.02) $0.20 ($1.52) ($2.02) ($0.89) $0.20 $0.30
Book Value Per Share $1.33 $2.58 $2.35 $2.16 $1.91 $1.76 $1.43 $1.13 $0.90 $0.63 $0.42 $0.23 $1.52 $2.22 $1.12 $0.23 $0.24

November 6, 2018
12/16/15 02/28/17 06/05/17 11/02/17 05/09/18 08/06/18

I:OW:$25 OW:$30 OW:$32 OW:$26 OW:$25 OW:$24
35
30
25
20
15
10
Q3 2016 Q1 Q2 Q3 2017 Q1 Q2 Q3 2018 Q1 Q2 Q3 2019
Legend:
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Piper Jaffray
BUY [OW] 397 62.62 115 28.97
HOLD [N] 223 35.17 20 8.97
SELL [UW] 14 2.21 0 0.00

Time of dissemination: 6 November 2018 22:00EST.

November 6, 2018
the past 12 months.
Rating Definitions

Jaffray & Co. Additional information is available upon request.Copyright 2018 Piper Jaffray. All rights reserved.

October 29, 2018

First Lab Checks Finds Some Knowledge Of Pheno, But Limited
Alexander Nowak, CFA Traction. Expecting Another Reset Quarter As AXDX Moves
Senior Research Analyst Towards Reagent Rental. Reiterate HOLD Rating As We Await
1 612-334-6347
Mayo/UCLA Study Results.
Accelerate Diagnostics is an early stage diagnostics company. Accelerate developed Pheno, a
next-generation microbiology instrument, automating and speeding up complex microbiology
www.craig-hallum.com testing.
OUR CALL
Rating - Hold Our initial channel checks found modest knowledge of AXDX/Pheno, but
Fundamental Trend - Stable limited adoption (only one out of 20 purchased the system and two were
Price Target - $22
FY18E Rev (M) - $11.1
evaluating it). Most labs were receptive to an automated ID/AST system,
FY19E Rev (M) - $37.4 although some still prefer conventional methods. During Q3, the University
FY20E Rev (M) - $82.0 of Arkansas published its retrospective study on Pheno. We believe the
FY18E Adj. EPS - ($1.55)
FY19E Adj. EPS - ($1.31) study emphasizes the need for a randomized, two-arm study (like
FY20E Adj. EPS - ($0.94) Mayo/UCLA). Mayo/UCLA is still listed as enrolling with completion in
December and we anticipate read-out early 2019 (interim as soon as second
Profile
Price: $14.96 week of January). Finally, we are anticipating another reset quarter for Q3,
52 Week Range: $14.25 - $30.35 as instrument revenue estimates are likely still too high (moved to a reagent
Shares Out (M): 54.1
rental model in Q2), but system placement forecasts are OK, in our opinion.
Market Cap (M): $802.7 We reiterate our HOLD rating on shares and await the Q3 earnings report as
Insiders Own %: 44.3% well as the read-out of the Mayo/UCLA study.
Short Interest %: 24.5%
Book value/Share: 2.1  Calling All Labs: We reached out to 20 hospital laboratories to gauge
4-Yr EPS CAGR NA awareness, interest and traction of Pheno. In most cases we spoke with
Dividend Yield (%) 0%
Net Debt (M): $81.9 the head or a technician on the microbiology bench. Out of the 20 labs, 7
Net Debt/share: $1.51 (35%) were familiar with either Pheno or Accelerate Diagnostics. One
Fiscal Year End: Dec.
hospital purchased Pheno and will be trained on the system “next week.”
Two labs are evaluating Pheno. For those unfamiliar with
Rev (M) 2018E 2019E 2020E Pheno/Accelerate, when we described the system and benefits the
Mar $0.8A $6.0 $15.5
Jun $1.7A $8.2 $19.0
commentary was mixed; most were receptive of a more rapid and less
Sep $3.7 $10.3 $22.1 hands-on test (“has great potential”), while others preferred conventional
Dec $5.0 $12.9 $25.4 methods (“not a one size fits all”) and questioned the accuracy of rapid
FY $11.1 $37.4 $82.0
tests. Of the 20 labs, 1 uses Pheno in their clinical practice (training on it
Adj. EPS 2018E 2019E 2020E next week), 7 use manual methods such as Kirby-Bauer disk diffusion, 4
Mar ($0.37)A ($0.36) ($0.30) use Maldi-TOF (no comment on follow-up for AST results), 5 use rapid
Jun ($0.43)A ($0.34) ($0.25)
Sep ($0.37) ($0.32) ($0.21) molecular systems (including BioFire and Verigene) and 3 use either
Dec ($0.37) ($0.29) ($0.18) Vitek or Phoenix. We intend to check in with these labs and additional
FY ($1.55) ($1.31) ($0.94) labs going forward to track progress of Pheno.
Adj. EPS includes stock-based comp expense
Heard of Accelerate/Pheno? Purchased Pheno?
P/E NM NM NM
EV/ Revenue NM 24x 11x Call Date Total Yes No Yes Evaluating No
EV/EBITDA NM NM NM
10/26/2018 20 7 13 1 2 17
Management 35% 65% 5% 10% 85%
Chairman John Patience
CEO Lawrence Mehren
CFO Steve Reichling Current Microbiology Testing Solution
Manual Rapid MDx (BioFire,
Call Date Total Pheno Maldi-TOF Vitek, Phoenix
Tests Verigene)
10/26/2018 20 1 7 4 5 3
5% 35% 20% 25% 15%
See page 2 for Accelerate’s trial update and our Q3 preview.

October 29, 2018
 Clinical Trial Updates: Since the Q2 call, Accelerate published several abstracts as
part of the ID Week conference. We believe the most important abstract from the
data release is from the University of Arkansas. The study is a retrospective chart
review which used the standard of care during January-April 2017 (Maldi & Vitek)
followed by Accelerate’s Pheno from February-March 2018. The study found the
time to optimal therapy was 37.5 hours with Accelerate vs. 73.5 hours with the
standard of care (p: <0.001). The length of stay was 9.1 days for Accelerate vs. 12.1
days for the standard of care (p: 0.03). Given our knowledge of Pheno, the reduction
in time to optimal therapy is not surprising. However, we were surprised at the
significance value of the length of stay outcome; just on the verge of non-significance
(at a 95% confidence interval). We believe the Arkansas study shows why the
UCLA/Mayo study will be important; despite a clearly better test, questions remain
on overall hospital cost/time savings with Pheno. The UCLA/Mayo study will allow
for a true side-by-side comparison and we believe the key metric to watch will be the
secondary outcomes (mortality, length of stay, time in ICU). Clinicaltrials.gov
continues to list the trial as “enrolling” with a completion of December 2018. We
expect a read-out early 2019, with potential for an interim read-out the second week
of January. If the results of Mayo/UCLA are in line with Arkansas (2 day reduction
in LOS), we believe Pheno will become a must have system for microbiology
laboratories.
 Q3 Preview: Q2 was a reset quarter for Accelerate with the company expanding its
reagent rental program (placing the system for free with no contract) and suspending
guidance. As we mentioned, the move to a reagent rental model should help
placements but hurt near-term revenue forecasts. That said, we still model $2.2M in
instrument sales for Q3 and $2.6M for Q4. If most customers switched to the reagent
rental model, we believe our instrument forecasts (for 2H18 and 2019) are too high.
Another way of saying it, we believe instrument placements should be fine, but
revenue could still miss estimates and ultimately lead to another reset quarter (as us
and others take down instrument forecasts). We continue to stay on the sidelines and
await the Mayo/UCLA read-out.
STOCK OPPORTUNITY
Our $22 price target represents 34x enterprise value/revenue on our 2019 estimate.
We initially derive our price target from our discounted cash flow model and then use
the DCF equity value to calculate the implied EV/revenue multiple. We use a WACC
of 14.5%, which is the discount rate implied in AXDX’s recent convertible note
offering. We model the WACC slowly declining to a “market” discount rate through
our time horizon.
RISKS
 Adoption & Execution: Accelerate Diagnostics has recently begun to sell Pheno
to microbiology labs. Failure to meet internal as well as external sales targets
could impact forward estimates and the stock price.
 Clinical Trial Results/Regulation: Accelerate will be seeking FDA approval for
its lower respiratory test in the next 12 months. Failure to obtain approval (or a
delay) could impact forward estimates and the stock price.

October 29, 2018
 Competition: We believe there are no true competiors to Accelerate’s Pheno.

However, microbiology labs may not appreciate the benefits of Pheno vs. other
microbiology products. Further, new instruments that are directly competitive to
Pheno could emerge and fight for Accelrate’s market share.

October 29, 2018

Updated: 8/6/2018
2017A 2018E 2019E 2020E 2015A 2016A 2017A 2018E 2019E 2020E
Q1A Q2A Q3A Q4A Q1A Q2A Q3E Q4E Q1E Q2E Q3E Q4E Q1E Q2E Q3E Q4E
Instruments 0.5 0.5 0.2 1.1 0.3 1.0 2.2 2.6 2.5 3.4 3.8 4.8 5.5 5.8 6.3 6.8 2.3 6.1 14.4 24.3
Reagents - 0.2 0.6 1.0 0.5 0.7 1.4 2.4 3.5 4.8 6.5 8.1 10.0 13.2 15.9 18.6 1.7 5.0 22.8 57.7
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1
Total Revenue 0.5 0.7 0.8 2.1 0.8 1.7 3.7 5.0 6.0 8.2 10.3 12.9 15.5 19.0 22.1 25.4 0.1 0.2 4.2 11.1 37.4 82.0
Gross Profit 0.5 0.6 0.6 1.5 0.3 1.0 2.1 2.9 3.7 5.2 6.6 8.6 10.4 12.8 14.9 17.2 0.1 0.2 3.2 6.2 24.1 55.3
S,G&A 10.5 11.5 11.6 11.5 14.4 15.3 15.5 16.0 16.0 16.2 16.4 16.6 18.6 18.8 19.0 19.2 18.6 37.2 45.1 61.2 65.2 75.6
Other - - - - - -
Other Expense (Income) 0.0 (0.1) 0.0 0.3 (0.1) 0.3 0.0 0.1 0.3
Income Taxes - 0.2 0.0 0.3 0.2 0.1 - - - - - - - - - - - 0.3 0.5 0.3 - -
NOLs 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4
Diluted EPS (GAAP) (0.27) (0.31) (0.31) (0.30) (0.37) (0.43) (0.37) (0.37) (0.36) (0.34) (0.32) (0.29) (0.30) (0.25) (0.21) (0.18) (1.01) (1.30) (1.19) (1.55) (1.31) (0.94)
Expense Analysis:
Gross Margin 95.1% 80.7% 76.9% 69.3% 38.6% 57.6% 56.3% 58.0% 62.5% 63.1% 64.1% 66.4% 66.8% 67.3% 67.5% 67.7% 100.0% 100.0% 76.0% 56.0% 64.4% 67.4%
Operating Margin -- -- -- -761.2% -2600% ####### -546.3% -396.9% -321.1% -222.0% -165.6% -120.5% -102.0% -72.4% -53.6% -39.0% -- -- -1536.6% -727.5% -187.2% -62.6%
Adj. Operating Margin -- -- -- -761.2% -2600% ####### -546.3% -396.9% -321.1% -222.0% -165.6% -120.5% -102.0% -72.4% -53.6% -39.0% -- -- -1536.6% -727.5% -187.2% -62.6%
S,G&A -- -- -- 541.1% 1791.9% 906.0% 424.6% 320.7% 268.1% 198.2% 159.0% 128.7% 119.8% 99.1% 85.9% 75.6% -- -- 1078.7% 549.6% 174.5% 92.2%
Tax Rate 0.0% -1.1% -0.3% -1.7% -0.9% -0.4% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 0.0% -0.4% -0.8% -0.3% 0.0% 0.0%
Net Margin -- -- -- -768.7% -2598% ####### -552.6% -402.8% -326.8% -226.8% -169.9% -124.3% -105.4% -74.9% -56.0% -41.2% -- -- -1532.9% -757.3% -191.6% -65.1%
Adj. Net Margin -- -- -- -768.7% -2598% ####### -552.6% -402.8% -326.8% -226.8% -169.9% -124.3% -105.4% -74.9% -56.0% -41.2% -- -- -1532.9% -757.3% -191.6% -65.1%
Grow th Metrics:
Total Revenue 225.2% 3395.0% 3350.0% 5335.9% 51.1% 142.1% 340.9% 135.4% 645.2% 383.1% 182.6% 158.5% 160.1% 132.1% 114.4% 96.9% -- 67.3% 1598.0% 166.5% 235.5% 119.5%
Gross Profit 209.2% 2720.0% 2554.2% 3668.2% -38.7% 72.9% 222.9% 96.9% 1107.9% 428.6% 221.7% 195.9% 177.8% 147.8% 125.8% 100.8% -- 67.3% 1190.5% 96.4% 286.0% 129.7%
Adj Operating Profit -6% -8.2% -0.6% 0.7% 45.5% 24.3% 15.2% 22.7% -8.0% -11.1% -14.3% -21.5% -17.4% -24.3% -30.6% -36.2% -- 46.0% -3.5% 26.2% -13.6% -26.6%
Adj Net Income -6% -7.9% -1.3% 1.0% 46.6% 41.1% 18.1% 23.3% -6.3% -20.2% -13.1% -20.3% -16.2% -23.4% -29.3% -34.6% -- 46.0% -3.5% 26.2% -13.6% -26.6%
Ongoing EPS -7% -11.9% -8.6% -4.2% 36.7% 40.0% 20.8% 23.0% -4.0% -20.9% -14.0% -21.1% -17.1% -27.6% -33.2% -38.3% -- 28.1% -8.0% 29.8% -15.2% -28.7%

October 29, 2018

Updated: 8/6/2018
2017A 2018E 2019E 2020E 2015A 2016A 2017A 2018E 2019E 2020E
- - - - - -
Instruments 0.5 0.5 0.2 1.1 0.3 1.0 2.2 2.6 2.5 3.4 3.8 4.8 5.5 5.8 6.3 6.8 - 0.2 2.3 6.1 14.4 24.3
Reagents - 0.2 0.6 1.0 0.5 0.7 1.4 2.4 3.5 4.8 6.5 8.1 10.0 13.2 15.9 18.6 - - 1.7 5.0 22.8 57.7
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1
Total Revenue 0.5 0.7 0.8 2.1 0.8 1.7 3.7 5.0 6.0 8.2 10.3 12.9 15.5 19.0 22.1 25.4 0.1 0.2 4.2 11.1 37.4 82.0
Instrum ent Build
Cumulative Systems:
Total Systems In-Field 191 265 295 337 345 430 -- -- -- -- -- -- -- -- -- -- 337 -- -- --
Evaluation Systems 169 220 239 259 256 312 -- -- -- -- -- -- -- -- -- -- 259 -- -- --
Revenue-Generating System s 22 45 56 78 89 118 173 238 293 368 453 548 658 773 898 1,033 78 238 548 1,033

QOQ Total Systems In-Field 191 74 30 42 8 85 - 337 93 - -
QOQ Evaluation Systems 169 51 19 20 (3) 56 - 259 53 - -
12 Month Conversion Ratio 46% 40% 33% 49% 62% 80% 80% -- -- -- -- -- --
Reagent Build
Revenue-Generating Systems Installed 22 45 56 78 89 118 173 238 293 368 453 548 658 773 898 1,033 78 238 548 1,033
Cost of Goods Build

Cartridge Cost $50 $80 $78 $76 $74 $72 $70 $68 $66 $65 $65 $65 $65 $50 $77 $69 $65
Overhead - - - - - - - - - - - - -
OPEX Analysis
2007 2008 2009

October 29, 2018

Updated: 8/6/2018
2017A 2018E 2019E 2020E 2015A 2016A 2017A 2018E 2019E 2020E
Inventories 4.4 5.7 7.3 8.1 10.1 11.3 13.9 13.7 12.2 13.2 14.2 14.2 16.9 20.3 23.6 26.9 1.6 - 8.1 13.7 14.2 26.9
Total Assets 74.4 148.3 136.1 125.5 213.1 218.3 201.2 188.4 171.4 160.0 149.5 140.5 167.8 160.9 155.9 153.0 139.3 114.3 125.5 188.4 140.5 153.0
Long-term Debt 99.2 115.5 115.5 115.5 115.5 115.5 115.5 115.5 115.5 115.5 115.5 115.5 - - 115.5 115.5 115.5
Change In Working Capital 0.7 0.6 2.1 0.9 3.9 1.6 6.4 (0.7) 13.8 1.6 1.5 1.2 24.5 5.2 4.4 4.9 (4.0) 8.3 6.9 6.9 20.9
Change in WC/Change in Revenue 1.4 3.3 16.2 0.7 4.8 1.8 3.3 (0.5) 2.3 0.7 0.7 0.5 1.6 1.5 1.4 1.5 (40.07) 2.10 1.00 0.26 0.47
Net Cash (Debt) Per Share 1.23 2.52 2.19 2.02 1.70 1.52 1.04 0.70 0.30 (0.05) (0.38) (0.67) (0.35) (0.65) (0.91) (1.15) 2.13 2.03 0.69 (0.67) (1.16)
Perform ance Ratios

Days of Inventory In Stock 15,333 3,877 3,517 1,134 1,883 1,444 800 600 500 400 350 300 300 300 300 300 #DIV/0! 2,936 1,024 390 367
Current Ratio 13.4 23.0 21.2 17.8 27.8 27.1 35.3 24.6 39.3 26.3 19.2 14.6 22.1 16.8 13.3 10.8 27.2 17.8 24.6 14.6 10.8
Quick Ratio 12.3 21.8 19.8 16.4 26.1 25.4 32.3 22.3 35.6 23.4 16.6 12.3 18.8 13.5 10.1 7.7 27.1 16.4 22.3 12.3 7.7
Cash Ratio 12.2 21.7 19.6 16.1 26.0 25.2 31.7 21.7 34.3 22.0 15.2 10.8 16.5 11.2 7.8 5.4 27.0 16.1 21.7 10.8 5.4

October 29, 2018

Updated: 8/6/2018
2017A 2018E 2019E 2020E 2015A 2016A 2017A 2018E 2019E 2020E
Net Income (14.2) (16.5) (17.1) (16.3) (20.8) (23.2) (20.2) (20.1) (19.5) (18.5) (17.5) (16.0) (16.4) (14.2) (12.4) (10.5) (45.5) (66.4) (64.0) (84.3) (71.6) (53.4)
Change in Assets & Liabilities (5.1) (1.0) (1.5) (0.8) (1.6) (1.1) (6.4) 0.7 (2.5) (1.6) (1.5) (1.2) (6.4) (5.2) (4.4) (4.9) 0.0 1.4 (8.4) (8.4) (6.9) (20.9)
Capital Expenditures (0.2) (1.4) (0.4) (0.9) (1.3) (0.6) (4.8) (4.8) (5.3) (5.3) (5.3) (5.3) (5.8) (5.8) (5.8) (5.8) (3.7) (2.4) (3.0) (11.5) (21.1) (23.2)
Other Cash From Investing Activities (31.6) (0.1) (0.2) (0.2) (0.0) (0.0) 12.8 30.9 (32.0) (0.1) - -
Net Cash from Investing Activities (31.8) (1.5) (0.6) (1.1) (1.3) (0.6) (4.8) (4.8) (5.3) (5.3) (5.3) (5.3) (5.8) (5.8) (5.8) (5.8) 9.2 28.5 (35.0) (11.6) (21.1) (23.2)
Debt Proceeds (Repayments) 105 21 - - 126.4 - -

Stock Proceeds (Repurchse) 2.0 85.2 1.0 2.1 1.2 1.8 1.0 1.0 1.0 1.0 1.0 1.0 40.0 1.0 1.0 1.0 105.0 (0.6) 90.4 5.0 4.0 43.0
Other Cash from Financing Acitivities (4) (0.66) (0.1) 2.4 - (5.0) - -
FX Impact On Cash 0.1 0.1 0.1 0.0 0.0 (0.1) 0.1 0.0 0.0 0.0 0.0 - 0.0 0.0 0.0 - - (0.1) 0.3 0.0 0.0 0.0
Net Increase (Decrease) In Cash (45.2) 71.3 (13.9) (12.2) 84.4 3.8 (25.7) (18.4) (21.3) (19.2) (17.9) (15.9) 17.3 (18.2) (15.3) (13.8) 78.9 (23.3) (0.0) 44.1 (74.3) (30.0)

Updated: 8/6/2018
Revenue 11 37 82 217 340 431 540 584 630 681 984 1,014
EBIT Margin -727% -187% -63% 13% 28% 28% 33% 32% 31% 30% 26% 26%
EBIT (81) (70) (51) 27 95 120 180 188 195 203 257 265
Tax Rate 0% 0% 0% 0% 0% 0% 0% 19% 19% 19% 19% 19%
EBIT (1-T) (81) (70) (51) 27 95 120 180 188 195 164 208 214
+ Depreciation 1 2 3 4 6 8 10 10 10 10 14 15
- Capex 11 21 23 26 28 31 34 36 38 41 52 53
- Working Capital 8 7 21 41 49 39 44 47 50 53 68 69
FCFF (79) (77) (71) (12) 47 82 137 140 143 108 134 141
Terminal CF 141
PV (Term Value) 828
Sum of PV 1,148
- Debt 99 2019 Revenue $ 37.4
- Minority Interests - Enterpise Value From DCF 1,148
+Non-Op Assets -
Value of Equity 1,243
Shares 56
Value of Shares 22
Total Revenue 167% 236% 120% 164% 57% 27% 26% 8% 6% 3.0%
EBIT Grow th 26% -14% -27% -153% 248% 26% 50% 4% 4% 3%

October 29, 2018
Source: FactSet

Buy 77% 18%
Hold 21% 2%
Sell 1% 0%
Total 100% 14%
next three months.
OTHER DISCLOSURES

Equity Research
August 6, 2018 Medical Technology
Sean Lavin, MD
slavin@btig.com Waters Remain Choppy; Evaluations Look Promising
Andrea Alfonso But Lack Of Purchasing Is A Concern; Maintain Neutral
(212) 527-3565
aalfonso@btig.com AXDX reported Q2 of $1.7M, better than our conservative estimate of
$1.5M but lighter than consensus of $2M. On a positive note, evaluations
Marie Thibault saw a nice pickup in pace (56 adds sequentially). Additionally, the company
(212) 527-3557 also indicated having been in productive dialogue with the FDA regarding
mthibault@btig.com its LRTI test and it appears as though the trial may prove to be less
demanding. On the negative side, there continues to be lack of clarity
around the long-term prospects of the technology with mgmt articulating
plans to shift away from a capital sale to a reagent rental focused model.
We remain believers in the value of the technology but feel that ambiguity
AXDX $21.80 around the changes in the commercial strategy, success of new salesforce
Upsi de
12 month target
%
$#,##0;(#,##0) and most importantly, hospital buying patterns, makes it less likely that
shares will outperform in the near-term. While we understand hospitals
NEUTRAL may all not have cash budgeted for the system, still the lack of ability to
make a lot of system sales calls into question the demand. Thus, we
52 week range $18.00 - $30.00
reiterate our Neutral rating.
Dividend
Market Yield
Cap (m) $1,177
  try but they might never buy… In today’s call, mgmt
Try and
Price Performance
announced that it plans to expand the reagent rental program. Mgmt
ran a pilot with 5 prospective customers with 2 having signed contracts
and the remaining 3 giving verbal commitments. We understand that
rental agreements run 3-5 years on average and although we are
concerned that flexible trialing may lead to perverse incentives, mgmt
believes the systems are highly sticky. In our minds, this system could
work if volume requirements are met or exceeded but this puts near-
term revenue at risk.
  guidance? Mgmt shied away from committing to its previous

Whither
guidance range of $21-30M, suggesting that it plans to wait for Q3 to
shape up. We see trialing this quarter as a positive but it is hard to say
how much so if the hospitals no longer must buy, but can try the
Source: IDC system and then decide whether or not to contract for future reagents.
 
Estimates
1Q17 A 2Q17 A 3Q17 A 4Q17 A FY17 A 1Q18 A 2Q18 A 3Q18 E 4Q18 E FY18 E FY19 E
Sales 1 1 1 2 4 1 2 4 6 12 29
Gross Margin (%) - 80.7% 76.9% 69.3% 76.0% 38.6% 57.6% 58.1% 58.6% 57.0% 62.9%
EBIT (14) (16) (17) (16) (64) (21) (20) (20) (19) (80) (80)
Net Income (Adj.) (14) (16) (17) (17) (63) (21) (23) (20) (19) (82) (80)
Diluted EPS (GAAP) (0.27) (0.31) (0.31) (0.30) (1.16) (0.37) (0.43) (0.36) (0.35) (1.51) (1.47)

Variance Analysis
Total revenue was $1.7M, up from $699k in the same period last year and also
up from $800k last quarter. The company reported having signed agreements
for 430 instruments vs. the tally of 345 at the end of Q1. Contracts for
customer evaluations totaled 312 instruments (vs. 256 at the end of Q1).
Meanwhile, revenue generating placements were 118 worldwide (vs. 89 at the
end of Q1).
Gross margin was 57.6%, much higher than our 45% estimate. SG&A of
$15.33M came in ~10% higher than our forecast. R&D of $6.06M was below
last quarter and lower than we modeled. All told, the net loss of $23.2M
equated to a LPS of $0.43.
Variance Analysis
2Q18
Total Revenue ($M) $1.69 $1.59 $0.11
COGS ($M) $0.72 $0.87 -17.8%
Gross Profit $0.98 $0.71 36.6%
SG&A ($M) $15.33 $14.00 9.5%
R&D ($M) $6.06 $6.60 -8.2%
Operating Expenses ($M) $21.39 $20.60 3.8%
Taxes ($M) -$0.10 $0.00 NM
Net Income ($M) -$23.22 -$19.89 16.8%
EPS ($0.43) ($0.36) 20.7%
Gross Margin 57.6% 45.0% NM
SG&A Spend % NM NM NM
R&D Spend % NM NM NM
Tax Rate NM NM NM
Model Changes
We are keeping our FY18 revenue estimate fairly steady as we prefer to wait
and assess the outcomes of incremental sales hires and new commercial
strategy. Though we find management’s commentary regarding customer
interest encouraging, the company’s own estimates also remain in flux.
Admittedly, we have little to go by and surmise that our revenue forecasts are
placeholders for now until we see more encouraging signs of conversion.

2
New Old Change

Total Revenue ($M) $12.0 $29.2 $55.8 $12.1 $29.8 $56.9 -1% -2% -2%
Net Loss ($M) -$82.2 -$80.4 -$74.8 -$78.5 -$80.3 -$76.9 5% 0% -3%
LPS ($1.51) ($1.47) ($1.34) ($1.40) ($1.43) ($1.34) 7% 3% 0%
Gross Margin 57.0% 62.9% 68.8% 57.6% 62.2% 63.7% -59bps 74bps 504bps
Valuation
Given the string of quarterly misses over the last year, the ongoing challenges
commercial strategy, we continue to see considerable risk to achieving Street
estimates. BTIG does not provide price targets on Neutral-rated stocks. Risks
to our rating include company to be acquired, not meeting FY18 estimates,
lengthening adoption cycles, LRTI data, building out the salesforce and OUS
expansion, competition, any changes to FDA regulation, the need for more
capital, a retraction in healthcare stock valuations, and a hospital spending
slow down.

3
$ millions, except EPS and %s FY14 A FY15 A FY16 A 1Q17 A 2Q17 A 3Q17 A 4Q17 A FY17 A 1Q18 A 2Q18 A 3Q18 E 4Q18 E FY18 E 1Q19 E 2Q19 E 3Q19 E 4Q19 E FY19 E FY20 E
Product Revenue 0.00 0.08 0.16 0.51 0.68 0.81 2.10 4.10 0.78 1.67 3.60 5.89 11.94 3.80 4.97 8.75 11.65 29.17 55.73
Total Revenue 0.12 0.15 0.25 0.53 0.70 0.83 2.12 4.18 0.80 1.69 3.62 5.91 12.02 3.82 4.99 8.77 11.67 29.25 55.81
COGS 0.00 0.00 0.00 0.03 0.14 0.19 0.65 1.00 0.49 0.72 1.51 2.44 5.17 1.57 1.95 3.25 4.08 10.84 17.43
Gross Profit 0.12 0.15 0.25 0.50 0.56 0.64 1.47 3.18 0.31 0.975 2.10 3.46 6.85 2.25 3.05 5.53 7.58 18.41 38.38
R&D 20.05 26.02 28.20 4.29 5.53 6.35 6.13 22.30 6.78 6.06 6.70 6.80 26.34 7.20 7.40 7.50 7.70 29.80 33.60
SG&A 10.70 17.88 36.20 10.53 11.46 11.60 11.47 45.06 14.35 15.33 15.00 15.50 60.18 15.80 16.50 17.50 19.20 69.00 79.60
EBIT -31.52 -45.55 -66.50 -14.31 -16.42 -17.32 -16.13 -64.18 -20.83 -20.41 -19.60 -18.84 -79.68 -20.75 -20.85 -19.47 -19.32 -80.39 -74.82
Other (Expense) Income 0.06 0.05 0.39 0.11 0.14 0.28 0.12 0.65 0.20 -2.71 0.00 0.00 -2.51 0.00 0.00 0.00 0.00 0.00 0.00
Pretax Income -31.46 -45.50 -66.11 -14.20 -16.28 -17.03 -16.02 -63.53 -20.63 -23.12 -19.60 -18.84 -82.19 -20.75 -20.85 -19.47 -19.32 -80.39 -74.82
Income Taxes (Benefit) -0.53 0.00 -0.27 0.00 -0.18 0.05 0.78 0.65 -0.18 -0.10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Net Income (Loss) -30.93 -45.50 -66.37 -14.20 -16.46 -17.08 -16.80 -62.88 -20.81 -23.22 -19.60 -18.84 -82.19 -20.75 -20.85 -19.47 -19.32 -80.39 -74.82
EPS -$0.71 -$1.01 -$1.29 -$0.27 -$0.31 -$0.31 -$0.30 -$1.16 -$0.37 -$0.43 -$0.36 -$0.35 -$1.51 -$0.38 -$0.38 -$0.36 -$0.35 -$1.47 -$1.34
EBIT -31.52 -45.55 -66.50 -14.31 -16.42 -17.32 -16.13 -64.18 -20.83 -20.41 -19.60 -18.84 -79.68 -20.75 -20.85 -19.47 -19.32 -80.39 -74.82
D&A 0.89 1.79 2.35 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00
EBITDA -30.63 -43.76 -64.15 -14.31 -16.42 -17.32 -16.13 -64.18 -20.82 -20.41 -19.60 -18.84 -79.67 -20.75 -20.85 -19.47 -19.32 -80.39 -74.82
Margins
Expenses

4
1Q17 A 2Q17 A 3Q17 A 4Q17 A FY17 A 1Q18 A 2Q18 A 3Q18 E 4Q18 E FY18 E 1Q19 E 2Q19 E 3Q19 E 4Q19 E FY19 E FY20 E
U.S.
Capital Equipment
additions 8 15 7 12 42 7 10 17 32 66 12 15 22 37 86 106
% sold 65% 80% 40% 77% 66% 65% 75% 75% 75% 73% 75% 75% 75% 75% 75% 75%
% reagent rental 35% 20% 60% 23% 35% 35% 25% 25% 25% 28% 25% 25% 25% 25% 25% 25%
Consumables
Price Per Test $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
y/y growth -62.4% -3.7% 50.0% 6.3% 89.8% 26.3% 26.7% 17.6%
OUS
Capital Equipment
additions 0 12 6 10 28 4 4 15 30 53 9 9 20 35 73 93
% sold 20% 20% 20% 35% 24% 0% 35% 40% 45% 30% 35% 35% 35% 35% 35% 35%
% reagent rental 80% 80% 80% 65% 76% 100% 65% 60% 55% 70% 65% 65% 65% 65% 65% 65%
Consumables
Price Per Test $150 $150 $150 $150 $150 $150 $150 $150 $145 $145 $145 $145
y/y growth -49.0% -8.2% 50.0% 14.1% 93.3% 26.4% 22.4% 19.4%
WW
Capital Equipment
additions 23 13 19 15 15 24 51 37 24 34 61
Consumables
y/y growth 51.3% 148.4% 313.1% 179.8% 186.9% 392.1% 197.5% 143.4% 97.8% 144.6% 91.0%
sequential growth 2734% 132.0% 129.4% 241.6% -63.3% 116.7% 115.1% 63.7% -35.5% 31.0% 76.0% 33.0%

5

6
Ratings Definitions
upon.

of the end of the most recent calendar quarter (June 30, 2018): 281
Distribution of BTIG’s Research Recommendations (as of June 30, 2018):

BUY: 57.3%; NEUTRAL: 39.9%; SELL: 2.8%
Distribution of BTIG’s Investment Banking Services (as of June 30, 2018):

BUY: 24.2%; NEUTRAL: 8.0%; SELL: 0.00%

misses over the last year, the ongoing challenges within the hospital purchasing environment and changes to the

7
company’s commercial strategy, we continue to see considerable risk to achieving Street estimates. BTIG does
not provide price targets on Neutral-rated stocks.

Other Disclosures

8
General Disclosures

9

respectively.

10
06 August 2018
Overweight
Price: $21.80
2Q18 Review: Record-High Placements (N=29) Not
Yet Translating into Revenues, As Emphasis Shifts to
Reagent Rentals
Accelerate Diagnostics (AXDX) reported mixed 2Q results, with revenues of Life Science Tools & Diagnostics
$1.7M again below the Street/JPMe ($2.0M$2.6M), while underlying placement AC
momentum improved significantly, with the company adding 29 systems (vs. 11 Tycho W. Peterson
(1-212) 622-6568
last quarter), bringing total placements to date to 118, while annualized utilization
is now in the $60-80k range. Despite record-high system placements, however, the
Bloomberg JPMA PETERSON <GO>
company continues to be bottlenecked by hospital budget constraints, as many
customers had set 2017-2018 budgets when the system launched last year. To Julia Qin
(1-212) 622-9253
address the issue, AXDX has recently begun to offer placements under a reagent
julia.qin@jpmorgan.com
rental model. While management noted considerable customer interest in the new
Tejas Savant
program (started just a few weeks ago), it has not yet gained enough visibility into
(1-212) 622-5650
the likely mix of reagent rental vs. capital sales, and therefore, expects to give
more color on the funnel and FY outlook on its 3Q call (potentially, with an
update to guidance before then). At this point, management expects the majority
of evaluation customers to stay with capital placement. Below we highlight other Price Performance
key takeaways:
30
 Operational initiatives starting to have an impact. In addition to discussing $

26
the quarter and announcing the reagent rental initiative, management also used 22
the call to outline several developments that are expected to fuel growth going
18
forward, including: (1) salesforce expansion by 50% (added 19 reps) and Aug-17 Nov-17 Feb-18 May-18 Aug-18
reorganization, with a more refined territorial split and upgraded talent enabling AXDX share price ($)
a sharper focus on customer conversion; (2) recent contracts with three of the RTY (rebased)
top four GPOs (covering 1,400 hospitals and representing the majority of the YTD 1m 3m 12m
Abs -20.6% 3.1% -0.9% -13.3%
current funnel) with plans to the sign the fourth in 3Q, which should expedite Rel -29.3% 3.7% -8.5% -32.4%
the contracting process; and (3) pending publication of data from multiple
randomized prospective clinical trials, which should provide more evidence of
the clinical and economic benefits of Pheno, including the previously-
highlighted Mayo Clinic and UCLA independent study (enrollment now
expected to be completed by 4Q, a slight delay), the University of Arkansas
study and two others. Additionally, AXDX also plans to enter the China market,
which is as sizable as the U.S. and, importantly, comes with full government
reimbursement ($300 per kit). The company is starting local clinical trial and
registration processes and expects to provide ongoing updates on its progress.
 Regarding the pipeline, AXDX has agreed with the FDA on a 510(k) pathway
for severe pneumonia assays (which should lead to expedited approval) and
plans to begin the U.S. clinical trial by the time it reports 3Q earnings (a slight
delay from late 2Q/early 3Q as previously expected).

Revenue ($ mn) Date Of Price 06-Aug-18
Q1 (Mar) 1 1A 1A 12 7 52-week Range ($) 30.35-16.75
Q2 (Jun) 1 3 2A 17 10 Market Cap ($ mn) 1,176.83
Q3 (Sep) 1 7 3 22 13 Fiscal Year End Dec
Q4 (Dec) 2 11 6 28 15 Shares O/S (mn) 54
FY 4 21 12 79 45 Price Target ($) 25.00

(1-212) 622-6568 06 August 2018
 Maintain Overweight. Stepping back, although 2Q top-line results were

disappointing and the lack of guidance reiteration may cause some uncertainty,
we think the risk is more to the upside than the downside, with the reagent rental
model providing a better path around hospital budget bottlenecks, while
increased sales focus, GPO contracts, and randomized trial data should facilitate
faster conversion, with further potential upside from China entry and
France/Germany reimbursement down the road (likely in 2019). With these in
mind, we remain Overweight, while establishing a Dec 2019 PT of $25 (vs. our
Dec 2018 PT of $25).
2

(1-212) 622-6568 06 August 2018

Accelerate Diagnostics (Overweight; Price Target: $25.00)
Investment Thesis
With an experienced management team commercializing a potentially disruptive
technology into a large addressable market and an attractive governmental tailwind,
we believe that Accelerate is well positioned to execute a successful commercial
launch of the Accelerate Pheno System and rapidly grow its install base, which
should lead to best-in-class revenue growth with a rapidly improving margin profile.
Valuation
Our YE19 DCF-derived PT of $25 assumes a WACC of 10.9% and 3% terminal
growth.

(1) The competitive landscape in clinical microbiology is crowded and intense; (2)
Our long-term forecasts are partly dependent on the successful commercialization of
tests beyond blood stream infections including respiratory and skin/soft tissue
infections; (3) Accelerate is a development-stage company with little meaningful
revenue currently. We model the company achieving profitability in 2019, although
this could be delayed if the company spends more or revenue ramps slower than
anticipated.
3

(1-212) 622-6568 06 August 2018

Income Statement 2014A 2015A 2016A 1QA 2QA 3QA 4QA 2017A 1QA 2QA 3QE 4QE 2018E 2019E
Capital Sales 0 0 0 1 1 0 1 2 0 1 2 3 6 9
Gross Profit 0 0 0 1 1 1 1 3 0 1 2 4 7 29
SG&A (11) (18) (36) (11) (11) (12) (11) (45) (14) (15) (16) (16) (61) (29)
Other income (expense), net 0 0 0 0 0 0 0 1 0 (3) (2) (2) (7) (10)

Pretax Income (31) (45) (66) (14) (16) (17) (16) (64) (21) (23) (22) (21) (87) (22)
Income Tax 1 0 0 0 (0) (0) 1 1 (0) (0) 0 0 (0) 0
GAAP Diluted EPS ($0.71) ($1.01) ($1.29) ($0.27) ($0.31) ($0.31) ($0.27) ($1.16) ($0.37) ($0.43) ($0.40) ($0.38) ($1.59) ($0.40)
Gross Margin 0% 0% 0% 95% 81% 77% 69% 80% 39% 58% 60% 60% 54% 65%
Effective Tax Rate 0% 0% 0% 0% -1% 0% 5% 1% -1% 0% 0% 0% 0% 0%
Net Margin 0% 0% 0% -2677% -2354% -2063% -715% -1505% -2598% -1373% -638% -336% -712% -49%
EPS growth (y/y) 37% 40% 31% 39% 37% -75%
4

(1-212) 622-6568 06 August 2018

Revenue ($M) 0 0 0 4 12 45 101 186 296 426 575 709
growth y/y 20% 55% 1732% 194% 269% 123% 84% 59% 44% 35% 23%
EBIT ($M) 0 (46) (67) (64) (80) (13) 5 26 56 102 167 234
EBIT margin 0% NA -29328% -1527% -647% -28% 5% 14% 19% 24% 29% 33%
Free Cash Flow 0 (44) (67) (72) (81) (17) 1 14 34 66 108 154
growth y/y 1704% 138% 94% 64% 43%

2020 - 2025 2.0% 2.5% 3.0% 3.5% 4.0% 2.0% 2.5% 3.0% 3.5% 4.0% 2.0% 2.5% 3.0% 3.5% 4.0%
9.9% 250 1,132 1,214 1,309 1,418 1,545 1,382 1,465 1,559 1,668 1,796 5.4x 5.8x 6.1x 6.6x 7.1x
+ =
10.4% 245 1,036 1,107 1,188 1,280 1,386 1,281 1,352 1,433 1,525 1,632 5.0x 5.3x 5.6x 6.0x 6.4x
10.9% 241 952 1,013 1,083 1,161 1,252 1,192 1,254 1,323 1,402 1,492 4.7x 4.9x 5.2x 5.5x 5.9x
11.4% 236 877 931 991 1,059 1,136 1,113 1,167 1,227 1,295 1,372 4.4x 4.6x 4.8x 5.1x 5.4x
11.9% 232 811 858 911 970 1,036 1,042 1,090 1,142 1,201 1,267 4.1x 4.3x 4.5x 4.7x 5.0x

2.0% 2.5% 3.0% 3.5% 4.0% 2.0% 2.5% 3.0% 3.5% 4.0% 2.0% 2.5% 3.0% 3.5% 4.0%
(83) 1,465 1,548 1,642 1,751 1,879 $25.91 $27.37 $29.04 $30.97 $33.22 82% 83% 84% 85% 86%
- = =
(83) 1,365 1,436 1,516 1,608 1,715 $24.13 $25.38 $26.81 $28.44 $30.32 81% 82% 83% 84% 85%
(83) 1,275 1,337 1,406 1,485 1,575 $22.55 $23.64 $24.87 $26.26 $27.86 80% 81% 82% 83% 84%
(83) 1,196 1,250 1,310 1,378 1,455 $21.15 $22.10 $23.17 $24.37 $25.73 79% 80% 81% 82% 83%
(83) 1,125 1,173 1,225 1,284 1,351 $19.90 $20.74 $21.67 $22.71 $23.88 78% 79% 80% 81% 82%
5

(1-212) 622-6568 06 August 2018

Income Statement - Annual FY16A FY17A FY18E FY19E FY20E Income Statement - Quarterly 1Q18A 2Q18A 3Q18E 4Q18E
Revenue 0 4 12 45 101 Revenue 1A 2A 3 6
COGS 0 (1) (5) (16) (33) COGS (0)A (1)A (1) (3)
Gross profit - - - - - Gross profit - - - -
SG&A (36) (42) (58) (26) (41) SG&A (13)A (14)A (15) (15)
Adj. EBITDA (64) (62) (77) (10) 10 Adj. EBITDA (20)A (20)A (19) (18)
D&A (2) (3) (3) (3) (5) D&A (1)A (1)A (1) (1)
Adj. EBIT (66) (64) (80) (13) 5 Adj. EBIT (21)A (20)A (20) (19)
Net Interest 0 1 - - - Net Interest 0A - - -
Adj. PBT (66) (64) (87) (22) (5) Adj. PBT (21)A (23)A (22) (21)
Tax 0 1 (0) 0 0 Tax (0)A (0)A 0 0
Adj. Net Income (66) (63) (88) (22) (5) Adj. Net Income (21)A (23)A (22) (21)
Reported EPS (1.29) (1.16) (1.59) (0.40) (0.08) Reported EPS (0.38)A (0.43)A (0.40) (0.38)
Adj. EPS (1.29) (1.16) (1.59) (0.40) (0.08) Adj. EPS (0.38)A (0.43)A (0.40) (0.38)
DPS - - - - - DPS - - - -
Payout ratio - - - - - Payout ratio - - - -
Shares outstanding - - - - - Shares outstanding - - - -
.
Cash and cash equivalents 19 29 123 114 121 Gross margin - - - - -
Current assets 79 120 200 200 223
PP&E 4 5 5 6 9 ROE (62.9%) (64.0%) (79.5%) (22.4%) (4.4%)
Other non current assets 0 0 (0) 0 0 ROCE (63.1%) (66.0%) (50.2%) (6.4%) 2.5%
Net debt/equity (24.8%) (24.0%) (23.5%) (14.6%) (19.4%)
Other short term liabilities 3 4 2 4 8 P/BV (x) - - - - -
Current liabilities 4 6 4 9 18 EV/EBITDA (x) NM NM NM NM -
Long-term debt 0 0 99 99 99 Dividend Yield - - - - -
Other long term liabilities 1 0 (0) (0) 0
Shareholders' equity 78 119 102 98 115 Interest cover (x) - - - - -
BVPS - - - - - Revenue y/y Growth 55.1% 1732.0% 194.3% 268.6% 123.0%
y/y Growth - - - - - EBITDA y/y Growth 46.6% (4.0%) 24.7% (87.6%) (200.3%)
Cash flow from operating activities (53) (56) (69) (5) 15 EPS y/y Growth 27.8% (10.0%) 36.5% (75.1%) (79.7%)
o/w Changes in working capital 1 (8) (2) (5) (5)
Cash flow from investing activities (50) (26) 11 (5) (8)
as % of sales 1056.6% 71.0% 19.9% 10.0% 7.5%
Net change in cash (101) 9 94 (9) 8
y/y Growth 43.6% 5.6% 21.0% (86.7%) (182.7%)
6

(1-212) 622-6568 06 August 2018
intervention.

Diagnostics.
7

(1-212) 622-6568 06 August 2018
50 OW $32
OW $31
40
($) ($)
OW $17 OW $25 OW $28 OW $27 OW $25
24-Mar-16 OW 12.02 17.00
30
Price($) 08-Aug-16 OW 22.00 25.00
27-Feb-17 OW 25.50 28.00
20
03-May-17 OW 27.40 31.00
03-Aug-17 OW 25.15 32.00
10 03-Nov-17 OW 19.30 27.00
09-May-18 OW 19.02 25.00
0
Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug
15 15 16 16 16 16 17 17 17 17 18 18 18
period.
GenMark Diagnostics (GNMK), Genomic Health (GHDX), Hologic (HOLX), ICON Plc (ICLR), IQVIA Holdings Inc (IQV), Illumina,
Inc. (ILMN), Intrexon (XON), Intuitive Surgical, Inc. (ISRG), Invitae (NVTA), Luminex (LMNX), Mettler-Toledo (MTD), Myriad
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N.V. (QGEN), Quanterix (QTRX), Quidel (QDEL), Repligen (RGEN), Syneos Health Inc (SYNH), Thermo Fisher Scientific (TMO),
Varian Medical (VAR), Waters (WAT)
J.P. Morgan Equity Research Ratings Distribution, as of July 02, 2018

(buy) (hold) (sell)
IB clients* 54% 48% 40%
IB clients* 74% 66% 58%
above.
8

(1-212) 622-6568 06 August 2018
Other Disclosures
representative.

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(1-212) 622-6568 06 August 2018
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10

(1-212) 622-6568 06 August 2018
"Other Disclosures" last revised June 30, 2018.

11
Completed 06 Aug 2018 08:58 PM EDT Disseminated 06 Aug 2018 09:02 PM EDT
August 6, 2018

Placements Pick Up Momentum; Model Adjustment Reflects Reagent Rental Shift
CONCLUSION
PRICE: US$21.80
AXDX shares are indicating lower in the post-market after reporting Q2 revenue and
Price as of the close August 6, 2018
EPS that were lower than Consensus expectations, but with strong revenue generating
TARGET: US$24.00
placements and units under evaluation that were much stronger than our expectations. We
are reducing our forward expectations for the accounting shift to far more reagent rentals
s/o, $0.53 debt/sh.
(and away from capital) but are more encouraged with the strong placement quarter and
continue to believe Accelerate's Pheno can revolutionize the microbiology market. William R. Quirk, CFA
• 2Q18 Placements Solid: Accelerate reported $1.7M in revenue, below the Street's
estimate of $2.0M. However, Accelerate announced it installed 430 cumulative Pheno Changes Previous Current
modules, an increase of 85 sequentially (was 345 modules and compares with our 385
Price Tgt US$25.00 US$24.00
estimate). This consists of 29 new revenue-generating installs vs. 11 in 1Q18, well above
our 22 2Q18 estimate (for a total of 118 revenue generating systems) and 274 modules
under evaluation (i.e., the backlog). Gross margin for the quarter was 57.2% (PJC FY18E EPS US$(1.45) US$(1.73)
estimate: 40.4%). Operating expenses were lower vs our estimates with SG&A of $15.3M FY19E EPS US$(1.10) US$(1.56)
(PJC $14.5M estimate) and R&D of $6.1M (PJC $7.1M). All in, EPS of ($0.43) was lower
than the Street's ($0.38) estimate (largely to non-cash interest expense accounting). Shares Out (mil) 54.0
Accelerate exited the quarter with $197.4M in cash. Market Cap. (mil) US$1,177.2
• Guidance: Due to a pivot to reagent rental deals as a % of mix (which is reducing the Book Value/Share US$1.76
sales cycle), management removed 2018 guidance (previously: revenue $21M-$30M Net Cash Per Share US$1.76
(Street: $17.1M)). We believe the pivot could help accelerate (pardon the pun) systems Debt to Total Capital 54.9%
Yield 0.00%
in the field as lab managers no longer have to fight for capital with other departments and
Fiscal Year End Dec
it removes an incremental argument within the hospital (i.e., the lab's spend rises, but the
technology benefits other departments such as the ICU and pharmacy). The immediate Price Performance - 1 Year
USD
downside of this shift is lower numbers due to revenue recognition timing. 32
30
• Business Update: The UCLA/Mayo study should finish enrollment in 4Q18, suggesting 28
a presentation/publication in ~1H19 or possibly by ASM 2019. This is a little later than 26
24
our previous expectations, but recall Accelerate does not control this study. The lower
22
respiratory sample prep device and the associated clinical trial are set to start by ~early
20
November and positively, the trial will be a straight 510(k) (rather than a longer and more 18
expensive de novo 510(k)). 16
Aug-17 Oct -17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18
• What To Do With The Stock: We are encouraged with the quarterly placements (a Source: Bloomberg
record) and believe Accelerate could be nearing an important inflection point in the Pheno
launch. Our estimates are coming down, but we believe this could be the last big negative
revision and it largely reflects the accounting change rather than a fundamental change
to our modeled placements. Accordingly, our price target multiple moves to 11x (was
9.5x) our 2020 EV/Rev estimate bringing our PT to $24 (was $25).
YEAR
2017A 0.5 0.7 0.8 2.1 4.2 280.3x (0.27) (0.31) (0.31) (0.27) (1.16) NM
2018E 0.8A 1.7A 3.2 7.2 12.9 91.3x (0.37)A (0.43)A (0.48) (0.44) (1.73) NM
2019E 8.8 10.4 12.4 19.1 50.6 23.3x (0.43) (0.42) (0.40) (0.31) (1.56) NM
Income Statement
2017A 2018E 2019E
Qtr 1 A Qtr 2 E Qtr 3 A Qtr 4 A Qtr 1 A Qtr 2 A Qtr 3 E Qtr 4 E Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E 2016A 2017A 2018E 2019E 2020E
Instrument Revenue 510 583 482 1,620 469 1,049 1,815 4,253 4,828 5,588 5,782 5,996 149 3,195 7,586 22,194 33,125
Assay Revenue - 97 324 479 312 623 1,421 2,892 3,918 4,829 6,599 13,045 14 900 5,248 28,390 90,158
Total Product Revenue 510 679 806 2,099 781 1,672 3,236 7,145 8,746 10,416 12,381 19,040 163 4,095 12,834 50,584 123,283
License Revenue 20 20 22 21 20 20 22 21 15 15 15 15 83 83 83 60 60
Total Revenue 530 699 828 2,120 801 1,692 3,258 7,166 8,761 10,431 12,396 19,055 246 4,178 12,917 50,644 123,343
Cost of Product Revenue 32 133 191 646 482 717 1,704 3,099 3,844 4,562 5,107 6,471 0 1,002 6,001 19,983 35,931
Gross Profit 498 566 637 1,474 319 976 1,555 4,067 4,918 5,870 7,289 12,584 246 3,176 6,916 30,661 87,412
Operating Expenses:
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 (20,058)
0
Interest & Other Expense (Income) net (110) (5) (285) (900) (198) 2,709 3,143 3,153 3,165 3,167 3,170 3,172 (393) (1,300) 8,807 12,675 12,679
Non-Recurring 67
Expense Variables:
Margin Analysis:
YoY Growth Rates:
Total Revenues 225.2% 3395.8% 3351.4% 5336.9% 51.1% 142.1% 293.4% 237.9% 993.8% 516.4% 280.4% 165.9% 67.3% 1598.3% 209.2% 292.1% 143.6%
S, G & A -41.7% -40.5% -15.7% 51.3% 58.2% 10.2% 16.5% 26.6% 18.0% 33.7% 10.8% 6.4% 102.4% 24.3% 42.4% 10.3% 3.7%
Balance Sheet Data:
Net Debt (Cash) Per Share ($1.23) ($2.52) ($2.19) ($1.97) ($1.70) ($1.52) ($1.12) ($0.69) ($0.43) ($0.12) $0.12 $0.42 ($1.52) ($2.02) ($0.68) $0.42 $0.53

August 6, 2018
Legend:
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Piper Jaffray
BUY [OW] 382 61.71 102 26.70
HOLD [N] 217 35.06 22 10.14
SELL [UW] 20 3.23 0 0.00

Time of dissemination: 6 August 2018 22:00EDT.

August 6, 2018
the past 12 months.
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Rating Definitions

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This document is being provided for the exclusive use of SUNNY PURI at ANSONCompleted
ADVISORS 28 JunINC
2018 08:26 PM EDT
Disseminated 29 Jun 2018 12:15 AM EDT
29 June 2018
Overweight
Price: $22.00
Lab Poll Suggests Long Ramp for Pheno System, with
Demonstration of Health Economic Benefit Key to
Improving Conversion
Following two quarters of disappointing Pheno order conversion (see our 1Q Life Science Tools & Diagnostics
debrief for details), we recently conducted a quick poll of 20 U.S. microbiology AC
Tycho W. Peterson
lab directors to get a better sense of customer purchasing plans. Overall, budget (1-212) 622-6568
constraints seems to be the main gating factor for order conversion, although there tycho.peterson@jpmorgan.com
is clearly room to improve the awareness of health economic benefits. While Bloomberg JPMA PETERSON <GO>
management has laid out a series of initiatives to improve the situation, their Julia Qin
effectiveness remains to be proven. Below we highlight key takeaways from the (1-212) 622-9253
poll. While the data provides useful color on customer thinking, we caution julia.qin@jpmchase.com
investors from over-generalizing these results due to the small sample size. Tejas Savant
(1-212) 622-5650
 Good progress since launch, although further penetration could be tejas.savant@jpmorgan.com
hindered by inertia from existing systems/workflows. Half of the J.P. Morgan Securities LLC
respondents (screened for familiarity with Pheno, most at academic medical Price Performance
centers) are current users of the system or evaluating the system. However, 34
most current users utilize the system for ID only, even though the turnaround 30
time benefit on Pheno is greater for AST than for ID. This could be due to $ 26
inherent inertia in lab workflow and the cost of replacing existing 22
systems/processes, which can be difficult to address. 18
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18
 Budget constraints are the main gating factor for order conversion, AXDX share price ($)
although there is clearly room to improve awareness of the health RTY (rebased)
YTD 1m 3m 12m
economic benefits. Of respondents who do not plan to purchase Pheno, half Abs -16.0% 8.9% -2.4% -21.1%
recognize health economic benefits of the system and cited budget constraints Rel -21.8% 8.1% -10.8% -36.2%
as the main gating factor, while a third are not yet convinced of the health
economic benefits. We believe additional user data from Mayo Clinic and
UCLA to be published by 3Q will improve awareness of Pheno’s health
economic benefits and potentially enable labs to justify the cost of purchase.
 Menu expansion to severe pneumonia is unlikely to spur a meaningful

uptick in system placements, but could significantly boost utilization.
Among respondents who do not plan to purchase Pheno, 2/3 indicated a
moderate likelihood of purchasing the system once it includes severe pneumonia
on the test menu, while the rest indicated a lower likelihood of changing their
mind. On a more positive note, utilization could see a significant boost from
menu expansion, with existing users expecting utilization to increase by 25% on
average once severe pneumonia is added to the menu (U.S. clinical trials
planned to start in 2Q/3Q).
FYE Dec 2016A 2017A 2018E 2019E Company Data
Revenue ($ mn) Price ($) 22.00
Q1 (Mar) 0 1 1A 12 Date Of Price 28 Jun 18
Q2 (Jun) 0 1 3 17 52-week Range ($) 30.35-16.75
Q3 (Sep) 0 1 7 22 Market Cap ($ mn) 1,216.56
Q4 (Dec) 0 2 11 28 Fiscal Year End Dec
FY 0 4 21 79 Shares O/S (mn) 55
Source: Company data, Bloomberg, J.P. Morgan estimates. Price Target ($) 25.00
Price Target End Date 31-Dec-18


(1-212) 622-6568 29 June 2018
Survey Results
Our panel of 20 respondents consists of lab directors and medical directors at 20 U.S.
microbiology labs, of which 15 are part of academic medical centers and three are
part of non-academic medical centers, in addition to one community hospital and one
private practice. All respondents are familiar with the Pheno system, of which eight
are current users of the system, two are in the process of evaluating the system (each
has had the system for one month and three months respectively), six expect to start
evaluating the system within the next 12 months, and four do not plan to purchase
the system in the next 12 months.
Figure 1: Respondent Composition (n = 20)
Private
practice, 5%
Community
hospital, 5%
Non-academic
medical center,
15%
Academic
medical center,
75%
Do not plan to
purchase in
NTM, 20%
Current user,
40%
Expect to start
evaluating in
NTM, 30%
Evaluating (yet
to purchase),
10%
Source: J.P. Morgan.
2

(1-212) 622-6568 29 June 2018
In terms of automated, panel-based systems utilized for bacterial ID/AST, FilmArray

and MicroScan are the most widely used among our respondent pool, followed by
Biotyper, Pheno, Phoenix and Vitek 2. Interestingly, although the Pheno system
combines both ID/AST, most (5 out of 8) current users utilize the system for ID only,
while only three users utilize the system for AST, even though the turnaround time
improvement on Pheno is greater for AST (36-54 hours faster) than for ID (24-36
hours faster). This could be due to inherent inertia in lab workflow and the cost of
replacing existing systems/processes.
Figure 2: What system(s) does your lab use? (n = 20)

16
14
14 13
12
10
10
8 8 8
8
6 5
4
2 1 1 1
0
FilmArray MicroScan Biotyper Accelerate Phoenix Vitek 2 Vitek MS ePlex GeneXpert Verigene
Pheno
Figure 3: What system(s) does your lab use for bacterial ID? (n = 20)
12
10
10 9
8
8 7
6
6 5
4
4
0
FilmArray MicroScan Biotyper Accelerate Phoenix Vitek 2 Vitek MS
Pheno
Figure 4: What system(s) does your lab use for antimicrobial susceptibility testing? (n = 20)
12
10 9
8 7 7
6
6
4 3 3
2
2
0
MicroScan FilmArray Vitek 2 Phoenix Biotyper Accelerate Vitek MS
Pheno
3

(1-212) 622-6568 29 June 2018
Budget constraints seem to be the main gating factor for order conversion,
although there is clearly room to improve awareness of health economic benefit
For the two respondents who are currently evaluating the Pheno system, neither of
them indicated a plan to purchase the system post-evaluation, both citing high system
cost and budget constraint as the main reason. Of the four respondents who are
neither evaluating the system nor planning to purchase a system directly in the next
12 months, two attributed the decision to unclear health economic benefit of the
Pheno system, one cited budget constraint, and one cited the cost of replacing the
lab’s existing ID/AST systems. Specifically, one respondent explained, “We have
existing systems in place. The Accelerate system is very large, with large reagent
cartridges. Given our volumes, it would be very difficult to integrate into our lab.
The benefit over our current technology is also not sufficiently clear”.
Across the six respondents who do not plan to purchase Pheno, half of them
recognize the health economic benefit of the system, with budget constraint being the
main gating factor, while a third are not yet convinced of the health economic
benefits of the system. We believe additional user data (randomized trial data from
Mayo Clinic and UCLA) to be published by 3Q will help further raise awareness of
Pheno’s health economic benefit and potentially enable labs to better justify the cost
of purchase, while cost to replace existing systems (especially at smaller labs with
low volumes) would be more difficult issue to address.
Figure 5: Why do you not plan to purchase the Pheno system? (N=6)
Costly to
replace
existing
ID/AST
systems, 17% Clear health
economic
benefit, but
lab budget
Unclear health insufficient,
economic 50%
benefit, 33%
Clearer measurement and demonstration of the health economic benefits of

implementing Pheno are crucial to improving order conversion
We asked the ten current Pheno users (including those currently evaluating the
system) to quantify the amount of annual cost savings their hospitals have realized as
a result of using the Pheno system. Four of them were unable to provide a specific
number, suggesting an insufficient focus on cost benefit measurement, while five
respondents reported annual savings ranging from $20K to $700K, likely depending
on patient volume. From the dispersion in respondents’ measurement of cost savings
(some in vaguely-defined percentage terms and some in absolute dollars), it also
appears that a better-defined metric would allow the company to more effectively
gather evidence on the health economic benefit across existing customers, thereby
strengthening the system’s appeal to new customers.
4

(1-212) 622-6568 29 June 2018
Figure 6: Please quantify the annual cost savings your hospital has realized as a result of using
the Pheno system (N=10)
I am not sure about this. We will need to have the ID physicians and ID Pharm
D on board to be able to calculate the savings.
We have not quantified this in detail, but based on reduction to time to optimal
therapy of almost 2 days compared to conventional methods for a majority of
patients with Gram negative bacteremia there will be overall healthcare savings
from appropriate antimicrobial usage, decreased length of stay and decreased
mortality; likely to be approximately $7K per episode or $700K per year.
Close to 20,000 dollars

We haven't completed this portion at this time.
$100,000 since April 1, 2018
5-10%
Cost savings are 24%
500,000
None
I really can't give you a number; the primary savings are expected to result
from early discharge of patients due to earlier conversion from IV to oral
therapy.
Source: J.P. Morgan. Note: These selected survey comments have been reproduced in their original form and have not been edited.
Survey comments should not be attributed to J.P. Morgan and are not representative of its views.
Menu expansion to severe pneumonia is unlikely to spur a meaningful uptick in

system placements, but could significantly boost utilization
Among the six respondents who do not plan to purchase Pheno, four indicated a
moderate likelihood of purchasing the system once it includes severe pneumonia on
the test menu, while the other two indicated a lower likelihood of changing the non-
purchase decision. Although the menu expansion is unlikely to spur a meaningful
uptick in system placements, utilization could see a significantly boost. Existing
users on average reported current utilization of ~8 tests per system per week. With
the addition of severe pneumonia to the test menu (U.S. clinical trials planned to start
in 2Q/3Q), respondents expect their utilization to increase to ~10 tests per system per
week on average, representing a ~25% increase.
Figure 7: How likely are you to purchase the Pheno system once it includes severe pneumonia
assays on the menu (0 = highly unlikely, 10 = highly likely)? (N=6)
5
4
4
Respondents
2
1 1
1
0
0 1 2 3 4 5 6 7 8 9 10
Likelihood of purchase
5

(1-212) 622-6568 29 June 2018
Figure 8: What’s your current utilization of the Pheno system? (N=10)

45%
40%
35%
30% 30%
30%
25%
20%
15%
10% 10% 10% 10%
10%
5%
0%
<3 tests 3-5 tests 5-7 tests 7-9 tests 9-11 tests 11-13 tests >13 tests
Tests per system per week
Figure 9: What do you expect your utilization to be once severe pneumonia assays are added to
the menu? (N=10)
45%
40%
40%
35%
30%
25%
20% 20%
20%
15%
10% 10%
10%
5%
0%
<3 tests 3-5 tests 5-7 tests 7-9 tests 9-11 tests 11-13 tests >13 tests
Tests per system per week
6

(1-212) 622-6568 29 June 2018

Investment Thesis
Valuation
growth.

(1) Should the Accelerate Pheno System not receive regulatory clearance from the
FDA, or experience delays (as other diagnostic systems have faced), its commercial
prospects will be significantly impaired; (2) The competitive landscape in clinical
microbiology is crowded and intense; (3) Our long-term forecasts are partly
dependent on the successful commercialization of tests beyond blood stream
infections including respiratory and skin/soft tissue infections; (4) Accelerate is a
7

(1-212) 622-6568 29 June 2018

COGS 0 (1) (8) (28) (60) COGS (0)A (1) (3) (4)
SG&A (36) (42) (55) (48) (75) SG&A (14)A (14) (14) (14)
Adj. EBITDA (64) (62) (72) (18) 16 Adj. EBITDA (20)A (19) (18) (15)
D&A (2) (3) (3) (4) (7) D&A (1)A (1) (1) (1)
Adj. EBIT (66) (64) (74) (22) 9 Adj. EBIT (21)A (20) (18) (15)
Net Interest 0 1 0 0 0 Net Interest 0A 0 0 0
Adj. PBT (66) (64) (74) (22) 9 Adj. PBT (21)A (20) (18) (15)
Tax 0 1 (0) 0 (3) Tax (0)A 0 0 0
Adj. Net Income (66) (63) (74) (22) 6 Adj. Net Income (21)A (20) (18) (15)
Reported EPS (1.29) (1.16) (1.29) (0.37) 0.10 Reported EPS (0.38)A (0.34) (0.31) (0.26)
Adj. EPS (1.29) (1.16) (1.29) (0.37) 0.10 Adj. EPS (0.38)A (0.34) (0.31) (0.26)
DPS - - - - - DPS - - - -
.
Other current assets 59 82 81 81 81 Net profit margin (29079.8%) (1505.4%) (359.9%) (28.0%) 3.5%
Current assets 79 120 112 113 148
PP&E 4 5 5 9 15 ROE (62.9%) (64.0%) (64.9%) (20.7%) 5.4%
LT investments - - - - - ROA (59.7%) (60.4%) (61.2%) (18.7%) 4.5%
Net debt/equity (24.8%) (24.0%) (20.9%) (12.0%) (22.4%)
Payables 1 2 4 10 19 P/E (x) NM NM NM NM 210.5
o/w Changes in working capital 1 (8) 3 (1) (2)
as % of sales 1056.6% 71.0% 10.0% 10.0% 7.5%
Net change in cash (101) 9 (6) (10) 16
y/y Growth 43.6% 5.6% (5.6%) (81.3%) (258.8%)
8

(1-212) 622-6568 29 June 2018
intervention.

Diagnostics.
9

(1-212) 622-6568 29 June 2018
50 OW $32
OW $31
40
($) ($)
OW $17 OW $25 OW $28 OW $27 OW $25
24-Mar-16 OW 12.02 17.00
30
Price($) 08-Aug-16 OW 22.00 25.00
27-Feb-17 OW 25.50 28.00
20
03-May-17 OW 27.40 31.00
03-Aug-17 OW 25.15 32.00
10 03-Nov-17 OW 18.00 27.00
09-May-18 OW 19.02 25.00
0
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun
15 15 15 16 16 16 16 17 17 17 17 18 18
period.
Foundation Medicine (FMI), GenMark Diagnostics (GNMK), Genomic Health (GHDX), Hologic (HOLX), ICON Plc (ICLR), IQVIA
Mettler-Toledo (MTD), Myriad Genetics Inc. (MYGN), NanoString (NSTG), Oxford Immunotec (OXFD), Pacific Biosciences Inc.
(PACB), PerkinElmer (PKI), Qiagen N.V. (QGEN), Quanterix (QTRX), Quidel (QDEL), Repligen (RGEN), Syneos Health Inc (SYNH),
Thermo Fisher Scientific (TMO), Varian Medical (VAR), Waters (WAT)

(buy) (hold) (sell)
IB clients* 52% 49% 39%
IB clients* 72% 67% 57%
above.
10

(1-212) 622-6568 29 June 2018
Other Disclosures
representative.

11

(1-212) 622-6568 29 June 2018

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12

(1-212) 622-6568 29 June 2018
"Other Disclosures" last revised June 16, 2018.

13
June 11, 2018

(AXDX - $20.85) Price Target: $25
Alexander Nowak, CFA
Senior Research Analyst
1 612-334-6347
Interest Remains High In Pheno At ASM, But The Talk Is All About Outcomes Data
– Which We Do Not Have Yet. We Remain HOLD Rated.
OUR CALL
Accelerate had a positive showing at this year’s American Society for Microbiology conference (ASM).
Their showcase on Pheno was well attended, as was the booth upon multiple passes. Both during the
showcase as well as talking with a validation Pheno user (who has not yet decided if they will purchase
Pheno), the talk was all about proving Pheno adds value. As one potential customer stated: labs only have
theoretical outcomes data today, and with that data, it is hard to justify the increased lab spend to hospital
administrators. We continue to believe a positive readout of the pivotal Mayo/UCLA outcomes trial could
be a catalyst for Pheno placements. Our visit to ASM does not change our thesis on AXDX: we remain
positive on the technology/business, but are awaiting Street expectations to reset. Remain HOLD rated with
a $25 price target.
Accelerate’s Pheno Showcase: Accelerate Diagnostics was a platinum sponsor for this year’s ASM
meeting and held an industry science & technology showcase on Friday, during exhibit hall hours. We
counted roughly 160 people attending the showcase; standing room only and 20 people standing. The
showcase was led by presentations by two Pheno customers: Joseph Campos from Children’s National
Medical Center and Dr. Micah Bhatti from MD Anderson Cancer Center.
 Children’s National is a 300 bed pediatric medical center located in Washington, DC. Mr. Campos
started his presentation noting there is a need to lower the time to antibiotic susceptibility results and
that genetic resistant markers are no substitute for phenotypic results (i.e. Pheno, Vitek, etc.) However,
Mr. Campos noted that laboratories are required, more than ever, to prove that a new diagnostic is
medically necessary and adds value. Children’s National recently acquired Pheno and found that “use
of the system dramatically decreases the time for AST.” He gave an example of a 16-year old patient
who was deteriorating while on antibiotics. The lab ran Pheno and in 23 hours from the blood draw
found the patient was resistant to the prescribed antibiotic and Pheno recommended an alternative
therapy. After the drug was switched, the infection subsided and the patient performed well. Mr.
Campos ended his presentation noting that the question always comes up: “is the value benefit worth
the extra cost?” He believes Pheno is worth the increased cost stating there are savings from pharmacy,
nursing time, physician time as well as infection control spend and, in the end, patient outcomes are
better with Pheno (Mr. Campos did not provide quantitative data around cost savings). Finally, Mr.
Campos stated that because of the cost, they do not use Pheno for all bacteremia patients, but instead
use it for 1) immunocompromised patients, 2) patients in the ICU or 3) when the clinician specifically
recommends Pheno.
 In addition to its focus on cancer care, MD Anderson’s central laboratory also performs all standard
microbiology testing. The lab recently switched from Vitek to Pheno and found the time to antibiotic
susceptibility results decreased by 37.9 hours. Dr. Bhatti stated that MD Anderson only uses Pheno for
gram negative samples, as they did not find value using the system for gram positive infections. For the
www.craig-hallum.com
June 11, 2018
workflow, MD Anderson will call the clinician on the gram stain result, but will not call the clinician on
Pheno’s results (Pheno results are put into the medical record); instead, an antibiotic stewardship team
reviews each patient’s medical record once per day and will make antibiotic changes if necessary. Dr.
Bhatti also gave two patient examples of Pheno. In the second example, one patient was given
antibiotics as recommended by Pheno. The patient was then readmitted to the hospital several days later
and Pheno then reported that the same bacteria became resistant. The patient was switched to an
alternative therapy (as recommended by Pheno on the second test) and improved.
Talking With A Potential Pheno Customer: We spoke with a potential Accelerate customer after the
showcase. This large medical center has had Pheno under validation for 3-4 months. While this user was
very positive on the technology and the long-term potential of the system, the medical center has not yet
decided if they will buy Pheno; their decision comes down to cost. This user stated they only have
theoretical data around the value of Pheno: “we all know the system works, but no real outcome data,” and
as a result, it is hard to justify the increased cost to hospital administrators. This medical center is watching
for the Mayo/UCLA outcomes trial, so they could arm themselves with real world data. If they do adopt
Pheno (sounds like they eventually will, but the evaluation is being delayed due to the cost), this medical
center will only use it for gram negative bacteria, as they found little value using Pheno for gram positive
infections.
Early Data, But Not What We Are Looking For: Accelerate had a poster with early data from the pivotal
Mayo/UCLA study. The poster only presented analytical validation results and did not provide outcomes
data. Overall, as of the preliminary data date, there were 131 subjects randomized to the Pheno arm
(randomized 1:1 Pheno:standard of care, final study is ~500 subjects). Of the 131 subjects tested with
Pheno, 90% had bacteria found on Pheno’s panel and Pheno identified 89% of on-panel bacteria. Pheno’s
antibiotic susceptibility results matched up well vs. the standard of care (only 6% minor errors, 1% major
errors, 0 very major errors). There were no outcome measures on the poster. Given initial data from early
Pheno users (University Hospital in particular), we remain confident in a positive trial read-out in 4Q18.
Our Thoughts: Our overall takeaway from the conference: many people are interested in Pheno, but
without real-world outcomes data, instrument acquisition may remain somewhat challenging. We continue
to believe the pivotal Mayo/UCLA study could be the catalyst for Pheno (and shares), with positive data
giving lab managers tools necessary to convince hospital administrators into buying the instrument. Interest
in Accelerate appears to remain high with Accelerate’s platinum sponsor booth location (directly in the
front) gathering crowds throughout the exhibit hall hours on Friday. We continue to remain HOLD on
Accelerate and wait until expectations reset.
STOCK OPPORTUNITY
Our $25 price target represents 31x enterprise value/revenue on our 2019 estimate of $43 million. We
initially derive our price target from our discounted cash flow model and then use the DCF equity value to
calculate the implied EV/revenue multiple. We believe the discounted cash flow model is most appropriate
for AXDX given the long-term opportunity Accelerate is going after. We use a WACC of 14.5%, which is
the discount rate implied in its recent convertible note offering. We model the WACC slowly declining to a
“market” discount rate through our time horizon.
RISKS
 Adoption & Execution: Accelerate Diagnostics has recently begun to sell Pheno to microbiology
labs. Failure to meet internal as well as external sales targets could impact forward estimates and
the stock price.

June 11, 2018
 Clinical Trial Results/Regulation: Accelerate will be seeking FDA approval for its lower
respiratory test in the next 12 months. Failure to obtain approval (or a delay) could impact forward
estimates and the stock price.
 Competition: We believe there are no true competiors to Accelerate’s Pheno. However,
microbiology labs may not appreciate the benefits of Pheno vs. other microbiology products.
Further, new instruments that are directly competitive to Pheno could emerge and fight for
Accelrate’s market share.

March 3, 2017
$35 AXDX 06/08/2018 $20.85
$30
$25
$20
$15
$10
$5
$0
07/28/2015
07/13/2017
12/22/2017
09/21/2015
11/12/2015
01/08/2016
03/04/2016
04/28/2016
06/22/2016
08/16/2016
10/10/2016
12/02/2016
01/30/2017
03/24/2017
05/18/2017
09/06/2017
10/30/2017
02/20/2018
04/16/2018
06/08/2018
Source: FactSet
business metrics are generally steady. Mixed means growth rates of some key business metrics are positive but others
are negative. Declining means growth rates of key business metrics are generally decelerating.

Buy 78% 17%
Hold 21% 0%
Sell 1% 0%
Total 100% 13%
CHLM expects to receive or intends to seek compensation for investment banking services from the subject company in
the next three months.
Analysts receive no direct compensation in connection with the firm’s investment banking business. Analysts may be
eligible for bonus compensation based on the overall profitability of the firm, which takes into account revenues from all of
the firm’s business, including investment banking.
OTHER DISCLOSURES

May 24, 2018

Moving The Microbiology Lab Into The Next Generation. Keep This
Alexander Nowak, CFA Stock On Your Radar When Expectations Reset. Initiating With A
Senior Research Analyst
1 612-334-6347
HOLD Rating And $25 Price Target.
Alex.Nowak@craig-hallum.com Accelerate Diagnostics is an early stage diagnostics company. Accelerate developed Pheno, a next-
OUR CALL
www.craig-hallum.com
The simple story for investors: AXDX is revolutionizing the microbiology lab
Changes Previous Current with a system that reduces test times by 40 hours while saving money and lives.
Rating - Hold The opportunity is $5.8B, replacing the 27K systems that were originally
Fundamental Trend - Improving developed in the early-2000s. Timing is everything though and we believe
Price Target - $25
FY17A Rev (M) - $4.2 2019/2020 estimates need to come down. Once they line up with ours, we expect
FY18E Rev (M) - $13.3 to climb onboard with a Buy rating. Here’s what we like about the company:
FY19E Rev (M) - $43.0
FY20E Rev (M) - $87.7  A Novel Instrument Moving Microbiology Into The Next Generation:
FY17A Adj. EBS - ($1.19) Launched in 2017, Accelerate’s Pheno instrument automates and speeds up
FY18E Adj. EPS - ($1.41) microbiology testing 2.5-fold. Accelerate’s system is so novel that it has no
FY19E Adj. EPS - ($1.16)
FY20E Adj. EPS - ($0.83)
true competition and we believe it has the potential to be adopted by every
hospital lab in the developed world.
Profile
Price: $21.00
 Sole Player Going After A $5.8B TAM: Accelerate is going after converting
52 Week Range: $16.75 - $30.45 hospitals from archaic, un-automated and slow workflows/instruments
Avg. Daily Vol: 292,545 designed in the early-2000’s to Accelerate’s Pheno instrument and compatible
Shares Out (M): 54.0 consumable test cartridges. This is a $5.8B U.S./EU TAM including ~$2.0B in
Market Cap (M): $1,155.2
Insiders Own %: 44.4% capital placements and $3.8B of annually recurring consumables. The TAM has
Short Interest %: 22.1% further room to expand as AXDX designs additional tests for Pheno.
Book value/Share: 2.1
4-Yr EPS CAGR NA  Every Lab Could Buy This System: Early data suggests Pheno speeds up the
Dividend Yield (%) 0% time to result by 40 hours (a 2.5x improvement), reduces mortality by 75%,
Net Debt (M): -$94.4 changes or de-escalates antibiotic therapy in 70% of patients and reduces
Debt / Capital: 0.0% antibiotic spend by $90K in 9 months (not including length of stay savings,
Fiscal Year End: Dec. etc.). As the launch progresses, additional data (including a pivotal 4Q18
Mayo/UCLA study) should emerge showing Pheno saves lives, time and
Rev (M) 2018E 2019E 2020E
Mar $0.8A $7.0 $17.1
money.
Jun $1.6 $9.7 $20.3 So Why A Hold Rating? Consensus Is The Problem: Excluding one below
Sep $4.1 $12.0 $23.5
Dec $6.8 $14.3 $26.8
consensus estimate, we believe analysts are too aggressive in their placement
FY $13.3 $43.0 $87.7 expectations in 2019/20 based on our analysis of comparable equipment launches
(see details on page 12). If our forecasts hold, most analysts will need to lower
Adj. EPS 2018E 2019E 2020E their revenue estimates by 40% for 2019 and 47% for 2020.
Mar ($0.37)A ($0.33) ($0.26)
Jun ($0.37) ($0.30) ($0.22)
Sep ($0.34) ($0.28) ($0.19)
Dec ($0.32) ($0.26) ($0.16)
FY ($1.41) ($1.16) ($0.83)
Adj. EPS includes stock-based comp expense
P/E NA NA NA
EV/ Revenue 82.5x 25.5x 12.5x
EV/EBITDA NA NA NA
*Excludes 1 analyst well below the Street
Management
Chairman John Patience What Are We Waiting For? We believe AXDX will become attractive once
CEO Lawrence Mehren expectations are significantly lowered, potentially by 4Q18 as (1) this is when
CFO Steve Reichling
2019/20 expectations should reset from Q2/Q3 results, and (2) the Mayo/UCLA
pivotal trial should read-out by then. If we are correct, we would likely become
buyers at that time as the stock would be set up for beats/raises as well as short-
covering (~40% short interest today, excluding insider ownership).

May 24, 2018
KEY POINTS DETAILED

2019 And 2020 Estimates Are Too Aggressive: We believe the most comparable
instrument launch is BioFire’s FilmArray, which received FDA approval February
17, 2011. In its second year after launch, BioFire placed 640 FilmArrays. Excluding
one analyst who is well below consensus, analysts are modeling ~864 Phenos in its
second year after launch (35% outperformance). BioFire placed 1,380 FilmArrays in
its third year after launch, compared to the Street at 1,924 Phenos (39%
outperformance). Given the significant divergence vs. BioFire (which was a very
successful instrument launch, partially added by being a reimbursed-product), we
believe the Street’s placement expectations are too high and need to be reset. For
reference, Accelerate is already under-performing the BioFire launch (on track for
~224 Phenos vs. 283 FilmArray) in the first 12 months, so it is fair to question if
BioFire is even too aggressive a short-term proxy for Accelerate, given BioFire
benefited initially from a reimbursement tailwind (no benefit for Pheno).
Accordingly, we are modeling 2019 and 2020 revenue 40% and 47% below other
analysts, respectively.
Exhibit 1 – Forecast vs. Consensus
$180M Revenue Estimates Vs. Street $167M

2,500
Pheno Placements Vs. BioFire $160M
Years After FDA Approval 1,924 $140M $130M
2,000
$120M
1,500 1,380
$100M $88M
1,019 $80M $72M
1,000 864 $61M
640 $60M $43M
534
$40M
500
$20M
- $0M
Year 2(end 2019) Year 3 (end 2020) 2019 2020
FilmArray Pheno (Street Est.) Pheno (CH Est.) CH Estimates Street Estimates Street Estimates (excl. 1 analyst)
Source: Company Reports and Craig-Hallum Estimates
Longer-term, however, our estimates may be too low. Accelerate’s Pheno is

replacing the early-2000s Vitek, Phoenix and MicroScan instruments. In its 8th-year
post-FDA approval, BioMérieux placed 10,000 Viteks world-wide. We are
modeling Accelerate placing 4,800 Phenos in its 8th-year. If Pheno is as successful
as we anticipate, our long-term estimates could be too low and need to come up.
However, before we begin to discuss longer-range forecasts, we need near-term
expectations to ease. Afterwards, it will become much easier to discuss the longer-
term potential of Pheno.
Valuation Not Attractive When Compared To Other Launches: On a EV/Rev
basis, Accelerate Diagnostics is trading at 12.3x the Street’s second twelve month
rolling estimates (2Q19-1Q20). This compares to another diagnostic instrument
launch, Cepheid, which traded as high as 5.8x during its launch. Exact Sciences also
had big expectations for its launch and traded as high as 12.9x. Bottom-line, it is
hard to recommend investors enter the stock at current multiples, particularly if
Street estimates need to come down.

May 24, 2018
Exhibit 2 – Product Launch Multiples Comparison
Then Why Initiate Now? Regardless of the Street’s current financial expectations,
we believe Accelerate Diagnostics’ Pheno is extremely novel, could be
revolutionary for the microbiology community, and is targeting a large market with
no immediate competitors. We want investors to know about this company, product
and technology as we believe eventually AXDX shares will be a good buy, once
expectations reset and the stock is set for multiple quarters of beat and raises.
When To Buy? We believe AXDX shares might set up for Buy rating just prior to
or after the release of the pivotal Mayo Clinic/UCLA outcomes study (RAPIDS-
GN), which is expected to finish enrolling end of Q3 with data in Q4 (Craig Hallum
estimate). We believe Q4 potentially could be a good time to buy because:
1. 2019/2020 estimates will likely be reset by this time, following Q2/Q3
misses/commentary.
2. We anticipate the Mayo Clinic/UCLA data will be positive and support other
labs purchasing Pheno.
3. Stock is set up for beat/raises throughout 2019 with expectations reset and
placements ramping on the back of the Mayo Clinic/UCLA data release.
STOCK OPPORTUNITY
Our $25 price target represents 31x enterprise value/revenue on our 2019 estimate.
We initially derive our price target from our discounted cash flow model and then
use the DCF equity value to calculate the implied EV/revenue multiple. We believe
the discounted cash flow model (page 21) is most appropriate for AXDX given the
long-term opportunity Accelerate is going after. We use a WACC of 14.5%, which
is the discount rate implied in its recent convertible note offering. We model the
WACC slowly declining to a “market” discount rate through our time horizon.

May 24, 2018
Exhibit 3 – Comp Table
Share Market Enterprise EV/Rev

Ticker Com pany Nam e Price Cap Cash Debt Value 2018 2019 2020
ABAX Abaxis, Inc. 83.01 1,899 167 0 1,732 6.2x 5.7x 5.4x
CERS Cerus Corporation 6.52 851 30 881 11.8x 8.2x 6.7x
GNMK GenMark Diagnostics, Inc. 6.94 385 72 28 341 4.8x 3.9x 3.0x
LMNX Luminex Corp 27.65 1,229 127 0 1,102 3.5x 3.4x 3.2x
QDEL Quidel Corporation 62.74 2,350 36 397 2,711 5.2x 5.2x 4.9x
VIVO Meridian Bioscience, Inc. 14.60 618 57 55 616 2.9x 2.8x 2.7x
Median 5.0x 4.5x 4.1x
AXDX Accelerate Diagnostics, Inc. 21.00 1,134 109 0 1,024 77.1x 23.8x 11.7x
WHAT DO THEY DO
Headquartered in Tucson, Arizona, Accelerate Diagnostics is an early stage in vitro
diagnostics product company. Accelerate developed the first automated
microbiology instrument that can perform both rapid pathogen identification (ID)
and rapid phenotypic antibiotic susceptibility testing (AST).
Current processes used within microbiology labs today are archaic, slow and labor
intensive; it takes days for clinical microbiologists to answer their primary question:
“what drug will kill the pathogen that is infecting the patient?” Accelerate’s products
are designed to automate microbiology labs and significantly improve the time to
result (by days). Accelerate’s first product is the Pheno instrument and the
PhenoTest BC (blood culture) test cartridge. Both products are CE-marked for EU
countries and were FDA-approved on February 23, 2017. Accelerate sells the Pheno
instrument to clinical microbiology laboratories (razor) and microbiologists run the
PhenoTest cartridges on the instrument (razorblade). Pheno automates multiple
workflows present in the microbiology lab: the technician inserts the patient’s blood
culture sample into the cartridge, inserts the cartridge into the instrument and presses
run. Within 90 minutes, Pheno reports the pathogen present in the sample and, after
seven hours, reports the pathogen’s antibiotic susceptibility (i.e. what drug will kill
the pathogen). Accelerate’s first cartridge for Pheno is the PhenoTest BC, which is
used for identifying and treating bloodstream infections. Bloodstream infections are
also known as bacteremia and routinely cause sepsis. Accelerate is also developing
additional Pheno cartridges for lower respiratory infections (pneumonia), skin and
soft tissue infections and urinary tract infections.
Accelerate’s Pheno instrument and test cartridges solve an unmet need within
microbiology labs. Processes in the microbiology lab today are archaic with it taking
days to run antibiotic susceptibility testing; early data suggests Pheno can reduce the
time to result by at least 40 hours. This time reduction decreases mortality and
promotes antibiotic stewardship (i.e. preventing future pathogens from becoming
antibiotic resistant). Further, conventional methods are labor-intensive while Pheno
is an automated platform. Given its speed, clinical benefits and workflow
advantages, we believe Accelerate’s Pheno is the next major step in microbiology
labs and this extremely novel instrument has the potential to be adopted by every
microbiology laboratory in the developed world.
Background On Microbiology is the analysis of bacteria, viruses and fungi to identify a pathogen
Microbiology causing an infection and to guide treatment to cure the infection. Microbiology
testing is performed in most clinical laboratories across the U.S. and developed
world. Microbiology labs test for infections including bloodstream infections,
May 24, 2018
hospital acquired infections, infections from cuts/scrapes, respiratory infections such

as influenza and bacteria causing pneumonia, sexually transmitted diseases and
urinary tract infections. Microbiology laboratories focus on answering two important
questions: pathogen identification (what pathogen is in the sample?) and antibiotic
susceptibility (what drug will kill this pathogen?).
There are several common pathogens that do not require extensive testing as these
pathogens are easy to detect and therapies are well known. These pathogens include
influenza, norovirus, some sexually transmitted diseases like chlamydia/gonorrhea
and tuberculosis. On the other hand, serious infections take up most of a
microbiology lab’s time and include bacteremia (blood stream infection), fungemia
(blood stream infection by fungi), lower respiratory infections (pneumonia) and
skin/tissue bacterial infections. These infections may be caused by a number of
different bacteria and each of these bacteria may have their own antibiotic resistance
profile. Further, bacteria can pick up resistance, meaning a pathogen may be
susceptible to vancomycin one day, but another patient’s infection by the same
pathogen could be resistant. As a result, it is critical for microbiology labs to use
diagnostic testing to quickly identify the pathogen infecting the patient and
determine the pathogen’s susceptibility to antibiotics.
Bloodstream Infections Bloodstream infections (bacteremia) are bacteria penetrating and infecting the
Overview bloodstream. Bacteria can enter the blood from various sources including hospital
acquired infections, urinary traction infections, cuts/scrapes and lung infections.
Bloodstream infections often cause sepsis, which is the body’s inflammatory
response to an infection. Symptoms of sepsis include fever, increased heart rate, and
rapid breathing. If a patient with sepsis is not treated, the body’s immune response
will increase blood clotting and lower blood pressure, resulting in septic shock
including organ damage or failure as well as death. Sepsis is common with 1.5M
cases per year in the U.S.1 and each hour delay in antibiotic therapy increases
mortality by ~7.6%2.
Lower Respiratory Lower respiratory infections occur when bacteria, viruses or fungi are inhaled into
Infections Overview the lower respiratory tract and the pathogen begins infecting the pulmonary alveolus
air sacs (which is involved in transferring oxygen into the bloodstream). Healthy
immune systems may be able to defend against the infection, while weakened
immune systems become infected. If the lower respiratory system becomes infected,
it causes pneumonia, which is the body’s inflammatory response to the infection.
Pneumonia symptoms include coughing, chest pain, fever and trouble breathing. If
the infection remains untreated, the pulmonary alveolus air sacs fill with fluid and
pus, disrupting the lung’s gas exchange process, preventing the lungs from
supplying oxygen into the blood. Low oxygen levels can cause organ damage and/or
failure as well as death. There are ~800K lower respiratory infections (specifically
community-acquired pneumonia) per year. Lower respiratory infections can also
cause sepsis (when bacteria transfer from the lungs into the bloodstream).
Bacteria Antibiotic All bacteria, including bacteria causing bacteremia and lower respiratory infections,
Susceptibility may be resistant to antibiotics. CDC estimates 2M people are infected in the U.S.
per year with antibiotic resistant bacteria3. In the U.S. there is a drastic rise of
antibiotic resistant organisms with the incidence of methicillin-resistant
1
Sepsis Data & Reports. CDC.
2
Kumar, A. 2006. Duration of Hypotension Before Initiation of Effective Antimicrobial Therapy is the Critical Determinant of Survival in Human
Septic Shock. Crit Care Med.
3
Antibiotic/Antimicrobial Resistance. CDC.
May 24, 2018
Staphylococcus Aureus growing from <5% in 1980’s to >50% in 2000’s, while the
incidence of Vancomycin-resistant Enterococci grew from 0% in 1990’s to ~30% in
2000’s4. The increase in antibiotic resistant organisms is directly related to
management of sepsis and pneumonia today (i.e. the overuse of antibiotics). When
patients are suspected of bacteremia (diagnosed with sepsis-related symptoms) or
lower respiratory infections (diagnosed with pneumonia-related symptoms), they are
immediately admitted to the hospital and put on broad-spectrum antibiotics. These
antibiotics are doses of multiple antibiotics in an attempt that the pathogen is
susceptible. At the same time, the physician will collect a blood or respiratory
sample and order microbiology pathogen identification and antibiotic susceptibility
testing. The microbiology lab will proceed with their workup and, after running their
tests (typically days later, described later), will alert the physician about which
pathogen was present in the patient and what narrow-spectrum antibiotic the
pathogen is susceptible to. While the patient’s sample is worked up in the
microbiology lab, the patient is rotated to multiple variations of broad-spectrum
antibiotics in an attempt to stave of the infection. The problem with prolonged
exposure to unnecessary antibiotics is bacteria may mutate and become resistant to a
set of antibiotics. CDC found >30% of antibiotics used in hospital are unnecessary
or prescribed incorrectly5. Some bacteria have resistance to multiple antibiotics,
creating the term “super bugs.” Further, broad-spectrum antibiotics may also disrupt
the body’s natural harmless bacteria (microbiome) and increases the chance for a
secondary infection including C. diff. As a result, it is critical for labs to run
antibiotic susceptibility tests as quickly as possible, as these tests allow physicians to
move patients off broad-spectrum antibiotics and onto narrow-spectrum/targeted
therapy. The timing of the antibiotic susceptibility results is critical with a study
from 1994 finding a 8.6 hour decrease in time to antibiotic susceptibility results
lowered mortality from 15.3% to 8.8%6.
Exhibit 4 – Antibiotic Resistant Bacteria Comparison
Source: Harvard University
Microbiology Microbiology workflows today are laborious, slow and time consuming. For
Workflows Of Today example, it takes ~64 hours to receive results from an antibiotic susceptibility test.
4
Resistant Strains Spread Rapidly. CDC
5
Antibiotic Use in the United States Progress and Opportunities. 2017. CDC.
6
Doern, G. 1994. Clinical Impact of Rapid In Vitro Susceptibility Testing and Bacterial Identification. Journal of Clinical Microbiology.
May 24, 2018
The common workflow today for bacteremia:

1. The patient’s blood sample is received by the lab, put into an aerobic or
anaerobic blood culture bottle for incubation and inserted into a blood culture
bottle incubator. The blood culture bottle incubator grows/incubates the bacteria
present in the blood sample until it reaches a particular colony forming units per
mL threshold. When the sample hits this threshold, the blood sample “pops”
positive. If after ~5 days the threshold is not hit the sample is deemed negative,
meaning there is no bacteria in the sample. 10% of blood cultures bottles are
actually positive7 and positive bottles “pop” in 18 hours on average8.
2. The technician streaks a sample from the blood culture bottle onto a petri dish
containing a growth medium (such as agar) and inserts the petri dish into an
oven for overnight incubation (~24 hours). This step is known as subculturing
and is designed to further increase the concentration of bacteria (colony forming
units per mL). If after 24 hours the quantity of bacteria on the petri dish is not
sufficient for testing, the technician may re-streak additional petri dishes
covered with an alternative growth material and re-incubate for another 24
hours.
3. Once the technician has sufficient bacteria for testing, the bacteria is added to a
semi-automated instrument for testing. The common instruments include
BioMérieux’s Vitek, Becton Dickinson’s Phoenix and Beckman Coulter’s
MicroScan. These instruments were all developed in the early 2000’s. Using the
Vitek for example, the technician picks a sample of bacteria off the petri dish
and inserts it into the instrument’s identification test card. After a ~12 hour run
time, Vitek returns the bacteria’s identification.
4. After identification, the technician selects several antibiotics to test
susceptibility and add the bacteria from the petri dish to the appropriate Vitek
test cartridges. In total, it takes ~12 hours to produce bacteria identification on
the Vitek and another ~10 hours for antibiotic susceptibility results.
7
Stalnikowicz, R. 2001. The Yield of Blood Cultures in a Department of Emergency Medicine. Eur J Emerg Med.
8
Schneiderhan, W. 2013. Workflow Analysis of Around-the-Clock Processing of Blood Cultures Samples and Integrated MALDI-TOF Mass
Spectrometry Analysis for the Diagnosis of Bloodstream Infection.
May 24, 2018
Exhibit 5 – Conventional Microbiology Workflow
Traditional Blood Culture

Workflow (Vitek) Total Time
Collect blood sample

from patient
Add blood to a blood

0 hours
culture bottle and
incubate till positive
Transfer sample from a

blood culture bottle to a
18 hours
petri dish for
subculturing. Begin
incubation
Transfer subcultured
sample to Vitek for 42 hours
pathogen identification
Receive identification
result. Begin antibiotic 54 hours
susceptibility testing on
Vitek
Receive antibiotic
susceptibility result. 64 hours
Report result to the
clinician
We believe the workflow discussed above is the most common workflow within a
microbiology laboratory with ~27,000 semi-automated instruments sold worldwide
(Vitek, MicroScan and Phoenix). There are some variations to this workflow being
offered through newer systems, but the basic premise is the same: incubate in a
blood culture bottle, subculture on a petri dish, bacterial identification and then
bacterial antibiotic susceptibility testing.
The workflow for lower respiratory samples is slightly different, but still uses the
same concept. Instead of blood, the physician collects a sputum (salvia and mucus
samples coughed up) or bronchoalveolar lavage sample (fluid is washed through the
lungs and collected). The sample is then streaked onto petri dishes and incubated.
Then the sample is tested via Vitek (or other instruments), similar to blood samples.
The average time for antibiotic susceptibility results on Vitek using lower
respiratory samples is ~46 hours.
Bottom-line, current workflows employed within microbiology labs today are labor
intensive, subjective and have long turnaround times at ~64 hours for blood samples
and ~46 hours for lower respiratory samples. We believe these long turnaround
times directly impact patient care.
Accelerate’s Solution Accelerate Diagnostics developed Pheno to replace existing workflows with an
To The Microbiology automated, easy to use and rapid diagnostic instrument for microbiology
Lab: Pheno identification and susceptibility testing. Pheno is a small benchtop instrument
(measuring 20” x 17”) with an external touchscreen monitor. Accelerate’s first test
for Pheno is the PhenoTest BC, a test cartridge for blood culture samples suspected

May 24, 2018
of bacteremia and the cartridge includes all reagents necessary for pathogen
identification and susceptibility testing.
Exhibit 6 – Accelerate’s Pheno and PhenoTest
Source: Company Reports
The workflow for Pheno is easy: starting from a positive blood culture bottle, the
technician adds the blood culture sample to the PhenoTest BC cartridge, inserts the
cartridge into Pheno and presses start. After 90 minutes, Pheno automatically reports
the pathogen’s identification and after 6.5 hours Pheno reports the pathogen’s
antibiotic susceptibility9. In field usage found Pheno reduces the time for antibiotic
susceptibility testing by 40-54 hours compared to conventional methods10. The
workflow chart below demonstrates how Pheno reduces the time to produce an
antibiotic susceptibility result to 25 hours, compared to 64 hours with conventional
methods.
Exhibit 7 – Accelerate’s Pheno Workflow vs. Conventional Methods
Traditional Blood Culture Accelerate's Blood Culture

Workflow (Vitek) Total Time Workflow (Pheno) Total Time
Collect blood sample Collect blood sample

from patient from patient
Add blood to a blood Add blood to a blood

0 hours 0 hours
culture bottle and culture bottle and
incubate till positive incubate till positive

blood culture bottle to a
18 hours blood culture bottle to 18 hours
petri dish for
the PhenoTest BC
subculturing. Begin
cartridge
incubation
Transfer subcultured Pheno reports pathogen

sample to Vitek for 42 hours 19 hours
identification
pathogen identification
Receive identification Receive antibiotic

result. Begin antibiotic 54 hours susceptibility result. 25 hours
susceptibility testing on Report results to the
Vitek clinician
Receive antibiotic
susceptibility result. 64 hours
Report result to the
clinician
Technology Behind Pheno and PhenoTest BC rely on multiple technologies to speed up microbiology
Pheno workflows. Once the sample is inserted into the cartridge, Pheno uses gel
9
FDA Allows Marketing of Test to Identify Organisms that Cause Bloodstream Infections and Provide Antibiotic Sensitivity Results. 2017.
10
Accelerate Diagnostics’ 4Q17 Earnings Call
May 24, 2018
electrofiltration to clean up the sample and eliminate subculturing. Sample debris,

salts, antimicrobial agents and ions enter the gel, while bacterial cells remain within
the testing well. The system uses electrokinetic concentration to immobilize cells
onto the flowcell surface and Pheno then uses fluorescence in-situ hybridization
(FISH) to tag the bacteria and fungi with multiple molecular tags. When one of the
tags hybridizes to the bacteria/fungi, Pheno uses the tag’s fluorescence signature to
identify the pathogen and Pheno reports the identification out to the laboratory (~90
minutes from pressing start). The PhenoTest BC cartridge can identify 16 different
bacteria and fungi. Next, Pheno separates the bacteria within ~20 different wells and
inoculates the pathogen with 20 different antibiotics. The system grows the
pathogens under the presence of antibiotics and, using a mixture of dark-field
microscopy and proprietary analytics (broadly called morphokinetic cellular
analysis), calculates a minimum inhibitory concentration (MIC). A lower MIC value
means the pathogen is susceptible to the antibiotic, while a higher value indicates the
pathogen is resistant. Seven hours after pressing start, Pheno produces a report
recommending the antibiotics to prescribe to the patient to treat the infection. The
PhenoTest BC is capable of reporting 101 different bacteria/fungi and drug combo
results (matrix below).
Exhibit 8 – PhenoTest BC Testing Menu
MRSA (Cefoxitin
(Erythromycin-
Erythromycin
Identification
Ciprofloxacin
Clindamycin)
Meropenem
Vancomycin
Tazobactam
Daptomycin
Ceftazidime
Tobramycin
Ceftriaxone
Piperacillin-
Gentamicin
Aztreonam
Ceftaroline
Ertapenem
Sulbactam
Ampicillin-
Cefepime
Ampicilin
Amikacin
Linezolid
MLSb
)
S. aureus X X X X X X X X
S. lugdunensis X X X X
CNS spp. X X X X X
E. faecalis X X X X X
E. faecium X X X X X
Streptococcus spp. X
E. coli X X X X X X X X X X X X X
Klebsiella spp. X X X X X X X X X X X X X
Enterobacter spp. X X X X X X X X X X X X
Proteus spp. X X X X X X X X X X X X X
Citrobacter spp. X X X X X X X X X X X X
S. marcescens X X X X X X X X X X X X
P. aeruginosa X X X X X X X X X
A. baumannii X X X
Candida albicans X
Candida glabrata X
Source: Company Reports
Clinical Data On Accelerate Diagnostics received FDA approval for Pheno and the PhenoTest BC
PhenoTest BC assay on February 23, 2017. System performance, as demonstrated during the FDA
trial, is very strong with sensitivity across the 16 bacteria of 97.4% and specificity
99.3%. For the antibiotic susceptibility portion of the cartridge, overall essential
agreement was 95.4% and categorical agreement was 94.3% (FDA target is
>90%)11. The FDA trial did not report outcomes, but early data is starting to emerge:
University Hospital of Augusta reduced sepsis mortality from 12% to <4% after
adopting Pheno and yielded $90,000 in antibiotics savings ~9 months after
adoption12. Barnes-Jewish Hospital found Pheno reduced the time to antibiotic
susceptibility results by 40.8 hours and 70.6% of patients saw antibiotic de-
11
Pancholi, P. 2018. Multicenter Evaluation of the Accelerate PhenoTest BC Kit for Rapid Identification and Phenotypic Antimicrobial
Susceptibility Testing Using Morphokinetic Cellular Analysis. J Clin Microbiol.
12
May 24, 2018
escalation or change in therapy based on the Pheno result13. We believe these early
data releases are only the start of a series of positive outcomes supporting Pheno and
the data backs our opinion Pheno could eventually be adopted by all hospitals within
the developed world.
Accelerate has complained the lack of true comparability outcomes data (i.e.
comparing two methods, side by side) has impacted Pheno’s adoption by hospitals.
To generate the data, Mayo Clinic and UCLA created a randomized clinical trial to
assess efficacy and health economic outcomes of Pheno, compared to the standard
of care. The trial is named RAPIDS-GN, Rapid Identification and Phenotypic
Susceptibility Testing for Gram-Negative Bacteremia. The trial will randomize
gram-negative infected patients into a current standard of care test/treatment cohort
and then a Pheno cohort. The trial compares patient outcomes (mortality, cost
savings) across both cohorts. The trial is expected to finish enrollment 3Q18 with
data “shortly” after (we expect sometime in Q4). We believe this trial is critical to
the success of Pheno and should ultimately accelerate instrument adoption, given
positive results.
Sepsis – Check. Next? The next test Accelerate is developing is for lower respiratory infections
Pneumonia (pneumonia). The lower respiratory test runs on bronchoalveolar lavage and
potentially sputum sample types and does not require pre-culturing via a blood
bottle. Accelerate already received a CE mark for the lower respiratory test.
Performance from the CE mark trial is strong with sensitivity and specificity of
97.3% and 99%, respectively. The essential agreement was 93.8% for 15 antibiotics
and categorical agreement was 96.9%14. Accelerate submitted its pre-submission
package to FDA and intends to begin the FDA clinical trial late 2Q18/early 3Q18
and launch the test early 2019. Accelerate is releasing a new sample prep device for
the U.S. lower respiratory test and will use this device within the clinical trial. While
this sample prep device appears to be simple, easy to use and low turnaround time,
we believe the inclusion of a new protocol in the trial could ultimately delay the trial
as well as FDA approval by a quarter. We believe the lower respiratory test could
decrease the time to antibiotic susceptibility results from 46 hours to 7 hours.
Accelerate’s FDA trial will also include a second arm to study outcomes. The
addition of the outcomes arm should improve the lower respiratory test’s
marketability immediately following the FDA approval (whereas it is taking ~12
months for PhenoTest BC outcomes data to emerge). We believe Accelerate is
developing additional tests on Pheno including urinary traction infections and tissue
infections.
Market Opportunity We believe Accelerate Diagnostics is overall targeting a $5.8B opportunity,
comprised of $2.3B in the U.S. and $3.5B in Europe. We believe Accelerate is
primarily replacing the aging fleet of BioMérieux Vitek, Becton Dickinson Phoenix
and Beckman Coulter MicroScan instruments. In total, there are ~27,000 of these
instruments placed worldwide and we believe 60% are placed in the U.S. Given
Accelerate is selling each Pheno module for $75,000, we peg the Pheno instrument
opportunity around ~$2.0B worldwide. We also calculate the recurring opportunity
for the diseases Accelerate is initially targeting including bloodstream infections,
lower respiratory infections (only cases requiring an ER visit), urinary tract
infections (only cases requiring an ER visit) and skin & soft tissue infections. In
13
Burnham, J. 2017. Clinical Impact of Expedited Pathogen Identification and Susceptibility Testing for Gram-Negative Bacteremia and Candidemia
Using The Accelerate Pheno System.
14
May 24, 2018
total, there are ~5.5M cases of these illnesses per year in the U.S. and ~18.0M cases
in Europe. Accelerate is currently succeeding in selling the PhenoTest for
>$200/cartridge and we assume this ASP in our market model for the U.S. For
Europe, we assume $200/cartridge for bloodstream and lower respiratory infections,
but assume $100/cartridge for urinary traction infections and skin & soft tissue
infections. We peg the U.S. consumable opportunity at $1.1B and $2.6B for Europe.
Exhibit 9 – Market Opportunity
Forecasting The In order to accurately forecast Pheno’s install ramp we looked at several comparable
Instrument Ramp system launches over the past years (those with public data) including BioMerieux’
Vitek, Beckman Coulter’s MicroScan, Cepheid’s GeneXpert and BioFire’s
FilmArray. While data is incomplete given how each company reported their
installed base, we can get a sense of how each instrument performed several years
after its FDA approval. We compared our Pheno launch assumptions to these comps.
We believe Vitek is the best long-term comp. We believe BioFire is the best near-
term comp, although understanding BioFire’s FilmArray was a fee for service
reimbursed product, whereas Pheno is not reimbursed (cost of the system is made up
with length of stay reduction, reduction in antibiotics, etc.). As a result, Pheno is
already underperforming BioFire and we anticipate it will continue to underperform
in the near-term. The chart below shows our Pheno install estimates alongside other
diagnostic comps. At the end of the 3rd year after the FDA approval we model 1,019
Phenos, compared to ~1,380 FilmArrays and ~1,480 GeneXperts. We believe the
short-term underperformance vs. FilmArray and GeneXpert is appropriate given we
are comparing reimbursed products vs. Pheno.
Longer-term, we model Accelerate placing 4,800 Phenos in its 8th-year post-FDA
approval. BioMerieuix placed its 10,000th Vitek in its 8th year and Cepheid placed its
~5,600th GeneXpert. If Pheno is as successful as we anticipate, our long-term
estimate could be too low.

May 24, 2018
Exhibit 10 – Diagnostic Instrument Launch Comparison

Each check indicates an actual install number was given
Potential Competitors Given Accelerate’s Pheno instrument does not require subculturing, we believe there
are no true competitors to Pheno on the market today. Accelerate is primarily going
after labs who currently use semi-automated instruments including BioMérieux’
Vitek, Becton Dickinson’s Phoenix and Beckman Coulter’s MicroScan. In total, we
believe there are ~27,000 of these instruments installed within microbiology labs
worldwide, with ~60% installed in the U.S. These instruments were released in the
early 2000s and are still the primary tools laboratories use for antibiotic
susceptibility testing.
Several other manufacturers within the last few years have launched new
instruments for the microbiology market. These instruments include BioFire’s
FilmArray and Luminex’ Verigene (molecular blood culture tests), BioMerieux’
Vitek MS (mass spectrometry for all sample types) as well as T2 Biosystems’ T2Dx
(pre-culture identification). It is important for investors to make a clear distinction
between these systems and Pheno: FilmArray, Verigene, Vitek MS and T2Dx all
focus on improving the time to obtain pathogen identification, but do not speed up
the time to obtain antibiotic susceptibility results. Some manufacturers of
identification-only systems tout their systems as improving care through rapid
identification, but given previously discussed data (75% reduction in mortality after
adopting Pheno), we believe rapid antibiotic susceptibility test results are most
important for improving patient care.
We believe actual competitors to Accelerate will eventually emerge. One potential
long-term competitor could be Qvella, who is developing an automated, rapid
antibiotic susceptibility testing instrument. The company recently raised Series B
financing with an investment from BioMérieux. Given the time to develop Pheno
(development started before 2012), we believe it will still take Qvella several years
to launch a platform and test. German-based Curetis recently received FDA approval
for its lower respiratory test, although the test only performs pathogen identification
and, thus, we do not believe is a true competitor to Accelerate in its current form.
Other potential competitors include QuantaMatrix and LifeScale, although they both
appear early stage.

May 24, 2018
Market Basics: Reimbursement is best understood as: “how does a laboratory get paid for
Reimbursement performing a test?” In the U.S., reimbursement for diagnostics products and
services is divided into where the treatment was provided: inpatient (testing during
a hospital stay) and outpatient (testing when not staying at a hospital).
Inpatient Inpatient diagnostics reimbursement in the U.S. uses the Diagnostic Resource Group
Reimbursement (DRG) method of payment. DRG designates a single payment amount to the treating
center for an episode of care. For example, a sick patient may present to the hospital
and, based on their diagnosis, a specific DRG is assigned resulting in a $2,000
payment to the hospital to cover the total cost of care. It is then up to the hospital’s
discretion where they allocate this payment to maximize care as well as profit15. The
DRG program’s inherit limitation is it may cause hospitals to focus solely on profit
over care (e.g. collect ~$2,000 and spend as little as possible to cure the patient),
Centers for Medicare & Medicaid Services (CMS) has increasingly looked to tie
payments to quality-of-care. Today, hospitals are required to implement quality-of-
care programs and achieve certain quality metrics16. If hospitals fail to meet these
metrics, they face material cuts to their payment amounts, thus hurting profitability.
Bottom-line for inpatient reimbursement: hospitals receive a fixed payment for
treatment and are allowed to allocate their spend to maximize care and profits. As a
result of this program, hospitals are most focused on finding value-added products to
improve care and reduce overall hospital expenditures. Accelerate’s products are
used within hospital laboratories for in-patients and we anticipate all will be
reimbursed using the DRG payment methodology. As a result, it is critical
Accelerate demonstrates Pheno is an overall value-add for hospitals.
Established by the Affordable Care Act, the Hospital-Acquired Condition Reduction
Program is an incentive-based program to improve hospital care and reduce the
number of hospital-acquired illnesses. As part of the program, CMS measures six
quality measures: patient safety indicator composite, central line-associated
bloodstream infection, catheter-associated urinary tract infection, surgical site
infection, methicillin-resistant staphylococcus aureus bacteremia and clostridium
difficile infection. Using these six measures, CMS creates a Hospital-Acquired
Condition quality score. Hospitals with the 25% lowest scores have their CMS
payments cut by 1% for one year17. As a result of this program, there is another
financial incentive to rapidly find infected patients and treat them, to prevent the
pathogen spreading in the hospital and community.
Regulation Diagnostic instruments, reagents, assays and cartridges are called in vitro
FDA diagnostics (IVDs) by the FDA. The definition of IVDs are medical devices to
diagnose a disease in order to cure, prevent or mitigate an illness and these products
are involved in the collection, preparation and examination of human body
specimens18. Accelerate’s Pheno and PhenoTest cartridges are IVDs. There are three
classes of IVDs: class I, class II and class III. Class I IVDs are considered low risk
tests and have limited regulatory oversight. Class III IVDs are high risk tests (i.e.
results could have a life/death impact on treatment) and have extensive oversight.
The two primary paths to bring an IVD through FDA regulatory approval are the
510(k) and PMA.
15
Acute Inpatient PPS. 2017. Centers for Medicare & Medicaid Services.
16
Hospital Inpatient Quality Reporting Program. 2017. Centers for Medicare & Medicaid Services.
17
Hospital-Acquired Condition (HAC) Reduction Program. QualityNet.
18
Overview of IVD Regulation. 2018.U.S. Food & Drug Administration.
May 24, 2018
The 510(k) pathway is used when the product is class I or class II and there is a
predicate device FDA can compare the new product against. The regulatory process
starts when the manufacturer submits to FDA its 510(k) dossier including
specifications of the test, clinical trial results, adverse event reporting, etc. FDA will
review the dossier and compare the new product to a predicate test. By law, FDA
has 90 days to review the submission, although if FDA reaches out to the company
for questions, the clock is paused. If there is no predicate device but the product is
still class I or class II, the company can submit for a de novo 510(k). A de novo
510(k) typically requires additional supporting evidence reinforcing the product’s
performance and safety. FDA must review a de novo 510(k) submission in 120 days.
Class III IVDs must seek approval under the Premarket Approval (PMA)
submission process. A PMA requires even more performance and safety data
compared to a de novo 510(k) and FDA must review the submission in 6 months
(but some submissions can ultimately take 12-18 months). After FDA 510(k) or
PMA approval, FDA will grant the IVD a complexity label including high
complexity, moderate complexity or waived (more on complexity below). Outside
the U.S., EU approval is via the CE Mark program, which certifies the lab meets EU
health, safety and environmental requirements and may require external data
review19. Beyond U.S. and EU, each country has its own regulatory approval
process and requirements.
Accelerate used the de novo 510(k) pathway to seek FDA approval for Pheno and
PhenoTest BC. Accelerate submitted the de novo 510(k) dossier on July 11, 2016
and received FDA approval on February 23, 2017. We believe Accelerate will file
the lower respiratory test under a traditional 510(k) approval pathway.
CLIA In addition to regulation on testing products, there are also U.S. regulations around
the labs running the test. These rules are listed under the Clinical Laboratory
Improvement Amendments of 1988, better known as CLIA. CLIA rules are
governed by CMS. Among a litany of rules to ensure all labs are producing quality
results, labs may be given a complexity level of either high-complexity or moderate-
complexity. Highly-complex labs may run any IVD cleared by the FDA.
Moderately-complex labs may run all IVDs labeled moderately-complex or CLIA-
waived. Labs without a complexity rating may only run CLIA-waived tests. CLIA-
waved tests are simple IVDs with a low risk for an incorrect result. Moderately-
complex tests are typically more manual and require operator training, while highly-
complex tests typically required extensive operator discretion to run the product
among other factors (CLIA has a seven question scorecard used to determine the
complexity level). All of Pheno’s target customers are high complexity laboratories.
FINANCIALS
We are modeling 2018 revenue of $13M, below management’s guidance of “lower-
end” of $21-30M. We forecast 146 revenue-generating Pheno placements during the
year, up from 78 in 2017. In 2019, we forecast 310 revenue-generating Pheno
placements. We also forecast each Pheno install will run 1.1 consumables per day.
Our 2019 revenue target is $43M vs. the Street at $61M (range: $30-79M). In 2020,
we forecast 485 revenue-generating installs, along with 1.2 consumables per day per
Pheno. Our 2020 revenue target is $88M vs. the Street at $130M (range: $57-181M).
19
CE Marking – Program Overview. 2013. Export.Gov.
May 24, 2018
Accelerate has not yet met Street expectations since launching Pheno and longer-
term estimates have been consistently lowered since the launch. As shown below,
estimates for 2018 started at $73M and guidance is now for lower-end of $21-30M.
2019 estimates to-date have been lowered by 65% and we believe could decline
further.
Exhibit 10 – Diagnostic Instrument Launch Comparison
Source: Factset
Pheno instrument COGS are under $20K, while at volume PhenoTest COGS are
~$60. We model $21K and $77 in COGS during 2018, respectively. We model
COGS slowly declining to management’s full-run guidance over our DCF time
horizon. We forecast both R&D and SG&A increasing during 2018 and 2019 with
total operating expenses growing 10% and 11%, respectively, above comparable
company Cepheid’s operating expense during its instrument ramp.
For our DCF, we model annual placements as well as instrument and cartridge
COGS through 2024. We assume operating expenditures will ramp in line with
Cepheid during their instrument launch phase. In 2024, we believe Accelerate can
peak with a 33% EBIT margin. We forecast EBIT margin will decline to 26% by the
terminal year. We forecast CAPEX will outgrow depreciation through the terminal
year. We assume a 3.0% terminal growth rate, in line with the current growth rate of
traditional microbiology companies. Our WACC for 2018 is 14.5% and is calculated
as a derivative of their recently issued convertible debt offering. We assume the
WACC will decline annually to a “market” risk level by the terminal year.
MANAGEMENT & BOARD

Lawrence (Larry) Mehren: Mr. Mehren is Accelerate Diagnostics’ President and
Chief Executive Officer and joined the company in 2012. Before Accelerate, Mr.
Mehren held multiple roles at Ventana Medical Systems prior to and after its sale to
Roche including Senior Vice President, Chief Financial Officer and Head of Global
Business. Prior to joining the industry, Mr. Mehren was a Managing Director and
Partner at P&M Corporate Finance in their life sciences division and also held roles
May 24, 2018
at The Thomson Corporation and Merrill Lynch. Mr. Mehren holds a B.A. in
Political Science from the University of Arizona and a MBA from Northwestern
University.
Steve Reichling: Mr. Reichling is Accelerate Diagnostics’ Chief Financial Officer
and joined the company in 2012. Prior to Accelerate, Mr. Reichling held various
leadership roles at Roche Diagnostics, Ventana Medical Systems and the Spring
Bioscience Corp. subsidiary. Prior to joining Roche in 2003, Mr. Reichling was an
auditor at Ernst & Young. Mr. Reichling received his B.A. in accounting and
entrepreneurship from the University of Arizona and is a CPA.
John Patience: Mr. Patience is the Chairman of Accelerate’s Board of Directors
and joined the Board in 2012. Mr. Patience is a founding partner of Crabtree
Partners and has held multiple director titles including at Ventana Medical Systems
and Stericycle. Mr. Patience’s firm Crabtree Partners owns ~12% of Accelerate’s
shares outstanding.
Jack Schuler: Mr. Schuler is a director at Accelerate Diagnostics and joined the
Board in 2012. Mr. Schuler served on multiple boards over the past years including
Ventana Medical Systems, Stericycle, Quidel and Medtronic. From 1972-1989, Mr.
Schuler was the President and Chief Operating Officer of Abbott Laboratories. Mr.
Schuler owns ~29% of Accelerate’s shares outstanding. Mr. Schuler purchases
shares on the open market and purchased ~1.5M shares in the last 12 months.
We hold Accelerate’s management team in high regard given their prior industry
and financial experience. We are also encouraged by management’s and the Board’s
financial interests in the firm. The team has significant operational experience,
which we believe will be critical following Accelerate’s launch. We do not have a
track record yet of the management team and their ability to hit forecasts and 2018
(and their $21-30M guidance) will be their first test in this regard.
RISKS
 Clinical Trial Results/Regulation: Accelerate will be seeking FDA approval
for its lower respiratory test in the next 12 months. Failure to obtain approval (or
a delay) could impact forward estimates and the stock price.
 Competition: We believe there are no true competiors to Accelerate’s Pheno.
However, microbiology labs may not appreciate the benefits of Pheno vs. other
microbiology products. Further, new instruments that are directly competitive to
Pheno could emerge and fight for Accelrate’s market share.

May 24, 2018

Updated: 5/10/2018
2017A 2018E 2019E 2020E 2015A 2016A 2017A 2018E 2019E 2020E
Q1A Q2A Q3A Q4A Q1A Q2E Q3E Q4E Q1E Q2E Q3E Q4E Q1E Q2E Q3E Q4E
Instruments 0.5 0.5 0.2 1.1 0.3 0.8 2.8 4.9 4.1 5.6 6.4 7.1 8.3 8.6 9.4 10.1 2.3 8.7 23.3 36.4
Reagents - 0.2 0.6 1.0 0.5 0.9 1.3 1.9 2.9 4.1 5.6 7.1 8.8 11.7 14.1 16.6 1.7 4.5 19.7 51.2
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1
Total Revenue 0.5 0.7 0.8 2.1 0.8 1.6 4.1 6.8 7.0 9.7 12.0 14.3 17.1 20.3 23.5 26.8 0.1 0.2 4.2 13.3 43.0 87.7
Gross Profit 0.5 0.6 0.6 1.5 0.3 1.0 2.5 4.8 4.9 6.8 8.4 10.0 12.0 14.2 16.4 18.7 0.1 0.2 3.2 8.6 30.1 61.3
S,G&A 10.5 11.5 11.6 11.5 14.4 15.0 15.0 16.0 16.0 16.2 16.4 16.6 18.6 18.8 19.0 19.2 18.6 37.2 45.1 60.4 65.2 75.6
Other - - - - - -
Other Expense (Income) 0.0 (0.1) 0.0 0.3 (0.1) 0.0 0.1 0.3
Income Taxes - 0.2 0.0 0.3 0.2 - - - - - - - - - - - - 0.3 0.5 0.2 - -
NOLs 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4 173.4
Diluted EPS (GAAP) (0.27) (0.31) (0.31) (0.30) (0.37) (0.37) (0.34) (0.32) (0.33) (0.30) (0.28) (0.26) (0.26) (0.22) (0.19) (0.16) (1.01) (1.30) (1.19) (1.41) (1.16) (0.83)
Expense Analysis:
Gross Margin 95.1% 80.7% 76.9% 69.3% 38.6% 60.1% 60.8% 70.5% 69.6% 69.9% 70.0% 70.2% 70.4% 70.0% 69.9% 69.7% 100.0% 100.0% 76.0% 64.4% 70.0% 70.0%
Operating Margin -- -- -- -761.2% -2600% ####### -467.4% -263.6% -255.4% -169.5% -127.6% -98.9% -83.0% -60.3% -44.2% -31.5% -- -- -1536.6% -588.2% -148.5% -51.6%
Adj. Operating Margin -- -- -- -761.2% -2600% ####### -467.4% -263.6% -255.4% -169.5% -127.6% -98.9% -83.0% -60.3% -44.2% -31.5% -- -- -1536.6% -588.2% -148.5% -51.6%
S,G&A -- -- -- 541.1% 1791.9% 923.0% 368.5% 235.5% 227.0% 166.4% 136.7% 116.5% 108.9% 92.4% 80.9% 71.7% -- -- 1078.7% 454.1% 151.5% 86.2%
Tax Rate 0.0% -1.1% -0.3% -1.7% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 0.0% -0.4% -0.8% -0.2% 0.0% 0.0%
Net Margin -- -- -- -768.7% -2598% ####### -472.3% -267.1% -259.3% -172.8% -130.6% -101.6% -85.5% -62.6% -46.3% -33.5% -- -- -1532.9% -592.5% -151.6% -53.8%
Adj. Net Margin -- -- -- -768.7% -2598% ####### -472.3% -267.1% -259.3% -172.8% -130.6% -101.6% -85.5% -62.6% -46.3% -33.5% -- -- -1532.9% -592.5% -151.6% -53.8%
Grow th Metrics:
Total Revenue 225.2% 3395.0% 3350.0% 5335.9% 51.1% 132.5% 391.6% 220.5% 779.9% 499.0% 194.7% 109.8% 142.4% 109.0% 95.9% 87.8% -- 67.3% 1598.0% 218.2% 223.8% 103.8%
Gross Profit 209.2% 2720.0% 2554.2% 3668.2% -38.7% 73.2% 288.8% 226.1% 1486.8% 596.3% 238.9% 108.8% 145.1% 109.3% 95.6% 86.5% -- 67.3% 1190.5% 169.5% 251.9% 103.7%
Adj Operating Profit -6% -8.2% -0.6% 0.7% 45.5% 24.4% 9.9% 11.0% -13.6% -19.2% -19.5% -21.3% -21.2% -25.7% -32.2% -40.2% -- 46.0% -3.5% 21.8% -18.3% -29.2%
Adj Net Income -6% -7.9% -1.3% 1.0% 46.6% 24.9% 12.6% 11.4% -12.2% -18.2% -18.5% -20.2% -20.1% -24.3% -30.5% -38.1% -- 46.0% -3.5% 21.8% -18.3% -29.2%
Ongoing EPS -7% -11.9% -8.6% -4.2% 36.7% 20.1% 11.5% 7.7% -13.0% -18.9% -19.2% -20.9% -20.8% -25.0% -31.1% -38.7% -- 28.1% -8.0% 18.4% -17.9% -28.3%

May 24, 2018

Updated: 5/10/2018
2017A 2018E 2019E 2020E 2015A 2016A 2017A 2018E 2019E 2020E
- - - - - -
Instruments 0.5 0.5 0.2 1.1 0.3 0.8 2.8 4.9 4.1 5.6 6.4 7.1 8.3 8.6 9.4 10.1 - 0.2 2.3 8.7 23.3 36.4
Reagents - 0.2 0.6 1.0 0.5 0.9 1.3 1.9 2.9 4.1 5.6 7.1 8.8 11.7 14.1 16.6 - - 1.7 4.5 19.7 51.2
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1
Total Revenue 0.5 0.7 0.8 2.1 0.8 1.6 4.1 6.8 7.0 9.7 12.0 14.3 17.1 20.3 23.5 26.8 0.1 0.2 4.2 13.3 43.0 87.7
Instrum ent Build
Cumulative Systems:
Total Systems In-Field 191 265 295 337 345 -- -- -- -- -- -- -- -- -- -- -- 337 -- -- --
Evaluation Systems 169 220 239 259 256 -- -- -- -- -- -- -- -- -- -- -- 259 -- -- --
Revenue-Generating System s 22 45 56 78 89 104 159 224 279 354 439 534 644 759 884 1,019 78 224 534 1,019

QOQ Total Systems In-Field 191 74 30 42 8 - 337 8 - -
QOQ Evaluation Systems 169 51 19 20 (3) - 259 (3) - -
12 Month Conversion Ratio 46% 40% 27% 43% 56% 74% -- -- -- -- -- -- --
Reagent Build
Revenue-Generating Systems Installed 22 45 56 78 89 104 159 224 279 354 439 534 644 759 884 1,019 78 224 534 1,019
Cost of Goods Build

Cartridge Cost $50 $80 $78 $76 $74 $72 $70 $68 $66 $65 $65 $65 $65 $50 $77 $69 $65
Overhead - - - - - - - - - - - - -
OPEX Analysis
2007 2008 2009

May 24, 2018

Updated: 5/10/2018
2017A 2018E 2019E 2020E 2015A 2016A 2017A 2018E 2019E 2020E
Inventories 4.4 5.7 7.3 8.1 10.1 12.7 13.9 13.1 11.7 12.8 13.8 13.9 16.6 20.0 23.2 26.6 1.6 - 8.1 13.1 13.9 26.6
Total Assets 74.4 148.3 136.1 125.5 213.1 195.1 186.7 177.8 164.5 157.1 150.7 145.6 138.0 134.9 133.7 134.6 139.3 114.3 125.5 177.8 145.6 134.6
Long-term Debt 99.2 99.2 99.2 99.2 99.2 99.2 99.2 99.2 99.2 99.2 99.2 99.2 - - 99.2 99.2 99.2
Change In Working Capital 0.7 0.6 2.1 0.9 3.9 8.2 0.2 0.2 14.4 2.2 1.6 1.0 25.6 5.0 4.3 4.9 (4.0) 8.3 8.2 6.6 20.8
Change in WC/Change in Revenue 1.4 3.3 16.2 0.7 4.8 9.9 0.1 0.1 2.0 0.8 0.7 0.4 1.5 1.5 1.4 1.5 (40.07) 2.10 0.90 0.22 0.47
Net Cash (Debt) Per Share 1.23 2.52 2.19 2.02 1.70 1.23 0.94 0.67 0.37 0.09 (0.16) (0.36) (0.68) (0.92) (1.12) (1.30) 2.13 2.03 0.67 (0.37) (1.30)
Perform ance Ratios

Days of Inventory In Stock 15,333 3,877 3,517 1,134 1,883 1800 800 600 500 400 350 300 300 300 300 300 #DIV/0! 2,936 1,012 393 368
Current Ratio 13.4 23.0 21.2 17.8 27.8 82.3 32.1 23.7 38.5 26.0 19.4 15.1 16.7 12.7 10.2 8.5 27.2 17.8 23.7 15.1 8.5
Quick Ratio 12.3 21.8 19.8 16.4 26.1 75.5 29.1 21.3 34.6 22.9 16.7 12.8 13.3 9.4 7.0 5.3 27.1 16.4 21.3 12.8 5.3
Cash Ratio 12.2 21.7 19.6 16.1 26.0 74.9 28.4 20.5 33.0 21.1 15.0 11.1 10.8 6.9 4.5 2.8 27.0 16.1 20.5 11.1 2.8

May 24, 2018

Updated: 5/10/2018
2017A 2018E 2019E 2020E 2015A 2016A 2017A 2018E 2019E 2020E
Net Income (14.2) (16.5) (17.1) (16.3) (20.8) (20.6) (19.2) (18.1) (18.3) (16.8) (15.7) (14.5) (14.6) (12.7) (10.9) (9.0) (45.5) (66.4) (64.0) (78.7) (65.2) (47.2)
Change in Assets & Liabilities (5.1) (1.0) (1.5) (0.8) (1.6) (8.2) (0.2) (0.2) (1.9) (2.2) (1.6) (1.0) (6.5) (5.0) (4.3) (4.9) 0.0 1.4 (8.4) (10.2) (6.6) (20.8)
Capital Expenditures (0.2) (1.4) (0.4) (0.9) (1.3) (4.8) (4.8) (4.8) (5.3) (5.3) (5.3) (5.3) (5.8) (5.8) (5.8) (5.8) (3.7) (2.4) (3.0) (15.7) (21.1) (23.2)
Other Cash From Investing Activities (31.6) (0.1) (0.2) (0.2) (0.0) 12.8 30.9 (32.0) (0.0) - -
Net Cash from Investing Activities (31.8) (1.5) (0.6) (1.1) (1.3) (4.8) (4.8) (4.8) (5.3) (5.3) (5.3) (5.3) (5.8) (5.8) (5.8) (5.8) 9.2 28.5 (35.0) (15.7) (21.1) (23.2)
Debt Proceeds (Repayments) 105 - - 104.9 - -

Stock Proceeds (Repurchse) 2.0 85.2 1.0 2.1 1.2 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 105.0 (0.6) 90.4 4.2 4.0 4.0
Other Cash from Financing Acitivities (4) (0.1) 2.4 - (4.3) - -
FX Impact On Cash 0.1 0.1 0.1 0.0 0.0 0.0 0.0 - 0.0 0.0 0.0 - 0.0 0.0 0.0 - - (0.1) 0.3 0.0 0.0 0.0
Net Increase (Decrease) In Cash (45.2) 71.3 (13.9) (12.2) 84.4 (25.7) (16.2) (15.0) (17.0) (15.6) (13.7) (11.8) (17.7) (14.2) (11.4) (9.9) 78.9 (23.3) (0.0) 27.5 (58.1) (53.2)

Updated: 5/10/2018
Revenue 13 43 88 222 344 429 539 582 629 679 982 1,011
EBIT Margin -588% -148% -52% 15% 29% 28% 33% 32% 31% 30% 26% 26%
EBIT (78) (64) (45) 33 99 119 180 187 194 202 256 263
Tax Rate 0% 0% 0% 0% 0% 0% 0% 19% 19% 19% 19% 19%
EBIT (1-T) (78) (64) (45) 33 99 119 180 187 194 164 207 213
+ Depreciation 1 2 4 5 7 8 10 10 10 10 15 15
- Capex 16 21 23 26 28 31 34 36 38 41 52 53
- Working Capital 10 7 21 40 48 38 44 47 50 53 68 69
FCFF (77) (61) (55) 4 62 93 147 151 154 120 148 155
Terminal CF 155
PV (Term Value) 912
Sum of PV 1,323
- Debt 99 2019 Revenue $ 43.0
- Minority Interests - Enterpise Value From DCF 1,323
+Non-Op Assets -
Value of Equity 1,417
Shares 56
Value of Shares 25
Total Revenue 218% 224% 104% 153% 55% 25% 26% 8% 6% 3.0%
EBIT Grow th 22% -18% -29% -174% 198% 20% 50% 4% 4% 3%

May 24, 2018
$35 AXDX 05/23/2018 $21.00
$30
$25
$20
$15
$10
$5
$0
07/13/2015
06/27/2017
12/07/2017
09/03/2015
10/28/2015
12/22/2015
02/18/2016
04/13/2016
06/07/2016
08/01/2016
09/23/2016
11/16/2016
01/12/2017
03/09/2017
05/03/2017
08/21/2017
10/13/2017
02/02/2018
03/29/2018
05/23/2018
Source: FactSet
Buy rated stocks generally have twelve month price targets that are more than 20% above the current price. Hold rated stocks
generally have twelve month price targets near the current price. Sell rated stocks generally have no price target and we would
sell the stock.
Improving means growth rates of key business metrics are generally accelerating. Stable means growth rates of key business
metrics are generally steady. Mixed means growth rates of some key business metrics are positive but others are negative.
Declining means growth rates of key business metrics are generally decelerating.

Buy 78% 17%
Hold 21% 0%
Sell 1% 0%
Total 100% 13%
Information about valuation methods and risks can be found in the “STOCK OPPORTUNITY” and
“RISKS” sections, respectively, of this report.
CHLM expects to receive or intends to seek compensation for investment banking services from the subject company in the next
three months.
Analysts receive no direct compensation in connection with the firm’s investment banking business. Analysts may be eligible for
bonus compensation based on the overall profitability of the firm, which takes into account revenues from all of the firm’s
OTHER DISCLOSURES
Although the statements of fact in this report have been obtained from and are based upon recognized statistical services, issuer
reports or communications, or other sources that Craig-Hallum believes to be reliable, we cannot guarantee their accuracy. All
opinions and estimates included in this report constitute Craig-Hallum's judgment as of the date of this report and are subject to
change without notice. Craig-Hallum may effect transactions as principal or agent in the securities mentioned herein. The
securities discussed or recommended in this report may be unsuitable for investors depending on their specific investment
objectives and financial position. This report is offered for informational purposes only, and does not constitute an offer or
solicitation to buy or sell any securities discussed herein in any jurisdiction where such would be prohibited. Additional
information available upon request. Member SIPC.
I, Alexander Nowak, hereby certify that the views expressed in this research report accurately reflect my personal views about
the subject security and issuer. No part of my compensation was, is or will be directly or indirectly related to the specific
recommendations or views contained herein.

Equity Research
May 9, 2018 Medical Technology
Sean Lavin, MD
slavin@btig.com Back Half Weighted, Or Forever Waiting? Neutral
Andrea Alfonso
(212) 527-3565
aalfonso@btig.com When we moved to Neutral, our concern was that sales would take a long
time. AXDX reported Q1 and activity was minimal. Sales of $800k were far
Marie Thibault below consensus’ $2.8M and by our math, only eight systems were added
(212) 527-3557 to the total signed agreements (evaluations plus converted placements).
mthibault@btig.com Both rev and evaluations are falling far shy of the demand one would
envision based on both management’s bullishness on their funnel and our
own previously positive survey. We continue to believe that AXDX offers a
compelling technology that will save lives and cut costs, but it is unclear to
us why hospitals simply are not buying.
AXDX
Upsi de
$22.45 %  The funnel is said to be robust, but something wrong. Mgmt said
12 month target $#,##0;(#,##0)
there are now ~750 interested customers but sales seem clogged. It
NEUTRAL seems there is a lot of hope but not a lot of clarity on when/if sales may
come. This seems a bit like a storm dumping 2 feet of snow in British
52 week range $18.00 - $30.30 Columbia while sitting 1,000 miles away in Vail hoping it meanders
Dividend
Market Yield
Cap (m) $1,249 towards Colorado. Often, the huge potential never comes. We are not
Price Performance certain if it’s lack of demand, labs having little purchasing power,
pricing too high, salespeople not getting the job done, or something
else but it is clear neither evaluations or revenue are ramping enough.
 
Hospitals do not need to buy. It’s always tricky to take machines back
from potential customers but at some point, if a company lets
hospitals trial forever, there is no incentive to buy. On the call, we
asked if there comes a point when the company will repossess systems
if not bought. Currently, the answer is no. With that in mind, there is
little incentive to convert from a free trial device to a purchased
device. This might be okay long term if utilization ramps but it
certainly puts near-term revenue at risk.
 
Guidance seems unlikely. Guidance was maintained at $21-30M but
Source: IDC we find this very unlikely. We now model $12M for FY18.
 
Estimates
1Q17 A 2Q17 A 3Q17 A 4Q17 A FY17 A 1Q18 A 2Q18 E 3Q18 E 4Q18 E FY18 E FY19 E
Sales 1 1 1 2 4 1 2 4 6 12 30
Gross Margin (%) - 80.7% 76.9% 69.3% 76.0% 38.6% 45.0% 55.0% 65.0% 57.6% 62.2%
EBIT (14) (16) (17) (16) (64) (21) (20) (20) (18) (79) (80)
Net Income (Adj.) (14) (16) (17) (17) (63) (21) (20) (20) (18) (79) (80)
Diluted EPS (GAAP) (0.27) (0.31) (0.31) (0.30) (1.16) (0.37) (0.36) (0.35) (0.33) (1.40) (1.43)

Variance Analysis
Total revenue was $800k, up 51% vs. the prior year but well below consensus’
estimate of $2.8M. The company reported having signed agreements for 345
instruments vs. the tally of 337 at the end of Q4. Contracts for customer
evaluations totaled 256 instruments (vs. 259 at the end of Q4). Meanwhile,
revenue generating placements were 89 worldwide (vs. 78 at the end of Q4).
Gross margin was 38.6%, much lower than our 55% estimate as a result of one-
time costs incurred in the quarter. SG&A of $14.35M grew 36% y/y due to
higher selling expenses and personnel costs in the U.S. R&D of $6.78M also
up-ticked from last quarter as a result of investments made in respiratory test
development and clinical affairs activity. All told, the net loss of $20.8M
equated to a LPS of $0.37.
Variance Analysis
1Q18
Total Revenue ($M) $0.80 $3.20 -$2.40
COGS ($M) $0.49 $1.44 -65.8%
Gross Profit $0.31 $1.76 -82.4%
SG&A ($M) $14.35 $13.10 9.6%
R&D ($M) $6.78 $6.20 9.4%
Operating Expenses ($M) $21.14 $19.30 9.5%
Taxes ($M) -$0.18 $0.00 NM
Net Income ($M) -$20.81 -$17.54 18.7%
EPS ($0.37) ($0.32) 18.7%
Gross Margin 38.6% 55.0% NM
SG&A Spend % NM NM NM
R&D Spend % NM NM NM
Tax Rate NM NM NM
Model Changes
We are taking down our FY18 revenue meaningfully as we have little
confidence that the company can meet revenue guidance of $21-30M. An
$800k first quarter with minimal added evaluations does nothing to point
towards $21-30M for the year. While we find the sales funnel encouraging if it
develops into sales, it appears as though even the company’s own estimates
will remain in flux until there is more clarity on full year buying patterns after
1H. Admittedly, we have little to go by and admit that our revenue forecasts
are placeholders for now until we see more encouraging signs of conversion.

2
New Old Change

Total Revenue ($M) $12.1 $29.8 $56.9 $25.2 $70.3 $140.3 -52% -58% -59%
Net Loss ($M) -$78.5 -$80.3 -$76.9 -$67.1 -$51.2 -$34.2 17% 57% 125%
LPS ($1.40) ($1.43) ($1.34) ($1.20) ($0.91) ($0.61) 17% 56% 120%
Valuation
Given the string of quarterly misses over the last year and the ongoing
challenges within the hospital purchasing environment, we see considerable
risk to achieving FY18 guidance. BTIG does not provide price targets on
Neutral-rated stocks. Risks to our rating include company to be acquired, not
meeting FY18 estimates, lengthening adoption cycles, LRTI data, building out
the salesforce and OUS expansion, competition, any changes to FDA
regulation, the need for more capital, a retraction in healthcare stock
valuations, and a hospital spending slow down.

3
$ millions, except EPS and %s FY14 A FY15 A FY16 A 1Q17 A 2Q17 A 3Q17 A 4Q17 A FY17 A 1Q18 A 2Q18 E 3Q18 E 4Q18 E FY18 E 1Q19 E 2Q19 E 3Q19 E 4Q19 E FY19 E FY20 E
Product Revenue 0.00 0.08 0.16 0.51 0.68 0.81 2.10 4.10 0.781 1.57 3.69 6.03 12.07 3.86 4.98 8.97 11.93 29.73 56.86
Total Revenue 0.12 0.15 0.25 0.53 0.70 0.83 2.12 4.18 0.80 1.59 3.71 6.05 12.15 3.88 5.00 8.99 11.95 29.81 56.94
COGS 0.00 0.00 0.00 0.03 0.14 0.19 0.65 1.00 0.49 0.87 1.67 2.12 5.15 2.11 2.40 3.41 3.34 11.27 20.65
Gross Profit 0.12 0.15 0.25 0.50 0.56 0.64 1.47 3.18 0.31 0.71 2.04 3.93 6.99 1.77 2.60 5.57 8.60 18.54 36.29
R&D 20.05 26.02 28.20 4.29 5.53 6.35 6.13 22.30 6.78 6.60 6.70 6.80 26.88 7.20 7.40 7.50 7.70 29.80 33.60
SG&A 10.70 17.88 36.20 10.53 11.46 11.60 11.47 45.06 14.35 14.00 15.00 15.50 58.85 15.80 16.50 17.50 19.20 69.00 79.60
EBIT -31.52 -45.55 -66.50 -14.31 -16.42 -17.32 -16.13 -64.18 -20.83 -19.89 -19.66 -18.37 -78.74 -21.23 -21.30 -19.43 -18.30 -80.26 -76.91
Other (Expense) Income 0.06 0.05 0.39 0.11 0.14 0.28 0.12 0.65 0.20 0.00 0.00 0.00 0.20 0.00 0.00 0.00 0.00 0.00 0.00
Pretax Income -31.46 -45.50 -66.11 -14.20 -16.28 -17.03 -16.02 -63.53 -20.63 -19.89 -19.66 -18.37 -78.54 -21.23 -21.30 -19.43 -18.30 -80.26 -76.91
Income Taxes (Benefit) -0.53 0.00 -0.27 0.00 -0.18 0.05 0.78 0.65 -0.18 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Net Income (Loss) -30.93 -45.50 -66.37 -14.20 -16.46 -17.08 -16.80 -62.88 -20.81 -19.89 -19.66 -18.37 -78.54 -21.23 -21.30 -19.43 -18.30 -80.26 -76.91
EPS -$0.71 -$1.01 -$1.29 -$0.27 -$0.31 -$0.31 -$0.30 -$1.16 -$0.37 -$0.36 -$0.35 -$0.33 -$1.40 -$0.38 -$0.38 -$0.34 -$0.33 -$1.43 -$1.34
EBIT -31.52 -45.55 -66.50 -14.31 -16.42 -17.32 -16.13 -64.18 -20.83 -19.89 -19.66 -18.37 -78.74 -21.23 -21.30 -19.43 -18.30 -80.26 -76.91
D&A 0.89 1.79 2.35 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00
EBITDA -30.63 -43.76 -64.15 -14.31 -16.42 -17.32 -16.13 -64.18 -20.82 -19.89 -19.66 -18.37 -78.74 -21.23 -21.30 -19.43 -18.30 -80.26 -76.91
Margins
Expenses

4
1Q17 A 2Q17 A 3Q17 A 4Q17 A FY17 A 1Q18 A 2Q18 E 3Q18 E 4Q18 E FY18 E 1Q19 E 2Q19 E 3Q19 E 4Q19 E FY19 E FY20 E
U.S.
Capital Equipment
additions 8 15 7 12 42 7 8 20 34 69 12 13 25 39 89 109
% sold 65% 80% 40% 77% 66% 65% 75% 75% 75% 73% 75% 75% 75% 75% 75% 75%
% reagent rental 35% 20% 60% 23% 35% 35% 25% 25% 25% 28% 25% 25% 25% 25% 25% 25%
Consumables
Price Per Test $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
y/y growth -62.4% -8.7% 50.0% 6.3% 89.8% 33.3% 26.7% 17.6%
OUS
Capital Equipment
additions 0 12 6 10 28 4 5 15 30 54 9 10 20 35 74 94
% sold 20% 20% 20% 35% 24% 0% 35% 40% 45% 30% 35% 35% 35% 35% 35% 35%
% reagent rental 80% 80% 80% 65% 76% 100% 65% 60% 55% 70% 65% 65% 65% 65% 65% 65%
Consumables
Price Per Test $150 $150 $150 $150 $150 $150 $150 $150 $145 $145 $145 $145
y/y growth -49.0% -10.0% 50.0% 14.1% 93.3% 28.9% 22.4% 19.4%
WW
Capital Equipment
additions 23 13 19 15 13 28 53 37 22 38 63
Consumables
y/y growth 51.3% 132.8% 324.0% 186.4% 190.0% 400.5% 217.8% 142.9% 97.9% 146.6% 91.2%
sequential growth 2734% 132.0% 129.4% 241.6% -63.3% 103.0% 135.6% 63.2% -35.9% 29.0% 80.0% 33.0%

5

6
Ratings Definitions
upon.

of the end of the most recent calendar quarter (March 31, 2018): 282
Distribution of BTIG’s Research Recommendations (as of March 31, 2018):

BUY: 59.6%; NEUTRAL: 36.5%; SELL: 3.9%
Distribution of BTIG’s Investment Banking Services (as of March 31, 2018):

BUY: 21.4%; NEUTRAL: 6.8%; SELL: 0.00%


7
misses over the last year and the ongoing challenges within the hospital purchasing environment, we see
considerable risk to achieving FY18 guidance. BTIG does not provide price targets on Neutral-rated stocks.


8
Other Disclosures
General Disclosures

9

respectively.

10
ADVISORS 09 MayINC
2018 08:40 PM EDT
Disseminated 09 May 2018 08:41 PM EDT
09 May 2018
Overweight
Price: $22.45
1Q18 Update: Disappointing Quarter as Long
▼ Price Target: $25.00
Conversion Cycle Persists, With Several Initiatives to Previous: $27.00
Fuel 2H Acceleration
of disappointing 1Q results and earnings call. Specifically, 1Q revenues of $0.8M Tycho W. Peterson
AC
were significantly below the Street/JPMe at $2.8M/$3.0M, mainly due to (1-212) 622-6568
persistently-long order conversion cycles (largely, the result of delays in final tycho.peterson@jpmorgan.com
administrative sign-off at customers), with AXDX adding only 11 placements in Bloomberg JPMA PETERSON <GO>
1Q (vs. 22 last quarter), bring the total number of Pheno placements to 89. Despite Julia Qin
the soft 1Q (management expected it to be light, but obviously, results fell far (1-212) 622-9253
short of the Street), the company highlighted several commercial developments julia.qin@jpmorgan.com
and initiatives that are expected to fuel an acceleration in placements and revenues Tejas Savant
(1-212) 622-5650
in 2H, including: (1) a strong line-up of clinical evidence to increase customer
urgency to purchase (seven publications/posters coming at ASM in 2Q, initiation
of a registry to track and show clinical outcome improvement, early data from
randomized trials by Mayo Clinic and UCLA to show efficacy and health Price Performance
economic outcomes by 3Q); (2) securing three GPO contracts, the first of which 34
(representing access to ~3k institutions) will be executed in the next few days; (3) 30
KOL support from leading customers; and (4) an expanded salesforce (by ~50%) $ 26
that has been extensively trained and is expected to ramp in productivity. In 22
addition, conversion rates remain ~100%, supporting management's belief that the 18
May-17 Aug-17 Nov-17 Feb-18 May-18
question around conversion is “when” not “if”, as the company still expects the AXDX share price ($)
majority of the 256 systems currently under evaluation to convert by YE. RTY (rebased)
YTD 1m 3m 12m
On a more positive note, regarding menu, AXDX has aligned with FDA on a Abs -18.2% -4.1% -6.1% -22.2%
Rel -21.2% -9.5% -14.1% -36.9%
510(k) pathway for severe pneumonia assays (which should lead to expedited
approval) and plans to begin a U.S. clinical trial in late 2Q/early 3Q (as previously
expected), with the addition of two new pathogens and three additional antibiotics.
Looking ahead, 2018 revenues are expected to be near the low end of guidance of
$21-30M (with a light 2Q and meaningful uptick in 2H, given the aforementioned
tailwinds and current funnel visibility). Stepping back, while 1Q was
disappointing, we are encouraged by commercial development initiatives in place
and management’s confidence in the path towards revenue acceleration in 2H.
Meanwhile, we continue to see value in the differentiated Accelerate Pheno
platform, which remains positioned for a meaningful ramp, which will be further
supported by menu expansion. As such, we remain Overweight, while adjusting
our Dec 2018 PT to $25 (from $27).

FYE Dec 2016A 2017A 2018E 2018E 2019E 2019E Company Data
Revenue ($ mn) Date Of Price 09 May 18
Q1 (Mar) 0 1 3 1A 13 12 52-week Range ($) 30.45-16.75
Q2 (Jun) 0 1 4 3 17 17 Market Cap ($ mn) 1,241.44
Q3 (Sep) 0 1 6 7 22 22 Fiscal Year End Dec
Q4 (Dec) 0 2 9 11 26 28 Shares O/S (mn) 55
FY 0 4 22 21 78 79 Price Target ($) 25.00


(1-212) 622-6568 09 May 2018

Investment Thesis
Valuation
growth.

(1). Should the Accelerate Pheno System not receive regulatory clearance from the
prospects will be significantly impaired; (2). The competitive landscape in clinical
microbiology is crowded and intense; (3). Our long-term forecasts are partly
infections including respiratory and skin/soft tissue infections; (4). Accelerate is a
2

(1-212) 622-6568 09 May 2018

Income Statement 2014A 2015A 2016A 1QA 2QA 3QA 4QA 2017A 1QA 2QE 3QE 4QE 2018E 2019E
(in millions, except per share amounts) Ma r Jun Sep Dec Ma r Jun Sep Dec
Capital Sales 0 0 0 1 1 0 1 2 0 1 4 5 10 14
Gross Profit 0 0 0 1 1 1 1 3 0 2 4 6 12 52
SG&A (11) (18) (36) (11) (11) (12) (11) (45) (14) (14) (15) (14) (58) (52)
Other income (expense), net 0 0 0 0 0 0 0 1 0 0 0 0 0 0

Pretax Income (31) (45) (66) (14) (16) (17) (16) (64) (21) (20) (18) (15) (74) (22)
Income Tax 1 0 0 0 (0) (0) 1 1 (0) 0 0 0 (0) 0
GAAP Diluted EPS ($0.71) ($1.01) ($1.29) ($0.27) ($0.31) ($0.31) ($0.27) ($1.16) ($0.37) ($0.34) ($0.31) ($0.26) ($1.29) ($0.37)
Gross Margin 0% 0% 0% 95% 81% 77% 69% 80% 39% 60% 60% 60% 55% 65%
Effective Tax Rate 0% 0% 0% 0% -1% 0% 5% 1% -1% 0% 0% 0% 0% 0%
Net Margin 0% 0% 0% -2677% -2354% -2063% -715% -1505% -2598% -753% -276% -146% -360% -28%
EPS growth (y/y) 37% 11% 2% -3% 11% -71%
3

(1-212) 622-6568 09 May 2018

Revenue ($M) 0 0 0 4 21 79 181 301 429 557 684 811
growth y/y 20% 55% 1732% 393% 285% 129% 66% 43% 30% 23% 19%
EBIT ($M) 0 (46) (67) (64) (74) (22) 9 42 81 134 198 268
EBIT margin 0% NA -29328% -1527% -360% -28% 5% 14% 19% 24% 29% 33%
Free Cash Flow 0 (44) (67) (72) (71) (27) (2) 19 47 85 128 175
growth y/y 148% 82% 51% 37%

2019 - 2025 2.0% 2.5% 3.0% 3.5% 4.0% 2.0% 2.5% 3.0% 3.5% 4.0% 2.0% 2.5% 3.0% 3.5% 4.0%
9.9% 248 1,170 1,255 1,352 1,465 1,597 1,417 1,502 1,600 1,713 1,845 4.8x 5.1x 5.5x 5.9x 6.3x
+ =
10.4% 241 1,066 1,139 1,222 1,316 1,426 1,307 1,380 1,463 1,558 1,667 4.5x 4.7x 5.0x 5.3x 5.7x
10.9% 235 975 1,038 1,109 1,189 1,282 1,209 1,273 1,344 1,424 1,517 4.1x 4.3x 4.6x 4.9x 5.2x
11.4% 229 894 949 1,010 1,079 1,158 1,123 1,178 1,239 1,308 1,387 3.8x 4.0x 4.2x 4.5x 4.7x
11.9% 223 823 871 924 984 1,051 1,046 1,094 1,147 1,207 1,274 3.6x 3.7x 3.9x 4.1x 4.4x

2.0% 2.5% 3.0% 3.5% 4.0% 2.0% 2.5% 3.0% 3.5% 4.0% 2.0% 2.5% 3.0% 3.5% 4.0%
(104) 1,521 1,606 1,704 1,816 1,948 $25.98 $27.43 $29.10 $31.02 $33.27 83% 84% 85% 86% 87%
- = =
(104) 1,410 1,483 1,566 1,661 1,771 $24.09 $25.34 $26.75 $28.37 $30.25 82% 83% 84% 85% 86%
(104) 1,313 1,376 1,447 1,528 1,620 $22.43 $23.50 $24.72 $26.10 $27.67 81% 82% 83% 84% 85%
(104) 1,227 1,281 1,343 1,412 1,491 $20.95 $21.89 $22.94 $24.12 $25.46 80% 81% 82% 83% 83%
(104) 1,149 1,197 1,251 1,311 1,378 $19.63 $20.45 $21.36 $22.38 $23.53 79% 80% 81% 82% 82%
4

(1-212) 622-6568 09 May 2018

COGS 0 (1) (8) (28) (60) COGS (0)A (1) (3) (4)
SG&A (36) (42) (55) (48) (75) SG&A (14)A (14) (14) (14)
Adj. EBITDA (64) (62) (72) (18) 16 Adj. EBITDA (20)A (19) (18) (15)
D&A (2) (3) (3) (4) (7) D&A (1)A (1) (1) (1)
Adj. EBIT (66) (64) (74) (22) 9 Adj. EBIT (21)A (20) (18) (15)
Net Interest 0 1 0 0 0 Net Interest 0A 0 0 0
Adj. PBT (66) (64) (74) (22) 9 Adj. PBT (21)A (20) (18) (15)
Tax 0 1 (0) 0 (3) Tax (0)A 0 0 0
Adj. Net Income (66) (63) (74) (22) 6 Adj. Net Income (21)A (20) (18) (15)
Reported EPS (1.29) (1.16) (1.29) (0.37) 0.10 Reported EPS (0.38)A (0.34) (0.31) (0.26)
Adj. EPS (1.29) (1.16) (1.29) (0.37) 0.10 Adj. EPS (0.38)A (0.34) (0.31) (0.26)
DPS - - - - - DPS - - - -
.
Current assets 79 120 112 113 148
PP&E 4 5 5 9 15 ROE (62.9%) (64.0%) (64.9%) (20.7%) 5.4%
Net debt/equity (24.8%) (24.0%) (20.9%) (12.0%) (22.4%)
o/w Changes in working capital 1 (8) 3 (1) (2)
as % of sales 1056.6% 71.0% 10.0% 10.0% 7.5%
y/y Growth 43.6% 5.6% (5.6%) (81.3%) (258.8%)
5

(1-212) 622-6568 09 May 2018
intervention.

Diagnostics.
50 OW $32
OW $31
40
OW $17 OW $25 OW $28 OW $27 ($) ($)
30 24-Mar-16 OW 12.02 17.00
Price($)
08-Aug-16 OW 22.00 25.00
20 27-Feb-17 OW 25.50 28.00
03-May-17 OW 27.40 31.00
03-Aug-17 OW 25.15 32.00
10
03-Nov-17 OW 19.30 27.00
0
May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May
15 15 15 16 16 16 16 17 17 17 17 18 18
6

(1-212) 622-6568 09 May 2018
period.

(buy) (hold) (sell)
IB clients* 52% 49% 39%
IB clients* 72% 67% 57%
above.
Other Disclosures
representative.
7

(1-212) 622-6568 09 May 2018


meaning given in section 761G of the Corporations Act 2001. Germany: This material is distributed in Germany by J.P. Morgan Securities plc, Frankfurt
Branch which is regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht. Hong Kong: The 1% ownership disclosure as of the previous month end
8

(1-212) 622-6568 09 May 2018
"Other Disclosures" last revised April 28, 2018.

9
May 9, 2018

1Q18 Results Sour, But Future Still Bright
CONCLUSION
PRICE: US$22.45
AXDX shares are trading off ~9% in the post-market after reporting Q1 revenue and EPS
Price as of the close May 9, 2018
miss. 2018 guidance was signaled at the low end of the previous $21M-$30M range. The
TARGET: US$25.00
respiratory clinical trials remain on track for late 2Q/3Q initiation although management
9.5x FY20E EV/Rev; revs: $152.4M,
signaled their new sample prep device is not yet finished (early data without the device
58.1M s/o, $0.13 cash/sh.
met the FDA's criteria). Many successful product launches start slow (e.g. GeneXpert) and
it can be frustrating, but with ongoing solid data and the upcoming Mayo study we believe William R. Quirk, CFA
Pheno will transform microbiology.
Alexander D. Nowak, CFA
• 1Q18 Results: Accelerate reported $0.8M in revenue, below the Street's estimate Research Analyst, Piper Jaffray & Co.
of $2.8M. Accelerate announced it installed 345 cumulative Pheno modules under 612 303-5679, alexander.d.nowak@pjc.com
evaluation following FDA approval, an increase of 8 sequentially (was 337 modules).
This consists of 11 new revenue-generating installs vs. 22 in 4Q17, below our 30 Rating — Overweight
1Q18 estimate (for a total of 89 revenue generating systems) and 256 modules under Price Tgt US$26.00 US$25.00
evaluation (i.e. the backlog). Gross margin for the quarter was 38.3%. Operating FY18E Rev (mil) US$23.8 US$20.7
expenses were mixed vs our estimates with SG&A of $14.4M (PJC $11.5M estimate) FY19E Rev (mil) US$77.3 US$75.9
and R&D of $6.8M (PJC $6.8M forecast). All in, EPS of ($0.37) was lower than the Street FY18E EPS US$(1.24) US$(1.45)
($0.32). Accelerate exited the quarter with $194M in cash (plus ~$22M from the green FY19E EPS US$(0.91) US$(1.10)
shoe on the recent convertible note). 52-Week High / Low US$30.45 / US$16.75
• Guidance: Management reiterated 2018 revenue of $21M-$30M (Street: $24.1M). Market Cap. (mil) 1,248
Despite the reiteration, mgmt signaled they would likely be near the low end of guidance. Avg Daily Vol (000) 212
• Business Update: Management clearly is frustrated with the pace of evaluations turning Debt to Total Capital 0.0%
into revenue generating units and noted many systems have completed the evaluation Yield 0.00%
process and were going in front of the final committee. It appears Accelerate has solved Fiscal Year End Dec
some of the LIS integration issues from 2017. Management reiterated their respiratory Price Performance - 1 Year
510K trial (and the corresponding clinical validity trial) will begin in late 2Q/3Q, but it USD
appears the front end sample prep device is still in development. To be clear, this front 32
30
end unit is not necessary for approval (based on the preliminary data that met FDA
28
criteria), but could enhance the system performance.
26
24
• What To Do With The Stock: Assuming all 2Q17 265 cumulative orders convert to 22
revenue generating by YE2018 (or a 18-21 month process, which is longer than even 20
management expects), Accelerate should come close to hitting our 2018 FY revenue 18
projection. The launch trajectory remains lower than expected, but sometimes even 16
May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18
exceptional instruments launch slowly (e.g. GeneXpert). As such, given the consistency
of user data and the prospective Mayo study (which could be published by year end), Source: Bloomberg
we remain optimistic that Pheno will disrupt the microbiology market. PT to $25 from $26
due to reduced cash/share (methodology unchanged).
YEAR
2017A 0.5 0.7 0.8 2.1 4.2 297.2x (0.27) (0.31) (0.31) (0.27) (1.16) NM
2018E 0.8A 2.3 5.7 11.9 20.7 60.3x (0.37)A (0.38) (0.36) (0.33) (1.45) NM
2019E 13.3 15.6 18.9 28.0 75.9 16.4x (0.32) (0.31) (0.28) (0.19) (1.10) NM
Income Statement
2017A 2018E 2019E 2020E
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Annual
Qtr 1 A Qtr 2 E Qtr 3 A Qtr 4 A Qtr 1 A Qtr 2 E Qtr 3 E Qtr 4 E Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E 2016A 2017A 2018E 2019E 2020E
Instrument Revenue 510 583 482 1,620 469 1,319 4,356 8,787 8,630 9,799 11,089 12,507 13,552 14,142 15,226 15,898 149 3,195 14,930 42,025 58,819
Assay Revenue - 97 324 479 312 984 1,337 3,052 4,693 5,815 7,832 15,493 18,514 18,945 21,424 34,598 14 900 5,685 33,833 93,481
Total Product Revenue 510 679 806 2,099 781 2,302 5,693 11,839 13,323 15,614 18,921 28,000 32,067 33,088 36,650 50,496 163 4,095 20,615 75,858 152,300
License Revenue 20 20 22 21 20 20 22 21 15 15 15 15 15 15 15 15 83 83 83 60 60
Total Revenue 530 699 828 2,120 801 2,322 5,715 11,860 13,338 15,629 18,936 28,015 32,082 33,103 36,665 50,511 246 4,178 20,698 75,918 152,360
Cost of Product Revenue 32 133 191 646 482 1,373 3,574 7,188 7,932 9,374 11,072 14,344 16,270 16,768 18,226 22,417 0 1,002 12,617 42,721 73,682
Gross Profit 498 566 637 1,474 319 949 2,141 4,672 5,407 6,255 7,864 13,671 15,812 16,335 18,438 28,094 246 3,176 8,081 33,197 78,678
Operating Expenses:
Research & Development 4,288 5,500 6,351 6,161 6,782 7,100 7,400 7,800 8,000 8,100 8,200 8,300 8,400 8,500 8,600 8,700 28,196 22,300 29,082 32,600 34,200
Sales, General & Administrative 10,526 11,500 11,601 11,361 14,353 14,503 14,653 14,853 15,003 15,153 15,303 15,503 15,653 15,803 15,953 16,153 36,200 44,988 58,362 60,962 63,562
Depreciation & Amortization 0 70 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2,351 70 0 0 0
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Operating Expense 14,814 17,070 17,952 17,522 21,135 21,603 22,053 22,653 23,003 23,253 23,503 23,803 24,053 24,303 24,553 24,853 66,747 67,358 87,444 93,562 97,762
Operating Income (Loss) (14,316) (16,504) (17,315) (16,047) (20,816) (20,654) (19,912) (17,981) (17,596) (16,998) (15,639) (10,132) (8,241) (7,968) (6,115) 3,241 (66,501) (64,182) (79,363) (60,365)
0 (19,084)
0
Interest & Other Expense (Income) net (110) (5) (285) (900) (198) 556 523 531 544 546 557 560 560 556 560 560 (393) (1,300) 1,413 2,207 2,237
Pretax Income (Loss) (14,206) (16,499) (17,030) (15,147) (20,618) (21,210) (20,435) (18,513) (18,141) (17,544) (16,196) (10,691) (8,801) (8,525) (6,675) 2,681 (66,108) (62,882) (80,776) (62,572) (21,321)
Provision for Income Taxes 0 0 45 0 184 0 0 0 0 0 0 0 0 0 0 0
Net Income (Loss) - Reported (14,206) (16,499) (17,075) (15,147) (20,802) (21,210) (20,435) (18,513) (18,141) (17,544) (16,196) (10,691) (8,801) (8,525) (6,675) 2,681 (66,375) (62,927) (80,960) (62,572) (21,321)
Non-Recurring 67
Net Income (Loss) - Ongoing (w/ SBC) (14,139) (16,499) (17,075) (15,147) (20,802) (21,210) (20,435) (18,513) (18,141) (17,544) (16,196) (10,691) (8,801) (8,525) (6,675) 2,681 (66,375) (62,860) (80,960) (62,572) (21,321)
Diluted EPS (Reported) (0.27) (0.31) (0.31) (0.27) (0.37) (0.38) (0.36) (0.33) (0.32) (0.31) (0.28) (0.19) (0.15) (0.15) (0.11) 0.05 (1.29) (1.16) (1.45) (1.10) (0.37)
Diluted EPS (Ongoing, w/ SBC) (0.27) (0.31) (0.31) (0.27) (0.37) (0.38) (0.36) (0.33) (0.32) (0.31) (0.28) (0.19) (0.15) (0.15) (0.11) 0.05 (1.29) (1.16) (1.45) (1.10) (0.37)
Avg. Share Outstanding, Diluted 51,887 53,668 55,316 55,421 55,640 55,840 56,040 56,240 56,440 56,640 56,840 57,581 57,781 57,981 58,181 58,381 51,272 54,073 55,940 56,875 58,081
Expense Variables:
Cost of Product Revenue 6.3% 19.6% 23.7% 30.8% 61.7% 59.6% 62.8% 60.7% 59.5% 60.0% 58.5% 51.2% 50.7% 50.7% 49.7% 44.4% NM 24.5% 61.2% 56.3% 48.4%
Research & Development 809.1% 786.7% 766.7% 290.6% 846.7% 305.7% 129.5% 65.8% 60.0% 51.8% 43.3% 29.6% 26.2% 25.7% 23.5% 17.2% 11461.8% 533.8% 140.5% 42.9% 22.4%
Selling, General & Administrative 1986.0% 1644.8% 1400.5% 535.8% 1791.9% 624.5% 256.4% 125.2% 112.5% 97.0% 80.8% 55.3% 48.8% 47.7% 43.5% 32.0% 14715.4% 1076.8% 282.0% 80.3% 41.7%
Total Operating Expenses 2795.1% 2441.5% 2167.3% 826.3% 2638.6% 930.2% 385.9% 191.0% 172.5% 148.8% 124.1% 85.0% 75.0% 73.4% 67.0% 49.2% 27132.9% 1612.2% 422.5% 123.2% 64.2%
Effective Interest Rate, cash 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%
Effective Interest Rate, debt 5.0% 5.0% 5.0% 5.0% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 5.0% 5.0% 2.5% 2.5% 2.5%
Effective Tax Rate NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Margin Analysis:
Product Gross Margin 93.7% 80.4% 76.3% 69.2% 38.3% 40.4% 37.2% 39.3% 40.5% 40.0% 41.5% 48.8% 49.3% 49.3% 50.3% 55.6% NM 75.5% 38.8% 43.7% 51.6%
Operating Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 6% NM NM NM NM NM
Pretax Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 5.3% NM NM NM NM NM
Net Income Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 5.3% NM NM NM NM NM
YoY Growth Rates:
Total Revenues 225.2% 3395.8% 3351.4% 5336.9% 51.1% 232.2% 589.9% 459.3% 1565.2% 572.9% 231.3% 136.2% 140.5% 111.8% 93.6% 80.3% 67.3% 1598.3% 395.4% 266.8% 100.7%
Cost of Goods Sold (Product Sales) NM NM NM NM 1404.1% 933.8% 1771.1% 1012.5% 1545.5% 582.6% 209.8% 99.6% 105.1% 78.9% 64.6% 56.3% NM NM 1159.2% 238.6% 72.5%
S, G & A -41.7% -40.5% -15.7% 51.3% 58.2% 29.1% 16.5% 26.6% 18.0% 14.1% 10.8% 6.4% 5.0% 4.9% 4.9% 4.8% 102.4% 24.3% 29.7% 4.5% 4.3%
Operating Expenses -3.4% -4.7% 2.9% 9.1% 42.7% 26.6% 22.8% 29.3% 8.8% 7.6% 6.6% 5.1% 4.6% 4.5% 4.5% 4.4% 46.1% 0.9% 29.8% 7.0% 4.5%
Net Income (Ongoing) NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
EPS NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Balance Sheet Data:
Net Debt (Cash) Per Share ($1.23) ($2.52) ($2.19) ($1.97) ($1.70) ($1.43) ($1.14) ($0.67) ($0.61) ($0.22) ($0.13) ($0.11) ($0.23) ($0.10) ($0.10) ($0.13) ($1.52) ($2.02) ($0.68) ($0.11) ($0.13)
Book Value Per Share $1.33 $2.58 $2.35 $2.16 $1.91 $1.60 $1.35 $1.09 $0.91 $0.68 $0.54 $0.77 $0.78 $0.73 $0.77 $0.92 $1.52 $2.22 $1.10 $0.78 $0.92

May 9, 2018
Legend:
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Piper Jaffray
BUY [OW] 371 59.84 92 24.80
HOLD [N] 228 36.77 21 9.21
SELL [UW] 21 3.39 0 0.00

Time of dissemination: 9 May 2018 22:00EDT.

May 9, 2018
Piper Jaffray expects to receive or intends to seek compensation for investment banking services from Accelerate Diagnostics, Inc. in the next 3 months.
the past 12 months.
Rating Definitions


April 26, 2018

Planes, Trains & Automobiles; On The Road With Accelerate
CONCLUSION
PRICE: US$23.25
Management reiterated a 2H18 ramp for Pheno placements, which is consistent with
our modeled expectations. Respiratory remains on track for the clinical trial beginning in
TARGET: US$26.00
mid-2018, and we expect it will be on the U.S. market approximately a year later. Accelerate
has placements in most key U.S. reference sites and has made solid progress in Southern
57.0M s/o, $0.53 cash/sh.
Europe, notably Italy. We continue to believe Accelerate is a "when" not "if" story and will
be transformational to their $3.7B TAM. William R. Quirk, CFA
• Execution Improving, But Still A 2H18 Ramp: Management noted their long-term
confidence around Pheno BC and the pipeline (which we share) but, consistent with Changes Previous Current
their guidance, reminded investors the sales changes they implemented would take time.
Price Tgt — US$26.00
Accordingly, we believe the large number of systems undergoing evaluation remain likely
2H18 revenue conversion events. Positively, lead generation remains strong (consistent
with strong attendance at their ECCMID booth and associated symposium, "standing FY18E EPS US$(1.18) US$(1.24)
room only"), which we believe will translate into a breakout 2H18 and a strong 2019. FY19E EPS US$(0.84) US$(0.91)
• Respiratory Update: Management is finalizing details with FDA for its lower respiratory Shares Out (mil) 55.4
test and plans initiating its 510k study in mid-2018. As a reminder, they will also Market Cap. (mil) 1,288
initiate a clinical outcomes study at the same time (N~800), which is expected around Avg Daily Vol (000) 231
FDA approval (PJC estimate: mid-2019). The clinical outcomes study will be used for Book Value/Share US$2.16
marketing support. Net Cash Per Share US$1.97
Yield 0.00%
• Sizing The Market: We estimate Accelerate's North American and European TAM at Fiscal Year End Dec
>$2.7B assuming $220/test for blood culture, $300/test for lower respiratory and $200/
test for urinary tract infections/sterile fluid infections. Management remains committed to USD
introducing a new panel ~every year and reaffirmed earlier comments that subsequent 32
projects would be less resource intensive given the system and cartridge leverage 30
following their initial approval. We believe Asian markets could add $1B to this TAM, but 28
that is likely no sooner than 2020/2021. 26
24
22
• European Update: Southern Europe is where Accelerate is having the most success 20
right now with >20 Pheno placements in Italy in particular, due in a large part to the higher 18
rates of drug resistance. France is also a priority, but Accelerate is awaiting important 16
reimbursement decisions, which can take ~6-12 months based on BioFire's experience. Apr-17 Jun-17 Aug-17 Oct -17 Dec-17 Feb-18 Apr-18
Northern Europe, with lower antibiotic resistance, is unsurprisingly less receptive at Source: Bloomberg
present to Pheno, although Accelerate is making progress in certain Nordic countries.
• Model Update: We are adjusting our model for the recent capital raise and shifting some
revenue from 1H18 to 2H18.

YEAR
2017A 0.5 0.7 0.8 2.1 4.2 306.7x (0.27) (0.31) (0.31) (0.27) (1.16) NM
2018E 2.7 3.7 6.1 11.3 23.8 54.1x (0.31) (0.33) (0.32) (0.28) (1.24) NM
2019E 13.7 16.0 19.3 28.4 77.3 16.7x (0.27) (0.26) (0.24) (0.14) (0.91) NM
Income Statement
2017A 2018E 2019E
Qtr 1 A Qtr 2 E Qtr 3 A Qtr 4 A Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E Qtr 1 E Qtr 2 E Qtr 3 E Qtr 4 E 2016A 2017A 2018E 2019E 2020E
Instrument Revenue 510 583 482 1,620 1,959 2,498 4,365 7,626 8,676 9,871 11,161 12,554 149 3,195 16,447 42,262 58,077
Assay Revenue - 97 324 479 710 1,188 1,716 3,613 5,000 6,069 8,080 15,871 14 900 7,227 35,020 94,286
Total Product Revenue 510 679 806 2,099 2,668 3,686 6,081 11,239 13,676 15,940 19,241 28,425 163 4,095 23,674 77,282 152,362
License Revenue 20 20 22 21 20 20 22 21 15 15 15 15 83 83 83 60 60
Total Revenue 530 699 828 2,120 2,688 3,706 6,103 11,260 13,691 15,955 19,256 28,440 246 4,178 23,757 77,342 152,422
Cost of Product Revenue 32 133 191 646 1,707 2,254 3,749 6,642 8,065 9,490 11,184 14,489 0 1,002 14,352 43,228 73,371
Gross Profit 498 566 637 1,474 981 1,451 2,353 4,618 5,626 6,465 8,073 13,951 246 3,176 9,404 34,114 79,051
Operating Expenses:
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 (7,341)
0
Interest & Other Expense (Income) net (110) (5) (285) (900) 186 856 822 830 839 845 852 857 (393) (1,300) 2,693 3,393 2,554
Non-Recurring 67
Expense Variables:
Margin Analysis:
YoY Growth Rates:
Total Revenues 225.2% 3395.8% 3351.4% 5336.9% 407.2% 430.0% 636.7% 431.1% 409.3% 330.6% 215.5% 152.6% 67.3% 1598.3% 468.6% 225.6% 97.1%
S, G & A -41.7% -40.5% -15.7% 51.3% 58.6% 29.1% 16.5% 26.6% 17.6% 14.1% 10.8% 6.4% 102.4% 24.3% 4.5% 5.5% 5.2%
Balance Sheet Data:
Net Debt (Cash) Per Share ($1.23) ($2.52) ($2.19) ($1.97) ($1.70) ($1.46) ($1.16) ($0.82) ($0.63) ($0.36) ($0.20) ($0.29) ($1.52) ($2.02) ($0.83) ($0.30) ($0.32)

April 26, 2018
Legend:
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Piper Jaffray
BUY [OW] 400 61.44 104 26.00
HOLD [N] 231 35.48 22 9.52
SELL [UW] 20 3.07 0 0.00


April 26, 2018
the past 12 months.
Rating Definitions


April 4, 2018

Pheno Powering Lower Infection-Related Mortality At Early Placement
CONCLUSION
PRICE: US$23.30
A case study from University Health Care System of Augusta detailed improvements in
sepsis mortality (as a % of inpatient mortality) and a reduction in average antibiotic days
TARGET: US$26.00
following broad adoption of Accelerate's Pheno BC test. Study limitation included not (yet)
reaching statistical significance, but the trends are consist with treating patients faster with
57.0M s/o, $0.53 cash/sh.
the right drug. Accordingly, we think this outcomes research could be a valuable marketing
tool for Accelerate as they try to reduce validation times. We remain OW shares of AXDX. William R. Quirk, CFA
• Case Study Lays Out Case For Pheno: University Health Care System, an 831-bed
hospital in Augusta, GA, detailed their experience using Acclerate's Pheno for blood Changes Previous Current
culture, describing how they changed their protocol from MALDI to Pheno. In addition to
Price Tgt — US$26.00
the workflow advantage (~2 minutes of hands-on time) the team describes the impact of
FY18E Rev (mil) — US$25.4
the faster time to using the correct antibiotic.
FY19E Rev (mil) — US$78.1
FY18E EPS — US$(1.18)
• The Data: University Health Care System delivered ID/AST an average of 42 hours faster FY19E EPS — US$(0.84)
than ID with MALDI, which led to more rapid intervention (i.e., antibiotic adjustment). 52-Week High / Low US$30.45 / US$16.75
Comparing bacterial-sepsis associated mortality as a % of all inpatients, mortality Shares Out (mil) 55.4
dropped from 10.9% in the 7 months prior to implementing Pheno to 7.0% in the Market Cap. (mil) 1,291
comparative period following adoption. Additionally, the average number of antibiotic Avg Daily Vol (000) 259
days per patient dropped a full day from 6.8 to 5.8 days reflecting the pre- and post- Book Value/Share US$2.16
adoption time frames. The dataset was not large enough to reach statistical significance. Net Cash Per Share US$1.97
Yield 0.00%
• Our Take: This case study is an interesting look at an early adopter's experience Fiscal Year End Dec
with Pheno (University Hospital was the first U.S. commercial Pheno installation).
Recognizing a multi-armed study would not likely pass IRB, a retrospective analysis is USD
the best way for a single center to evaluate the improved time to result and impact on 32
patient care. An obvious limitation in the paper is the size of the patient population has not 30
yet reached statistical significance. However, the positive mortality and antibiotic usage 28
trends University Hospital experienced make common sense when treating patients 26
faster with the right tools and are consistent with published literature linking time to 24
22
result in improved mortality. Accordingly, we believe this case study could be a valuable
20
marketing tool for Accelerate. 18
Competition, clinical trial outcomes, commercialization and profitability/cash burn. Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18
Source: Bloomberg

YEAR
2017A 0.5 0.7 0.8 2.1 4.2 307.3x (0.27) (0.31) (0.31) (0.27) (1.16) NM
2018E 3.1 5.1 6.8 10.4 25.4 50.8x (0.31) (0.30) (0.30) (0.27) (1.18) NM
2019E 13.9 16.1 19.4 28.7 78.1 16.5x (0.26) (0.24) (0.22) (0.12) (0.84) NM
Income Statement
2017A 2018E 2019E
Assay Revenue - 97 324 479 710 1,243 1,956 4,058 5,165 6,206 8,214 16,075 14 900 7,967 35,660 95,038
License Revenue 20 20 22 21 20 20 22 21 15 15 15 15 83 83 83 60 60
Total Revenue 530 699 828 2,120 3,138 5,111 6,793 10,355 13,866 16,132 19,440 28,664 246 4,178 25,397 78,102 153,254
Gross Profit 498 566 637 1,474 1,131 1,932 2,639 4,436 5,734 6,585 8,202 14,102 246 3,176 10,137 34,622 79,612
Operating Expenses:
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 (6,780)
0
Interest & Other Expense (Income) net (110) (5) (285) (900) 186 (8) (40) (33) (26) (19) (13) (8) (393) (1,300) 105 (66) (41)
Non-Recurring 67
Expense Variables:
Margin Analysis:
YoY Growth Rates:
Total Revenues 225.2% 3395.8% 3351.4% 5336.9% 492.1% 630.9% 720.0% 388.4% 341.8% 215.7% 186.2% 176.8% 67.3% 1598.3% 507.9% 207.5% 96.2%
S, G & A -41.7% -40.5% -15.7% 51.3% 58.6% 29.1% 16.5% 26.6% 17.6% 14.1% 10.8% 6.4% 102.4% 24.3% 4.5% 5.5% 5.2%
Balance Sheet Data:

April 4, 2018
Legend:
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Piper Jaffray
BUY [OW] 388 60.16 105 27.06
HOLD [N] 235 36.43 22 9.36
SELL [UW] 22 3.41 1 4.55


April 4, 2018
the past 12 months.
Rating Definitions


Buy 1 164 Reduce 0 11 Hold 0 103 IBC 1 21-Jul-2015,06-Au g-2015,0 7-Jan-2 014,14-Apr-201 6,19-Feb-2 014,17- Dec-2015,24-A pr-2014,14-Nov-2016 ,07-J ul-2014,2 2-Jun-2 015,12-Apr-2016, 22-Au g-2016,11-Mar-2014,14-Se p-2016,N /A,N/A ,N/A,N/A,N/A,N/A
Equity Research
March 5, 2018 Medical Technology
Sean Lavin, MD Our Snowbird Healthcare Conference

(212) 527-3570 In This Note, We Provide Updates From The 14
slavin@btig.com Covered Companies That Attended Our Conference
Andrea Alfonso
95 companies (including Therapeutic corporates) attended our annual
(212) 527-3565
Snowbird conference. Takeaways from our covered companies follow.
aalfonso@btig.com
Ryan Zimmerman  There  was no single theme: Most of the discussion was company
(212) 527-3586 specific though common topics included new product pricing,
rzimmerman@btig.com utilization, and M&A. We feel procedures continue to trend positively.
  traded companies relevant to our space included: AtriCure

Publicly
(ATRC, Neutral), Baxter (BAX, Not Rated), BioTelemetry (BEAT, Not
Rated), Boston Scientific (BSX, Buy, $32 PT), Cellnovo Group (CLNV-
PAR), Corindus Vascular Robotics (CVRS, Not Rated), CryoLife (CRY,
Not Rated), Cutera (CUTR, Not Rated), CytoSorbents (CTSO, Not
Industry Report Rated), DexCom (DXCM, Neutral), Edwards (EW, Neutral), Exact
Sciences (EXAS, Neutral), Health Equity (HQY, Not Rated), Hologic
(HOLX, Buy, $47 PT), iRhythm Technologies (IRTC, Neutral), LeMaitre
Vascular (LMAT, Not Rated), Masimo (MASI, Buy, $100 PT), Merit
Medical (MMSI, Not Rated), NeoGenomics (NEO, Neutral), Novocure
(NVCR, Not Rated), Profound Medical (TSX-V:PRN), Senseonics
(SENS, Buy, $4.50 PT), Sientra (SIEN, Not Rated), Surmodics (SRDX,
Not Rated), Tactile Systems Technology (TCMD, Buy, $34 PT),
Valeritas (VLRX, Not Rated), Varex (VREX, Not Rated), Varian (VAR,
Neutral), ViewRay (VRAY, Buy, $10 PT), Viveve Medical (VIVE, Not
Rated), and VolitionRx (VNRX, Not Rated).
  companies included: 4C Medical Technologies (Private), Avra

Private
Medical Robotics (Private), Bigfoot Biomedical (Private), Fractyl
Laboratories (Private), Intuity Medical (Private), JenaValve (Private),
Mercator Medsystems (Private), NeuroSigma (Private), Renovia
(Private), Silk Road Medical (Private), and Solace Therapeutics
(Private).
 
Takeaways on participating Orthopedic companies will be
published by Ryan Zimmerman in a separate research note.

Attending Covered Companies
(listed by market capitalization, in descending order)
Boston Scientific (BSX, Buy, $32 PT)

We met with Sr. Manager of Investor Relations Lindsay Fish. Topics discussed
included: 1) Neuromodulation strength and innovation, 2) broader Med-Surg
trends, 3) update on the cardiovascular segments, and 4) incremental tidbits
on FY18 guidance.
On Neuromodulation, discussion covered landmark trials and new products. In

SCS, the company indicated that the ACCELERATE trial (high-rate SCS) is
expected to wrap up enrollment soon but would not commit to a timeline for
when they will present the data. Management continues to be encouraged by
the rapid uptake in SCS technology in Q4, underpinned by positive outcomes
as well as under-penetration of the market (particularly on the international
front). On the newer WaveWriter combination therapy, physician interest
remains reportedly high as the device offers a more flexible therapy.
Management anticipates Neuromod market acceleration in 2018 via the ramp
of Vercise DBS (launched late 2017) and the contribution from directional lead
supplements later in the year. On ongoing litigation with Nevro (NVRO, Not
Rated), we could receive an update on the CA and DE trials in October 2018.
Turning to the broader Med-Surg market, BSX is very pleased with the broad-
based growth and acceleration from Q3. Looking ahead, the company
concedes that it might be difficult to mimic the stellar 2017 growth in
endoscopy and urology segments of 2x the market but expects BSX’s growth
will continue to outpace the overall market.
Seguing into the CV business, the company suggested that the strongest areas
of investor focus remain Lotus and WATCHMAN with the bull thesis outlining
the strong potential for WATCHMAN upside. Timelines for much-awaited
products were stable for the implantable loop recorder (2019) and mCRM
(clinical trials commencing in 2019). On stents, BSX is naturally cautious on
the DES business given known headwinds in 2018, principally the launch of
Medtronic's (MDT, Neutral) Resolute ONYX; however, guidance has
incorporated some share shift away as a result of trailing.
There was less focus on 2018 margin expectations though management

reiterated commentary that achieving long-term margin targets will largely be
dependent on SG&A moderation. On the topic of below the line expense
guidance, the company reminded investors that the aggregate amount of
$300M includes not only interest and equity method dilution but a fair amount
of f/x hedging; in turn, the marked increase in hedging accounts for majority of
the y/y increase from $286M in 2017.
We remain positive on BSX shares on both revenue growth and margin

expansion.

2
Edwards LifeSciences (EW, Neutral)
We met with VP of Investor Relations David Erickson and Sr. Manager of
Investor Relations Mike Feher. The group meeting touched on a variety of
issues with noticeable focus on 1) low volume center strength in Q4, 2) the
remaining market opportunity, and 3) pricing expectations for new products.
EW addressed the recent voluntary recall of anchor drives utilized in the

Cardioband mitral and tricuspid valve repair devices. Per the company’s letter
to European physicians, anchor disengagement caused “implant dehiscence”,
which in turn required re-intervention in two patients. While EW would not size
the number of impacted units, the company is nearly done swapping out all
units and will resume implants shortly. On the cause of bar disengagement,
the company suggested the device needed to be reworked such that the
measurements needed to be tightened/narrowed. Importantly, this recall is
not expected to change the sales forecast ($15M in 2018) or trial timelines.
The company was asked about the strong growth in low-volume centers seen
in Q4; here, management suggested it is too early to call a trend. In Edwards’
experience, adding centers in certain geographies leads to unlocking new
patient pools with no access to TAVR previously. Thus, when new centers are
established, the incremental patients are not usually gained at the expense of
a competitor. On the potential to see new center additions similar to the pace
seen in Q4, EW demurred a bit on whether this was sustainable. New centers
adds are largely outside the co.’s control and usually steps are initiated by
centers and not the other way around at this point. Turning to the impact of
hospital consolidation, the company has not seen much of an impact on its
business.
Turning to planned initiatives to raise patient awareness, EW indicated that

there has been little DTC effort historically and that it is only beginning to
scratch the surface on the opportunity. At present time, it does not appear as
though there is a very concrete strategy but it is unlikely that the company will
opt for a mass DTC campaign. EW feels that it continues to target a small
portion of the overall population and is evaluating ways to market to this
group including the use of social media or other cost effective methods.
With respect to pricing of newer products, the company was asked about
anticipated pricing for surgical and TAVR valves. For surgical valves, without
disclosing exact figures, the company believes that new innovation
underpinning the INTUITY ELITE valve will lead to higher pricing (~50%) over
the Magna valve. The INSPIRIS RESILIA will likely be priced between the
Magna and ELITE. For TAVR valves, the self-expanding CENTERA valve will
likely be priced at a premium to SAPIEN 3 in some markets though that range
will vary in the EU given the price variability there. On the CENTERA launch,
the company did not commit to an optimal number of centers for 2018;
instead, management suggested that the launch will be as broad-based as
possible. In EW’s view, its goal for CENTERA is not to cannibalize SAPIEN 3 or
ULTRA but gain market share from the self-expanding group. Management
mentioned that we will all learn whether doctors are biased towards self-
expanding or Medtronic (MDT, Neutral) doctors when we asked them which
they felt was more likely.

3
On balance, commentary on the market was consistent with views expressed
at Analyst Day and the Q4 call. As perceptions of the competitive landscape
vary depending on which company you ask, in Edwards’ estimation, small
shifts towards or away in share each quarter are typically “rounding errors” in
such a sizable market and often depend on how a company accounts for things
(volume, inventory, price, revenue, etc. all play factors).
Finally, on pending litigation with BSX, there is a U.S. IPR decision expected at
the end of March but EW expects litigation to carry on for a while.
Varian Medical Systems (VAR, Neutral)

We met with Chief Financial Officer Gary Bischoping and Vice President of
Investor Relations J. Michael Bruff. Varian has undertaken 3 transactions in the
last couple months, including the purchase of Sirtex (SRX-ASX, Not Rated).
The SRX acquisition timeline is proceeding as expected and we learned that
VAR plans to preserve the company’s salesforce and supply chain. While it’s
too early to discuss strategy, management does expect to place emphasis on
winning back market share from direct competitor BTG plc (BTG-LON).
In just the last month, VAR has also purchased clinical decision support
software company Evinance Innovation, Inc., and rad onc quality assurance
software company Mobius Medical Systems. This expands the company’s
treatment planning functions and extends the 360 Oncology care
management platform. Taken in combination with the new platform of
interventional oncology that Sirtex brings, we see these acquisitions as a clear
sign of VAR’s shift toward a broader oncology treatment and planning
company. It seems to us that the current management team may prioritize
M&A that fits this profile over share buybacks, at least near-term.
Management noted that long-term investors seem to prefer organic growth
and M&A that will fuel growth over non-stop large buybacks.
On the core linac business, VAR reports good pricing discipline during the
selling process, with sales reps incentivized to exceed a target selling price. We
expect to see management continue efforts to improve working capital
performance as well.
VAR remains committed to its proton business, noting that its single-room
proton systems are profitable for both the company and customers when
accounting for service contracts that can run a decade or longer.

4
Hologic (HOLX, Buy, $47 PT)
We met with Vice President of Investor Relations Michael Watts. Much of the
discussion focused on the Cynosure Medical Aesthetics business and progress
on turning the segment around. While Aesthetics sales were relatively in line
with expectations in the fiscal first quarter, during the earnings call,
management did not reaffirm an earlier metric of double-digit growth later
this year. Asked about this, management reiterated the decision not to give
guidance by product division, but pointed to the recent quarterly result as a
sign of progress, with more room to improve. We get the sense things are not
improving quite as fast as hoped but we are not sure 8%, 9%, or 10% growth
on a small segment of the business is that material, but investors seem
focused on it. As was noted on the earnings call, seasonality is historically a
factor in the fiscal second quarter. Newer product opportunities within the
Aesthetics space, like TempSure and MonaLisa Touch, are in the early stages
of commercial rollout with positive feedback. We expect the focus on
Aesthetics to continue and though there may be some quarterly lumpiness due
to seasonality, we expect this segment to start to hit its stride over the next 3-6
quarters.
While there hasn’t been an update on the US Preventive Services Task Force’s
(USPSTF) draft recommendation on cervical cancer screening, management
remains confident that co-testing will remain standard of care with providers,
patients, and payers regardless of what the Task Force does. It is unlikely that
insurance will stop paying for co-screening, though co-pays could be added
should the guidelines change.
In the GYN Surgical segment, a new head of sales from Stryker (SYK, Not
Rated) and realignment of incentives for reps and clinical specialists are part of
the strategy for improving performance. We expect this approach to pay off
for HOLX, as it has for the International business. The Breast Health business,
which makes up about 40% of the company’s sales, has been executing well,
with recurring revenue and service revenue bolstering the segment and
smoothing out quarterly volatility. The Diagnostics business—a dependable
performer—has seen continued solid placements and utilization, as well as
several new assays cleared in recent months.
We remain positive on HOLX shares and expect improved execution in the

Aesthetics and GYN Surgical businesses over time, though some near-term
lumpiness would not surprise us.

5
Exact Sciences (EXAS, Neutral)
We met with Chief Financial Officer Jeff Elliott. There was heavy focus on the
expense outlook following the Q4 call. We pressed the company on the
uncertainty and whether the company prefers to leave it open-ended so that it
can spend more should it need to do so to meet revenue goals. Management
denies that this is the case, mentioning that R&D and trials are hard to predict
in terms of exact timing. Of course, we recognize there are a number of
investments that need clarification (liver/lung trials) but we sense investors are
equally focused on the organic spend to support Cologuard growth.
In light of competitive news around blood-based CRC tests, we sense investors

in the room were dismissive around some of the news flow, pointing to flaws in
trial design. We concur with the idea that any competitor seeking to offer a
test is looking at 3-4+ year roadmap to commercialization though we wonder if
CMS may be receptive to a competitive diagnostic priced less expensively.
On the topic of growth deceleration into 2018, the co. still feels there are a
number of puts and takes particularly with respect to adoption from large
health systems. Even so, management is encouraged by certain payor
incentives to drive Cologuard use such as gift cards. Continued conversion to
electric ordering should be another tailwind and the co. has made considerable
progress on this front with electronic prescriptions now totalling 27% of orders
(up from 18% in 2016). The shift to electronic ordering can sometimes be
challenging though as some custom ordering systems can be tough to
integrate with.
On potentially expanding CRC screening to a younger patient population, it is

likely that the company will need to run another trial and also benefit from a
guideline update. The company is also looking into expansion into the high-
risk market, which could add another sizeable market to the current screening
opportunity.
Dexcom (DXCM, Neutral)

We met with Vice President of Corporate Development Matt Dolan and
Executive Vice President of Strategy and Corporate Development Steven
Pacelli. The discussion focused on the competitive launch of Libre and DXCM’s
product pipeline. Management continues to see Abbott’s (ABT, Neutral) Libre
rollout as a boon for the field of continuous glucose monitoring (CGM),
reporting anecdotally that many patients approach their endocrinologists
asking about CGM technology and walk away with a prescription for the
Dexcom system. While we think unit volumes may benefit from this additional
exposure, we think the pricing pressure referenced on the Q4 earnings call
may become more impactful as the launch progresses. Commercial coverage
of Libre will also be a key factor to watch. Management again reiterated
confidence in a mid-year FDA approval of its G6 with no calibration. Since we
see pricing and calibration as key issues impacting patient decision making,
this approval will be significant.
As DXCM puts more investments toward the Type 2 market via the Verily
partnership and through the UnitedHealthcare (UNH, Not Rated) pilot, we are
learning more about the product pipeline. A small first-generation version of

6
the DXCM-Verily disposable CGM for patients with Type 2 diabetes is
anticipated by the end of this year, but is not expected to be launched on a
broad scale due to production costs (DXCM is currently deciding how/where it
will be launched). However, a commercial-ready second-generation product
with full CGM features should be available in 2020.
Overall, we feel DXCM’s volume is being positively impacted by ABT but we

are unsure as to how pricing and margins may end up.
Masimo (MASI, Buy, $100 PT)

We met with CEO Joe Kiani, CFO Micah Young, and Vice President of Business
Development and Investor Relations Eli Kammerman. We discussed Masimo’s
interactions with Philips (PHG, Not Rated) as the two companies co-market
their products. Management believes Rainbow is adding a competitive edge to
PHG’s offerings as it sells against other major players, so PHG and MASI sales
reps are working together to sell the technology. We expect to MASI to enjoy
continued commercial success with this partnership and management feels it
is g0ing very well.
We feel the flu season positively impacted Q4 but is likely also having a strong
impact in Q1 as hospitals continue to report strong admissions and other
companies such as Exact Sciences have mentioned flu being a Q1 impact on
their recent earnings call.
While MASI may have shifted its focus somewhat away from near-term M&A,
the company continues to innovate internally and we expect to hear more on
the R&D pipeline as this work matures. We think new products like the latest
SedLine technology, Rad-97 for home, and the RD sensors could provide
meaningful growth in the future. Masimo will announce products as they
complete feasibility testing and we expect at least one major new product to
be ann0unced in 2018 or 2019.
Management discussed an ASA published abstract on hemoglobin monitoring

where a single center looked at about 18,000 surgical patients and saw a 30%
statistically significant reduction in mortality (based on our reading, when hb
monitoring was used to decide transfusions). Some anesthesia experts
questioned the study in May 2017 (we have both the study abstract and
discussion about it). Management feels the result was strong and plans to
repeat a similar larger study in about 10 centers.
Overall, we feel MASI may beat expectations this year based on both strong flu
and work with Philips. We do not have a good reason for the recent sell-off,
and we remain strong buyers of shares.
iRhythm Corporation (IRTC, Neutral)

We met with EVP of Strategy and Corporate Development Derrick Sung. The
dialogue of the meeting centered on a variety of topics, including 1)
reimbursement, 2) incremental discussion around MCOT, 3) competitive
landscape, and 4) sales rep outlook.
The company was asked about the status of its CPT coding. Recall that ZIO is
covered as a Category 3 CPT code (emerging technology) through 2022; thus,

7
reimbursement terms are handled by local/regional Medicare contractors and
insurance carriers. On whether the company might apply for a permanent
Category 1 code, which covers widely performed procedures consistent with
medical practice), the company appears undecided.
On the ZIO AT offering, management appears confident that there is enough

data to support productive conversations with payors. The company just
began discussions in June and is mindful that the MCOT market is very
different. Despite the advantage of permanent coding in place, there remains
heavy lifting ahead to establish in-network payor contracts. Even so,
management is hopeful it will achieve in-network contracts with 75%+ of
health plans with positive coverage decisions in the MCOT category in 2018.
While the company did not disclose specific pricing, it expects to price the ZIO
AT at 2-3x the price of ZIO XT.
Regarding the competitive landscape, perception of the potential for larger

players to enter the market remains doubtful. The company observes that
larger players seem to be reluctant to invest in the back-end.
Finally on sales reps, the company noted that turnover is less than 10% and
departures are more attributable to reps not meeting quotas than anything
else. It generally takes 3-4 years for reps to achieve peak productivity of
~$2.25M (or maybe higher over time).
mSToPS data will be presented as a late-breaking abstract at the upcoming

American College of Cardiology (ACC) meeting on March 10th. Management
conveyed enthusiasm around the potential implication here for screening
undiagnosed atrial fibrillation and the subsequent impact it might have on
payor coverage and guidelines.
Accelerate Diagnostics (AXDX, Neutral)

We met with CEO Larry Mehren. Management highlighted the more rigorous
hospital purchasing environment for lab equipment, which has been a bit of a
surprise. The Pheno has been placed in a handful of prominent centers such as
CHOP and The Mayo Clinic but these types of facilities are not the mass
market in that they don’t have any funding issues. It seems more hospitals
have challenges than not and hospital labs usually lose out to high-
reimbursement areas like cath labs or surgery since these drive revenue. To
improve this sentiment, management feels there must be a change in hospital
CFOs’ awareness and prioritization of sepsis. Management feels hospital
CMOs generally understand the issue but at times, decision-making has been
left to the CFOs who are much less aware. In the decision-making process, the
company dismissed the notion that some of the pushback was due to a limited
Pheno menu.
In discussing FY18 guidance, management again stressed that revenue will be

back-end loaded and that it should have a good idea of full year progression by
the Q2 call based on evaluations. However, the co. did express comfort that
what the company has in the current evaluations should support reaching the
bottom end of guidance though we note this has a utilization assumption built
in. Management did concede that there are things beyond the company’s

8
control between evaluation and active use such as timing and complication
around IT integration.
On expansion into China, the co. anticipates this will be a 2019 event with a
fuller benefit in 2020. It seems that Accelerate is less inclined to price
competitively in this market and in turn, will focus on securing favorable
reimbursement by province. Of note, management can lean on extensive OUS
commercialization experience given historical leadership positions in larger
multinational diagnostic companies.
We remain positive on the technology’s benefits and ability to save costs and
lives but wonder how long adoption will take.
NeoGenomics (NEO, Neutral)

We met with EVP and Chief Compliance Officer Steve Jones and VP of
Corporate Development Bill Bonello. Majority of the commentary was on the
moving parts to recently offered FY2018 expectations.
Given the variability around reimbursement, management deliberately opted

for a wider guidance range for FY18 to encompass more variability around
pricing. As the Physician Fee and Clinical Lab Fee schedules have been
established, the biggest wildcard appears to be from increased prior
authorization of test orders, which was discussed in extensive detail in the Q3
call. At the moment, it is tough to predict what the impact might be from
potential changes to Medicare coverage determinations but our sense is that
management does not appear overly concerned.
The tone around same-store volume growth remained very bullish, in our view.
Here, management highlighted continued wins particularly among larger
clients/hospital systems. Additionally, the company’s flexible tech-only model
continues to resonate among pathologists and remain a differentiator.
On management’s conveyed interest around M&A in the Q4 call, the co.

suggested it is less likely they will look for areas in core lab but may be more
acquisitive in the Pharma Services and/or data and technology areas.
AtriCure (ATRC, Neutral)

We met with Chief Financial Officer Andy Wade. Discussion centered on the
recent Department of Justice (DOJ) investigation and pricing on new products.
Importantly, we asked about the recent 10-K disclosure noting that the
company received a Civil Investigative Demand (CID) from the DOJ on whether
AtriCure violated the False Claims Act regarding the promotion of its devices
dating back to 1/1/10. Management is committed to cooperating with the
investigation but did clarify that it was cooperating via a Corporate Integrity
Agreement (CIA) from 2010-2015 and was being monitored during much of the
time now being investigated. While management has yet to fully know the
scope of the investigation, the company believes that it covers the staged
approach (epicardial/endocardial) used in the DEEP procedures (of note, ATRC
doesn’t “market” the hybrid approach to doctors, per se). AtriCure will
endeavor to make the DOJ clearly understand what is on label and how the
company sells the device and demonstrate its culture of compliance. It will also

9
explain its FDA approved trials to the DOJ. With respect to timing, AtriCure
agreed it could take a while (maybe a year) for the DOJ to fully review data/e-
mails.
For 2018, the company conveyed enthusiasm around two new AtriClip
offerings, FLEX V and PRO V. In the co.’s view, the FLEX V should help drive
incremental growth within CABG procedures while PRO V should be well
received among physicians performing mini-mitral type procedures. On the
topic of pricing, open ablation and MIS appear fairly consistent with
expectations. AtriClip pricing on the open side for the current generation of
products runs at ~$1k+ and management intends to sell the FLEX V at a
considerable premium (maybe 50%+). Turning to AtriClip devices on the MIS
side, pricing has varied for older Pro generations from $2-3k range but the
company expects the PRO V to also sell at a 50%+ premium.
We see shares as quite inexpensive but feel many investors want to get closer
to MIS data before becoming involved.
ViewRay (VRAY, Buy, $10 PT)

We met with Chief Financial Officer Ajay Bansal. We discussed the competitive
landscape, installation capacity, and the recent capital raise. Regarding
competition, some potential customers are waiting to compare VRAY’s
technology with Elekta’s (EKTA.B-OME, Not Rated) Unity MR system, despite
the previously announced delay for the competitive system. Unity is expected
to receive CE Mark by the end of June and VRAY’s management believes the
MRIdian system will compare favorably to Unity. We will look to learn more
about Unity once it is available, but expect pricing, setup and treatment time,
and installation requirements to be important factors in customer decision-
making. Pricing and the ability to fit in existing vaults should benefit VRAY.
VRAY believes it has enough installation capacity and ability to fulfill its order
bookings. The company recently entered a $59M equity financing agreement
with Fosun International Limited (656-HKG, Not Rated) as it continues to use
capital at a fast rate. Despite this funding, VRAY does not anticipate a
significant expansion in its salesforce this year, but we think the company has
flexibility to modify that plan if needed. We feel investors at large funds are
frustrated by the continued insider and/or strategic raises and may lose
interest in shares.
We expect to learn more about VRAY’s outlook for 2018 on topics like
competition, important international geographies, and visibility into the order
funnel and installation timing when it hosts its Q4 earnings call in the coming
weeks. We also hope to learn more about when full adaptive planning will be
available and/or on the LINAC.
We remain positive on the technology, would buy shares at ~$8 but to be

honest, we wonder how much higher they can go if management continues to
raise money away from large institutional funds as we feel some are losing
interest in the company.

10
Tactile Systems Technology (TCMD, Buy, $34 PT)
We met with Chief Financial Officer Lynn Blake. We discussed TCMD’s
impressive 29% y/y sales growth in 2017 and revenue guidance of 20-22% y/y
growth for 2018. The company plans to keep adding new sales reps at a fast
clip, projecting a 20% expansion in rep headcount for the year. While this
opportunistic hiring strategy will likely mean high growth in sales and
marketing expenses, some of the added investment will also be put toward
awareness campaigns and work with medical societies.
This rapid expansion in the salesforce is expected to continue for at least a few
years, but the company is focused on maintaining productivity per rep. Based
on the company’s sales outperformance in 2016 and 2017 and its success with
a strategy focused on high-diagnosing clinicians, we would not be surprised by
beats and raises throughout 2018.
We expect the full market rollout of the new Flexitouch Plus to help drive
growth, given the positive feedback from patients and physicians during the
limited launch. Though most sales will likely go to new customers, we think a
small portion of sales may go to existing patients who have a medical reason
that allows them to qualify for an upgrade and possibly to some self-pay
patients.
Senseonics (SENS, Buy, $4.50 PT)

We met with Chief Financial Officer Don Elsey and Rick Sullivan, Treasurer,
Strategy and Financing from Senseonics. We met with the company the same
day as the March 29 FDA advisory committee meeting for the Eversense CGM
was announced, so much of the discussion focused on expectations and
preparation for that panel. The company has been practicing using mock
panels. We do not expect any agency concerns on the device’s safety profile,
but do think the company will spend time discussing it plans for training
endocrinologists as well as the accompanying app for users. We also think a
post-market surveillance program is likely, as the FDA has been requesting
these regularly and we’d see detailed discussion on this during the meeting as
a positive sign for potential approval.
While FDA panels are never failproof, we do not expect any major challenges
during the discussion. Assuming approval, the next question is around
potential timing of the FDA nod. We think an approval just ahead of the
American Diabetes Association annual meeting (June 22-26 in Orlando), would
be ideal, but not a certainty. SENS plans to be ready to be operational by mid-
June in case of this.
The early launch is expected to target 200 endocrinologists, mainly in urban

practices, with around 15 reps. We expect a focus on endocrinologist training
and service to simplify workflow for doctors adopting the device. In addition,
since patients with Type 1 diabetes are often highly educated about their
disease and savvy on new technology, we expect SENS to use social media to
spread the word to patients.
Senseonics will give guidance on its year end call. We do not expect EU
forecasts to be at risk, but it is not clear how management may guide the US

11
given uncertain timing. One option we think might make sense would be first
year of launch guidance or first six month guidance or something like that.

12
ABBOTT LABORATORIES (ABT, Neutral, $N/A PT; Current Price: $59.46; Analyst: Sean.Lavin)
ATRICURE, INC. (ATRC, Neutral, $N/A PT; Current Price: $17.71; Analyst: Sean.Lavin)
BOSTON SCIENTIFIC CORPORATION (BSX, Buy, $32.00 PT; Current Price: $26.50; Analyst: Sean.Lavin)
DEXCOM, INC. (DXCM, Neutral, $N/A PT; Current Price: $54.03; Analyst: Sean.Lavin)
EDWARDS LIFESCIENCES CORPORATION (EW, Neutral, $N/A PT; Current Price: $132.91; Analyst: Sean.Lavin)
EXACT SCIENCES CORPORATION (EXAS, Neutral, $N/A PT; Current Price: $43.76; Analyst: Sean.Lavin)
HOLOGIC, INC. (HOLX, Buy, $47.00 PT; Current Price: $37.99; Analyst: Sean.Lavin)
IRHYTHM TECHNOLOGIES, INC. (IRTC, Neutral, $NM PT; Current Price: $62.24; Analyst: Sean.Lavin)
MASIMO CORPORATION (MASI, Buy, $100.00 PT; Current Price: $82.11; Analyst: Sean.Lavin)
MEDTRONIC PLC (MDT, Neutral, $N/A PT; Current Price: $78.33; Analyst: Sean.Lavin)
NEOGENOMICS, INC. (NEO, Neutral, $N/A PT; Current Price: $8.49; Analyst: Sean.Lavin)
SENSEONICS HOLDINGS, INC. (SENS, Buy, $4.50 PT; Current Price: $3.07; Analyst: Sean.Lavin)
TACTILE SYSTEMS TECHNOLOGY, INC. (TCMD, Buy, $34.00 PT; Current Price: $31.26; Analyst: Sean.Lavin)
VARIAN MEDICAL SYSTEMS, INC. (VAR, Neutral, $N/A PT; Current Price: $117.39; Analyst: Sean.Lavin)
VIEWRAY, INC. (VRAY, Buy, $10.00 PT; Current Price: $7.84; Analyst: Sean.Lavin)

13
I, Ryan Zimmerman, hereby certify that the views about the companies and securities discussed in this report are
Ratings Definitions
upon.


BUY: 59.0%; NEUTRAL: 37.0%; SELL: 4.0%

BUY: 20.1%; NEUTRAL: 6.8%; SELL: 0.0%
Disclosures in Research Reports Covering Six or More Companies

All current required disclosures can be obtained by contacting BTIG at 825 Third Avenue, 6th Floor, New York, NY
10022 or on our website at http://www.btigresearch.com.

14
Other Disclosures
General Disclosures

15

Issues and approved for distribution in the UK and EEA by BTIG Ltd. to eligible counterparties and professional
respectively.

16
ADVISORS 15 FebINC
2018 08:03 PM EST
Disseminated 15 Feb 2018 08:04 PM EST
15 February 2018
Overweight
Price: $24.90
4Q17 Model Update
of 4Q results and the subsequent earnings call. In line with the pre-announcement, Tycho W. Peterson
AC
4Q revenue of $2.1M came in light vs. previous JPMe/Street at $3.0M due mainly (1-212) 622-6568
to longer order conversion cycle (previously called out in both 2Q and 3Q), with tycho.peterson@jpmorgan.com
the company adding 22 placements in 4Q (vs. previous expectation for the Bloomberg JPMA PETERSON <GO>
majority of 40 contracts under review to close by YE17), bringing the total Julia Qin
number of Pheno placements so far to 78. The company is taking active measures (1-212) 622-9253
to mitigate the situation, such as increasing the number of instruments used in julia.qin@jpmorgan.com
verification, providing more support during evaluation, and being more flexible Steven Reiman, CFA
about allowing reagent rental placements, with the goal of shortening the overall (1-212) 622-6545
steven.reiman@jpmorgan.com
sales cycle from 12-14 months currently down to 6-9 months. More
Tejas Savant
encouragingly, despite the longer conversion cycle, conversion rates are tracking
(1-212) 622-5650
close to 100%, and >80% of the instruments placed so far are capital sale (close to tejas.savant@jpmorgan.com
100% in the U.S., ~60% in Europe). Meanwhile, the company continues to make J.P. Morgan Securities LLC
progress adding evaluation contracts, with 259 systems currently under
evaluation. On the consumable side, reagent pricing continues to look solid Price Performance
(>$200/kit in both the U.S. and the EU), with customers running 1 test per system 30
per day on average. Regarding the menu expansion pipeline, AXDX has achieved 26
$
CE Mark for its severe pneumonia assays as expected, and plans to begin U.S.
22
clinical trial for the pneumonia assays in late 2Q / early 3Q (management plans to
18
provide an update on expected FDA approval timeline on its next earnings call). Feb-17 May-17 Aug-17 Nov-17 Feb-18
Looking ahead, management expects 2018 revenue of $21-30M (heavily weighted AXDX share price ($)
RTY (rebased)
towards 2H), representing 5-7 fold growth from 2017 levels, as the company
YTD 1m 3m 12m
expects to benefit from previous sales investment and budget clearance of Abs -5.0% -7.9% 20.0% 4.6%
qualified customer now that the system has FDA approval. Management still Rel -5.1% -5.6% 15.0% -4.9%
targets >50% capital sales mix and >$200 test kit pricing. Given the U.S.
pneumonia clinical trials, management expects cash burn to be $13-15M per
quarter. Stepping back, while the extended order conversion cycle has been
frustrating, we are encouraged by management’s active mitigating efforts, and we
continue to see value in the differentiated Accelerate Pheno platform, which
remains positioned for a meaningful and sustained ramp. As such, we remain
Overweight and maintain our Dec 2018 PT of $27.

FYE Dec 2016A 2017A 2018E 2018E 2019E 2019E Company Data
Revenue ($ mn) Date Of Price 15 Feb 18
Q1 (Mar) 0 1 4 3 18 13 52-week Range ($) 30.45-16.75
Q2 (Jun) 0 1 7 4 22 17 Market Cap ($ mn) 1,376.92
Q3 (Sep) 0 1 10 6 27 22 Fiscal Year End Dec
Q4 (Dec) 0 2 13 9 32 26 Shares O/S (mn) 55
FY 0 4 34 22 99 78 Price Target ($) 27.00


(1-212) 622-6568 15 February 2018

Investment Thesis
Valuation
growth.

(1). Should the Accelerate Pheno System not receive regulatory clearance from the
prospects will be significantly impaired; (2). The competitive landscape in clinical
microbiology is crowded and intense; (3). Our long-term forecasts are partly
infections including respiratory and skin/soft tissue infections; (4). Accelerate is a
2

(1-212) 622-6568 15 February 2018

Income Statement 2014A 2015A 2016A 1QA 2QA 3QA 4QA 2017A 1QE 2QE 3QE 4QE 2018E 2019E
Capital Sales 0 0 0 1 1 0 1 2 1 1 2 3 7 13
Gross Profit 0 0 0 1 1 1 1 3 2 3 4 5 13 51
SG&A (11) (18) (36) (11) (11) (12) (11) (45) (13) (14) (15) (14) (56) (51)
Other income (expense), net 0 0 0 0 0 0 0 1 0 0 0 0 0 0

Pretax Income (31) (45) (66) (14) (16) (17) (16) (64) (17) (19) (18) (17) (70) (22)
Income Tax 1 0 0 0 (0) (0) 1 1 0 0 0 0 0 0
GAAP Diluted EPS ($0.71) ($1.01) ($1.29) ($0.27) ($0.31) ($0.31) ($0.27) ($1.16) ($0.30) ($0.32) ($0.32) ($0.28) ($1.22) ($0.37)
Gross Margin 0% 0% 0% 95% 81% 77% 69% 80% 60% 60% 60% 60% 60% 65%
Effective Tax Rate 0% 0% 0% 0% -1% 0% 5% 1% 0% 0% 0% 0% 0% 0%
Net Margin 0% 0% 0% -2677% -2354% -2063% -715% -1505% -546% -432% -295% -193% -316% -28%
EPS growth (y/y) 9% 6% 3% 4% 5% -70%
3

(1-212) 622-6568 15 February 2018

Revenue ($M) 0 0 0 4 22 78 177 293 419 549 680 810
growth y/y 20% 55% 1732% 432% 253% 126% 66% 43% 31% 24% 19%
EBIT ($M) 0 (46) (67) (64) (70) (22) 9 41 80 132 197 267
EBIT margin 0% NA -29328% -1530% -316% -28% 5% 14% 19% 24% 29% 33%
Free Cash Flow 0 (44) (67) (66) (73) (27) (2) 19 46 84 127 175
growth y/y 147% 83% 52% 37%

2019 - 2025 2.0% 2.5% 3.0% 3.5% 4.0% 2.0% 2.5% 3.0% 3.5% 4.0% 2.0% 2.5% 3.0% 3.5% 4.0%
9.3% 254 1,321 1,425 1,547 1,689 1,858 1,575 1,679 1,801 1,943 2,112 5.4x 5.7x 6.2x 6.7x 7.2x
+ =
9.8% 247 1,197 1,286 1,387 1,505 1,644 1,444 1,533 1,635 1,753 1,891 4.9x 5.2x 5.6x 6.0x 6.5x
10.3% 241 1,089 1,165 1,252 1,350 1,465 1,330 1,406 1,492 1,591 1,706 4.6x 4.8x 5.1x 5.4x 5.8x
10.8% 235 995 1,061 1,134 1,218 1,315 1,230 1,295 1,369 1,453 1,549 4.2x 4.4x 4.7x 5.0x 5.3x
11.3% 229 912 969 1,033 1,105 1,186 1,141 1,198 1,261 1,333 1,415 3.9x 4.1x 4.3x 4.6x 4.8x

2.0% 2.5% 3.0% 3.5% 4.0% 2.0% 2.5% 3.0% 3.5% 4.0% 2.0% 2.5% 3.0% 3.5% 4.0%
(106) 1,681 1,785 1,907 2,049 2,218 $28.72 $30.50 $32.58 $35.00 $37.89 84% 85% 86% 87% 88%
- = =
(106) 1,551 1,639 1,741 1,859 1,997 $26.49 $28.00 $29.74 $31.76 $34.12 83% 84% 85% 86% 87%
(106) 1,437 1,512 1,599 1,697 1,812 $24.54 $25.84 $27.31 $29.00 $30.96 82% 83% 84% 85% 86%
(106) 1,336 1,402 1,475 1,559 1,655 $22.83 $23.94 $25.20 $26.64 $28.28 81% 82% 83% 84% 85%
(106) 1,247 1,304 1,368 1,439 1,521 $21.31 $22.28 $23.36 $24.59 $25.99 80% 81% 82% 83% 84%
4

(1-212) 622-6568 15 February 2018

Income Statement - Annual FY16A FY17A FY18E FY19E FY20E Income Statement - Quarterly 1Q18E 2Q18E 3Q18E 4Q18E
Revenue 0 4 22 78 177 Revenue 3 4 6 9
COGS 0 (1) (9) (27) (58) COGS (1) (2) (3) (3)
SG&A (36) (42) (54) (47) (73) SG&A (13) (14) (14) (14)
Adj. EBITDA (64) (62) (68) (18) 16 Adj. EBITDA (16) (18) (18) (16)
D&A (2) (3) (2) (4) (7) D&A (1) (1) (1) (1)
Adj. EBIT (66) (64) (70) (22) 9 Adj. EBIT (17) (19) (18) (17)
Net Interest 0 1 0 0 0 Net Interest 0 0 0 0
Adj. PBT (66) (64) (70) (22) 9 Adj. PBT (17) (19) (18) (17)
Tax 0 1 0 0 (3) Tax 0 0 0 0
Adj. Net Income (66) (63) (70) (22) 6 Adj. Net Income (17) (19) (18) (17)
Reported EPS (1.29) (1.16) (1.22) (0.37) 0.10 Reported EPS (0.30) (0.32) (0.32) (0.28)
Adj. EPS (1.29) (1.16) (1.22) (0.37) 0.10 Adj. EPS (0.30) (0.32) (0.32) (0.28)
DPS - - - - - DPS - - - -
.
Current assets 79 117 113 113 147
PP&E 4 4 4 8 15 ROE (62.9%) (64.5%) (61.3%) (20.2%) 5.3%
Other non current assets 0 0 (0) (0) 0 ROCE (63.1%) (66.5%) (61.3%) (20.2%) 5.3%
Net debt/equity (24.8%) (23.2%) (17.3%) (8.2%) (19.1%)
Net debt/(cash) (19) (27) (19) (9) (25) Tax rate 0.0% (1.0%) 0.0% 0.0% 30.0%
o/w Changes in working capital 1 (3) (3) (1) (2)
as % of sales 1056.6% 56.8% 10.0% 10.0% 7.5%
y/y Growth 43.6% (6.9%) 11.7% (81.8%) (252.3%)
5

(1-212) 622-6568 15 February 2018
intervention.

Diagnostics.
50 OW $32
OW $31
40
OW $17 OW $25 OW $28 OW $27 ($) ($)
30 24-Mar-16 OW 13.52 17.00
Price($)
08-Aug-16 OW 22.00 25.00
20 27-Feb-17 OW 25.50 28.00
03-May-17 OW 27.40 31.00
03-Aug-17 OW 25.15 32.00
10
03-Nov-17 OW 18.00 27.00
0
Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb
15 15 15 15 16 16 16 16 17 17 17 17 18
6

(1-212) 622-6568 15 February 2018
period.

(buy) (hold) (sell)
IB clients* 53% 50% 35%
IB clients* 70% 66% 54%
above.
Other Disclosures
representative.

7

(1-212) 622-6568 15 February 2018

8

(1-212) 622-6568 15 February 2018

9
Equity Research
February 15, 2018 Medical Technology
Sean Lavin, MD
slavin@btig.com No Real Surprises Given Prior Preannouncement;
Andrea Alfonso Outlook Remains The Same
(212) 527-3565
aalfonso@btig.com As the company preannounced Q4 revenue and provided FY18 revenue
expectations on January 10th , the company’s formal earnings call was
Ryan Zimmerman fairly straightforward without surprises. The messaging was largely
(212) 527-3586 consistent with what we learned from the company’s JPM conference
rzimmerman@btig.com presentation though we now may expect an update on progress with the
FDA on the LRTI test as early as the Q1 call. Overall, we remain very
positive on the technology and the total opportunity but feel the company
needs to consistently hit estimates through the course of the year for the
Street to regain comfort with the model. We maintain our Neutral rating.
AXDX
Upsi de
$24.90 %  
Modestly tweaking our estimates for gross margin. Our revenue
12 month target $#,##0;(#,##0)
estimates are unchanged but we have increased our gross margin
NEUTRAL estimates to reflect better trends in Q4. Our full year FY18 revenue
estimate is $25M and we assume roughly 2/3 of revenue will be
52 week range $18.00 - $30.30 recognized in the 2H. For Q1, we model a slight uptick sequentially
Dividend
Market Yield
Cap (m) $1,383 from Q4 revenue of $2.12M to $3.2M; of note, this estimate also
Price Performance seems to be lower than other estimates on the Street of $4-5M. Given
the timing of hospital purchasing, we prefer to have a conservative
bias in the start of the year.
 
Valuation: Shares are Neutral rated based on our DCF analysis. Risks
follow.
Source: IDC
Estimates
1Q17 A 2Q17 A 3Q17 A 4Q17 A FY17 A 1Q18 E 2Q18 E 3Q18 E 4Q18 E FY18 E FY19 E
Sales 1 1 1 2 4 3 5 7 10 25 70
Gross Margin (%) - 80.7% 76.9% 69.3% 76.0% 55.0% 57.0% 61.0% 64.0% 60.7% 64.8%
EBIT (14) (16) (17) (16) (64) (18) (17) (17) (15) (67) (51)
Net Income (Adj.) (14) (16) (17) (17) (63) (18) (17) (17) (15) (67) (51)
Diluted EPS (GAAP) (0.27) (0.31) (0.31) (0.30) (1.16) (0.32) (0.31) (0.31) (0.27) (1.20) (0.91)

Model Changes
As we updated our model on January 22nd to reflect the company pre-
announcement, we do not make changes to our top-line forecasts. We do
update our gross margin forecast for better than expected trends in Q4. We
are raising our FY18 gross margin estimate to 60.7% from 58.1%.
New Old Change

FY17A FY18 FY19 FY17E FY18 FY19 FY17A FY18 FY19
Total Revenue ($M) $4.2 $25.2 $70.3 $4.2 $25.2 $70.3 $0.0 $0.0 $0.0
Net Loss ($M) -$62.9 -$67.1 -$51.2 -$65.4 -$67.8 -$53.0 $2.5 $0.7 $1.8
LPS ($1.16) ($1.20) ($0.91) ($1.21) ($1.22) ($0.95) $0.05 $0.01 $0.03
Gross Margin 76.0% 60.7% 64.8% 73.7% 58.1% 62.3% 228bps 263bps 257bps
Valuation
Our Accelerate Diagnostics rating is Neutral. Our valuation is DCF-based. We
prefer to see a few quarters of better evaluations to enhance our comfort in
meeting near-term estimates. BTIG does not provide price targets on Neutral-
rated stocks. Risks to our rating include the potential for the company to be
acquired, not meeting FY18 estimates, lengthening adoption cycles, LRTI data,
building out the salesforce and OUS expansion, competition, any changes to
FDA regulation, the need for more capital, a retraction in healthcare stock
valuations, and a hospital spending slow down.

2
AXDX Income Statement Dec-14 Dec-15 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Dec-19
$ millions, except EPS and %s FY14 A FY15 A FY16 A 1Q17 A 2Q17 A 3Q17 A 4Q17 A FY17 A 1Q18 E 2Q18 E 3Q18 E 4Q18 E FY18 E 1Q19 E 2Q19 E 3Q19 E 4Q19 E FY19 E
License Fees/Royalties 0.12 0.07 0.08 0.02 0.02 0.02 0.02 0.08 0.02 0.02 0.02 0.02 0.08 0.02 0.02 0.02 0.02 0.08
Product Revenue 0.00 0.08 0.16 0.51 0.68 0.81 2.10 4.10 3.18 4.89 6.72 10.31 25.09 11.62 14.62 18.42 25.58 70.25
Total Revenue 0.12 0.15 0.25 0.53 0.70 0.83 2.12 4.18 3.20 4.91 6.74 10.33 25.17 11.64 14.64 18.44 25.60 70.33
y/y growth NM NM NM NM NM NM NM NM 503.8% 601.9% 714.1% 387.1% 502.7% 263.9% 198.3% 173.6% 148.0% 179.4%
COGS 0.00 0.00 0.00 0.03 0.14 0.19 0.65 1.00 1.44 2.11 2.63 3.72 9.90 4.66 5.42 6.46 8.19 24.72
Gross Profit 0.12 0.15 0.25 0.50 0.56 0.64 1.47 3.18 1.76 2.80 4.11 6.61 15.28 6.99 9.22 11.99 17.41 45.61
R&D 20.05 26.02 28.20 4.29 5.53 6.35 6.13 22.30 6.20 6.60 6.70 6.80 26.30 7.20 7.40 7.50 7.70 29.80
SG&A 10.70 17.88 36.20 10.53 11.46 11.60 11.47 45.06 13.10 13.50 14.50 15.00 56.10 15.30 16.00 17.00 18.70 67.00
Total Operating Expenses 31.64 45.70 66.75 14.81 16.99 17.95 17.60 67.36 19.30 20.10 21.20 21.80 82.40 22.50 23.40 24.50 26.40 96.80
EBIT -31.52 -45.55 -66.50 -14.31 -16.42 -17.32 -16.13 -64.18 -17.54 -17.30 -17.09 -15.19 -67.12 -15.51 -14.18 -12.51 -8.99 -51.19
Other (Expense) Income 0.06 0.05 0.39 0.11 0.14 0.28 0.12 0.65 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Pretax Income -31.46 -45.50 -66.11 -14.20 -16.28 -17.03 -16.02 -63.53 -17.54 -17.30 -17.09 -15.19 -67.12 -15.51 -14.18 -12.51 -8.99 -51.19
Income Taxes (Benefit) -0.53 0.00 -0.27 0.00 -0.18 0.05 0.78 0.65 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Net Income (Loss) -30.93 -45.50 -66.37 -14.20 -16.46 -17.08 -16.80 -62.88 -17.54 -17.30 -17.09 -15.19 -67.12 -15.51 -14.18 -12.51 -8.99 -51.19
EPS -$0.71 -$1.01 -$1.29 -$0.27 -$0.31 -$0.31 -$0.30 -$1.16 -$0.32 -$0.31 -$0.31 -$0.27 -$1.20 -$0.28 -$0.25 -$0.22 -$0.16 -$0.91
Diluted Shares Outstanding 43.63 45.00 51.28 51.88 53.57 55.32 55.53 54.07 55.65 55.76 55.87 55.99 55.82 56.09 55.92 56.19 56.02 56.05
EBIT -31.52 -45.55 -66.50 -14.31 -16.42 -17.32 -16.13 -64.18 -17.54 -17.30 -17.09 -15.19 -67.12 -15.51 -14.18 -12.51 -8.99 -51.19
D&A 0.89 1.79 2.35 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
EBITDA -30.63 -43.76 -64.15 -14.31 -16.42 -17.32 -16.13 -64.18 -17.54 -17.30 -17.09 -15.19 -67.12 -15.51 -14.18 -12.51 -8.99 -51.19
Margins
Gross Profit NM NM NM NM 80.7% 76.9% 69.3% 76.0% 55.0% 57.0% 61.0% 64.0% 60.7% 60.0% 63.0% 65.0% 68.0% 64.8%
EBIT NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
EBITDA NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Pretax Income NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Net Income NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Expenses
COGS as a % of Revenue NM NM NM NM 19.3% 23.1% 30.7% NM 45.0% 43.0% 39.0% 36.0% 39.3% 40.0% 37.0% 35.0% 32.0% 35.2%
SG&A as a % of Revenue NM NM NM NM 1639.5% 1401.1% 541.0% NM 409.4% 275.1% 215.1% 145.3% 222.9% 131.4% 109.3% 92.2% 73.0% 95.3%
R&D as a % of Revenue NM NM NM NM 790.7% 767.0% 289.3% NM 193.7% 134.5% 99.4% 65.9% 104.5% 61.8% 50.6% 40.7% 30.1% 42.4%
Total Operating Expenses NM NM NM NM 2430.2% 2168.1% 830.4% NM 603.1% 409.7% 314.5% 211.1% 327.3% 193.2% 159.9% 132.8% 103.1% 137.6%
Tax Expense (Income) NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Net operating losses (est.) -223.40 -237.60 -253.88 -270.92 -286.93 -286.93 -304.47 -321.78 -338.86 -354.06 -354.06 -369.57 -383.75 -396.26 -405.25 -405.25

3
AXDX Placement/Revenue Model Mar-17 Jun-17 Sep-17 Dec-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Dec-19
1Q17 A 2Q17 A 3Q17 A 4Q17 A FY17 A 1Q18 E 2Q18 E 3Q18 E 4Q18 E FY18 E 1Q19 E 2Q19 E 3Q19 E 4Q19 E FY19 E
U.S.
Capital Equipment
Instruments Under Contract Evaluation (Cumulative - End of Quarter) 8 115 139 146 146 176 206 232 278 278 318 352 378 390 390
Active Instruments (As of Quarter End) 14 29 36 61 61 91 131 181 251 251 297 357 427 557 557
additions 8 15 7 25 55 30 40 50 70 190 46 60 70 130 306
% sold 65% 80% 40% 77% 66% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80%
% reagent rental 35% 20% 60% 23% 35% 20% 20% 20% 20% 20% 20% 20% 20% 20% 20%
# of instruments sold 5 12 3 19 39 24 32 40 56 152 37 48 56 104 245
ASP of instrument sold (000s) $25 $30 $30 $42 $32 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
U.S. Instrument Revenue ($M) 0.1 0.4 0.1 0.8 1.4 1.2 1.6 2.0 2.8 7.6 1.8 2.4 2.8 5.2 12.2
Consumables
Active Instruments 14 15 31 42 42 69 101 144 199 199 263 312 375 460 460
Price Per Test $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
y/y growth -28.6% 21.7% 20.0% 40.0% 40.0% 25.0% 33.3% 21.4%
U.S. Consumables Revenue ($M) 0.4 0.3 0.6 0.8 1.9 1.2 2.2 3.1 5.0 11.5 6.6 8.4 10.8 14.1 39.9
Total U.S. Revenue ($M) $0.5 $0.6 $0.6 $1.6 $3.3 $2.4 $3.8 $5.1 $7.8 $19.1 $8.5 $10.8 $13.6 $19.3 $52.1
OUS
Capital Equipment
Instruments Under Contract Evaluation (Cumulative - End of Quarter) 8 102 100 104 104 122 150 182 216 216 226 252 288 308 308
additions 0 12 6 10 28 12 20 24 40 96 28 30 26 70 154
% sold 20% 20% 20% 35% 24% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35%
% reagent rental 80% 80% 80% 65% 76% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65%
# of instruments sold 0 2 1 4 7 4 7 8 14 34 10 11 9 25 54
ASP of instruments sold (000s) $20 $20 $20 $40 $25 $40 $40 $40 $40 $40 $40 $40 $40 $40 $40
OUS Instrument Revenue ($M) 0.0 0.0 0.0 0.1 0.2 0.2 0.3 0.3 0.6 1.3 0.4 0.4 0.4 1.0 2.2
Consumables
Active Instruments 2 10 16 23 23 33 47 68 96 96 133 162 191 228 228
Price Per Test $150 $150 $150 $150 $150 $150 $150 $150 $145 $145 $145 $145
y/y growth 32.7% 30.0% 40.0% 15.4% 19.0% 19.0% 24.3% 16.0%
OUS Consumables Revenue ($M) 0.0 0.0 0.2 0.4 0.6 0.6 0.8 1.3 1.9 4.6 2.8 3.4 4.5 5.3 16.0
Total OUS Revenue ($M) $0.0 $0.0 $0.2 $0.5 $0.8 $0.7 $1.1 $1.6 $2.5 $6.0 $3.2 $3.8 $4.8 $6.3 $18.1
WW
Capital Equipment
additions 23 13 32 41 54 71 98 83 89 99 167
Instrument Revenue ($M) 0.13 0.41 0.11 0.95 1.60 1.37 1.88 2.34 3.36 8.94 2.23 2.82 3.16 6.18 14.40
Consumables
Global Consumables Revenue ($M) 0.38 0.27 0.76 1.16 2.56 1.81 3.01 4.38 6.95 16.15 9.39 11.80 15.26 19.40 55.85
WW Product Revenue ($M) $0.51 $0.67 $0.871 $2.10 $4.16 $3.18 $4.89 $6.72 $10.31 $25.09 $11.62 $14.62 $18.42 $25.58 $70.25
y/y growth 524% 626% 672% 390% 504% 265.5% 199.1% 174.1% 148.2% 179.9%
sequential growth 2734% 132.0% 129.4% 241.6% 51.2% 53.7% 37.5% 53.3% 12.8% 25.7% 26.1% 38.9%

4

5
Ratings Definitions
upon.


BUY: 59.0%; NEUTRAL: 37.0%; SELL: 4.0%

BUY: 20.1%; NEUTRAL: 6.8%; SELL: 0.0%

Valuation: Our Accelerate Diagnostics rating is Neutral. Our valuation is DCF-based. We prefer to see a few
quarters of better evaluations to enhance our comfort in meeting near-term estimates. BTIG does not provide

6

Other Disclosures

7
General Disclosures
issue.

8

respectively.

9
February 15, 2018

Q4 In Line With The Pre-Announcement; Guidance On The Weaker Side; Reiterate OW
CONCLUSION
PRICE: US$24.90
AXDX shares are trading largely unchanged in the post-market after reporting Q4 revenue
Price as of the close February 15, 2018
in line with their January pre-announcement. The team announced 2018 guidance of $21M-
TARGET: US$26.00
$30M or 5x-7x their 2017 revenue. While the multiple off 2017 revenue is unchanged,
a lower base brings 2018 guidance below the $25M-$56M implied in 3Q17. Despite the
57.0M s/o, $0.53 cash/sh.
guide down, we remain positive on the long-term opportunity, believe 2018 estimates
are now beatable (given the current pipeline plus lower cycle times) and reiterate our William R. Quirk, CFA
Overweight rating. We are moving our price target rationale to 2020 numbers and our
multiple decreases to 9.5x (was 9.7x) due to a longer time horizon.
Alexander D. Nowak, CFA
Research Analyst, Piper Jaffray & Co.
• 4Q17 In Line With Pre-Announcement: Accelerate reported $2.1M in revenue, in line 612 303-5679, alexander.d.nowak@pjc.com
with the pre-announcement, but missing the Street's original $3.1M forecast. Accelerate
announced it installed 337 Pheno modules under evaluation following FDA approval, Rating — Overweight
an increase of 42 sequentially (was 295 modules). This consists of 22 new revenue Price Tgt — US$26.00
generating installs vs. 11 in 3Q17, but below our original 33 4Q17 estimate, and 259 FY18E Rev (mil) US$42.8 US$25.4
modules under evaluation (was 239, +20 sequentially). Gross margin for the quarter was FY19E Rev (mil) US$138.4 US$78.1
69%. Operating expenses were slightly better than our estimates; SG&A of $11.5M vs. FY18E EPS US$(1.28) US$(1.18)
our $11.7M estimate and R&D of $6.1M vs. our $6.8M forecast. All in, EPS of ($0.27) FY19E EPS US$(0.58) US$(0.84)
was better than the Street ($0.33). Accelerate exited the quarter with $109M in cash. 52-Week High / Low US$30.45 / US$16.75
• Guidance: Management guided 2018 revenue to $21M-$30M (Street: $31.8M). The Market Cap. (mil) 1,379
guide implies 5x-7x their 2017 revenue. The 5x-7x commentary is unchanged (originally Avg Daily Vol (000) 415
given 3Q17), but with a lower sales figure in 2017, the 2018 guidance range declines from
$25M-$56M implied in 3Q17. As expected, guidance is 2H18 weighted. The company
also guided cash burn to increase modestly to $13M-$15M/quarter (from $10M-$13M).
Yield 0.00%
Fiscal Year End Dec
• Business Update: Management noted its sales process changes are already starting to Price Performance - 1 Year
improve cycle times and, in one instance, changing the contract language is lowering the USD
cycle time by "months." Given there are 259 Phenos under evaluation (but not revenue 32
generating) at the end of 2017 plus the lower cycle times, we anticipate most, if not all, 30
28
of these system to convert to revenue by the end of 2018. On top of this, a number
26
of new 2018 customers should also convert to revenue generating install, suggesting 24
there is upside to our 235 system target for 2018. Management repeated the pneumonia 22
kit CE mark data with 97.3%/99.0% sensitivity/specificity and 93.8%/96.9% essential 20
agreement and categorical agreement. Importantly, the CE mark performance is above 18
the threshold for FDA approval. 16

Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18
• See page 2 for our "what to do with the stock." Source: Bloomberg

YEAR
2017A 0.5 0.7 0.8 2.1 4.2 328.4x (0.27) (0.31) (0.31) (0.27) (1.16) NM
2018E 3.1 5.1 6.8 10.4 25.4 54.3x (0.31) (0.30) (0.30) (0.27) (1.18) NM
2019E 13.9 16.1 19.4 28.7 78.1 17.7x (0.26) (0.24) (0.22) (0.12) (0.84) NM
February 15, 2018
• What To Do With The Stock: Q4 results came in below expectations, but we think it is
early evidence that revenue is beginning to ramp and does not take away from the product's
long-term potential. Given better cycle times and number of systems already in the pipeline,
we believe our estimates are achievable. The CE marking of the lower respiratory assay is
important and suggests that Accelerate has clear line of sight around other pipeline tests since
lower respiratory is a "dirty" sample. Other pipeline tests are likely to require the same amount
of front end filtration, and it is encouraging that Accelerate found a breakthrough. We remain
convinced in the long-term opportunity and reiterate our Overweight rating.

Income Statement
2017A 2018E 2019E
Assay Revenue - 97 324 479 710 1,243 1,956 4,058 5,165 6,206 8,214 16,075 14 900 7,967 35,660 95,038
License Revenue 20 20 22 21 20 20 22 21 15 15 15 15 83 83 83 60 60
Total Revenue 530 699 828 2,120 3,138 5,111 6,793 10,355 13,866 16,132 19,440 28,664 246 4,178 25,397 78,102 153,254
Gross Profit 498 566 637 1,474 1,131 1,932 2,639 4,436 5,734 6,585 8,202 14,102 246 3,176 10,137 34,622 79,612
Operating Expenses:
Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 (6,780)
0
Interest & Other Expense (Income) net (110) (5) (285) (900) 186 (8) (40) (33) (26) (19) (13) (8) (393) (1,300) 105 (66) (41)
Non-Recurring 67
Expense Variables:
Margin Analysis:
YoY Growth Rates:
Total Revenues 225.2% 3395.8% 3351.4% 5336.9% 492.1% 630.9% 720.0% 388.4% 341.8% 215.7% 186.2% 176.8% 67.3% 1598.3% 507.9% 207.5% 96.2%
S, G & A -41.7% -40.5% -15.7% 51.3% 58.6% 29.1% 16.5% 26.6% 17.6% 14.1% 10.8% 6.4% 102.4% 24.3% 4.5% 5.5% 5.2%
Balance Sheet Data:

February 15, 2018
Legend:
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Piper Jaffray
BUY [OW] 383 57.42 102 26.63
HOLD [N] 264 39.58 24 9.09
SELL [UW] 20 3.00 0 0.00

Time of dissemination: 15 February 2018 22:00EST.

February 15, 2018
the past 12 months.
Rating Definitions


Equity Research
January 10, 2018 Medical Technology
Sean Lavin, MD
slavin@btig.com Q4 Revenue Misses and FY18 Guidance Comes In
Andrea Alfonso Light; We Remain Cautious Around 2018
(212) 527-3565
aalfonso@btig.com Before the market open, Accelerate Diagnostics pre-announced Q4
revenue of $2.1M, falling short of our $2.9M estimate and the Street’s
Ryan Zimmerman $3.0M estimate. Instruments under agreement totaled 337, up 42 from the
(212) 527-3586 295 signed agreements reported at the end of Q3. During its JPM
rzimmerman@btig.com conference presentation, the company provided its initial FY18 outlook,
targeting revenue of $21-30M vs. consensus’ $35M estimate but closer to
our $27M estimate. Given the string of quarterly misses, we think investors
may pressure shares now but we think it is key that a level has been set
that should be met. We remain Neutral. We think the technology is game-
AXDX
Upsi de
$26.05 %
changing but the early ramp has been very hard to predict.
12 month target $#,##0;(#,##0)  
Commentary around 2018. The initial 2018 revenue guidance of $21-
NEUTRAL 30M assumes a 5-7x increase over 2017. In 2018, management expects
revenue to be very back-end loaded and anticipates “strong” gross
52 week range $18.00 - $30.30 margins with a pathway towards 70% at scale (vs. the mid-60s today).
Dividend
Market Yield
Cap (m) $1,409 percent
  for LRTI obtained as planned; U.S. trial to commence in

CE Mark
Price Performance
Q2/Q3. Along with the pre-announcement, management also
announced CE Mark of its Pheno system to target severe bacterial
pneumonia infections. This was expected. Results for the assay were
available ~57 hours faster than the standard of care, which we find
should be a compelling proposition to hospitals. Management plans to
start the U.S. trial in late Q2/Q3. The company estimates the severe
pneumonia market could total a 2M patient opportunity.
 
Valuation: Shares are Neutral rated based on our DCF analysis. Risks
follow.
Source: IDC
Estimates
1Q16 A 2Q16 A 3Q16 A 4Q16 A FY16 A 1Q17 A 2Q17 A 3Q17 A 4Q17 E FY17 E FY18 E
Sales 0 0 0 0 0 1 1 1 3 5 27
Gross Margin (%) - - - - - - 80.7% 76.9% 70.0% 75.4% 59.7%
EBIT (15) (18) (17) (16) (67) (14) (16) (17) (17) (65) (66)
Net Income (Adj.) (15) (18) (17) (16) (66) (14) (16) (17) (17) (65) (66)
Diluted EPS (GAAP) (0.29) (0.35) (0.34) (0.31) (1.29) (0.27) (0.31) (0.31) (0.31) (1.20) (1.19)


2
Ratings Definitions
upon.


BUY: 59.0%; NEUTRAL: 37.0%; SELL: 4.0%

BUY: 20.1%; NEUTRAL: 6.8%; SELL: 0.0%

Valuation: Our Accelerate Diagnostics rating is Neutral. While we are positive on what we feel is practice-
changing technology, we cannot justify raising our price target until we see a better pathway to reaching our

3
revenue estimates over the next 12-24 months, either via an improved contract conversion process and/or a
significant ramp in evaluations. We feel visibility is limited by what appears to be delays in the hospital
administration level and a need to refine the selling process. BTIG does not provide price targets on Neutral-rated
stocks. `
Risks: Risks to our rating include the potential for the company to be acquired, not meeting FY18 estimates,
lengthening adoption cycles, LRTI data, building out the salesforce and OUS expansion, competition, any changes
to FDA regulation, the need for more capital, a retraction in healthcare stock valuations, and a hospital spending
slow down


4
Other Disclosures
General Disclosures
issue.

5

respectively.

6
ADVISORS 10 JanINC
2018 04:33 PM EST
Disseminated 10 Jan 2018 04:35 PM EST
10 January 2018
Overweight
Price: $26.05
J.P. Morgan Healthcare Conference Takeaways - 10 Jan 2018
ALERT
Accelerate Diagnostics (AXDX) CEO Larry Mehren presented at our healthcare Life Science Tools & Diagnostics
conference. Here are our key takeaways: AC
Tycho W. Peterson
(1-212) 622-6568
 Thoughts on pre-announcement. 4Q revenue miss ($2.1M vs. JPMe/Street at tycho.peterson@jpmorgan.com
$3.0M) was mainly due to longer order conversion cycle (due to reasons Bloomberg JPMA PETERSON <GO>
previously discussed), with the company adding 22 placements in 4Q (vs. Julia Qin
previous expectation for the majority of 40 contracts under review to close by (1-212) 622-9253
YE17), bringing the total number of Pheno placements so far to 78, which is julia.qin@jpmorgan.com
about equally split between the U.S. and Europe. The company is taking active Steven Reiman, CFA
measures to mitigate the situation, such as increasing the number of instruments (1-212) 622-6545
used in verification, providing more support during evaluation, and being more
flexible about allowing reagent rental placements, with the goal of shortening Tejas Savant
(1-212) 622-5650
the overall sales cycle from 12-14 months currently down to 6-9 months. More
encouragingly, despite the longer conversion cycle, conversion rates are J.P. Morgan Securities LLC
tracking close to 100%. Meanwhile, the company continues to make progress
adding evaluation contracts, with 259 systems currently under evaluation. We
believe the value proposition of the Pheno system remains clear, with the
company showcased instances where Pheno allowed customers to lower the
mortality rate of sepsis patients with positive blood culture from 11-12% down
to <4% and achieve $100K in annualized savings in antibiotics usage.
 2018 guidance. For 2018, management still expects revenue to grow between 5-
7 times 2017, although that translates into a lower range than Street expectations
($21-30M vs. consensus $35M) given the 4Q miss. 2H18 is expected to be
stronger than 1H18. The company still targets >50% capital sales mix and
>$200 test kit pricing. Gross margin is expected to be in the 60s for the near
term, but management sees a clear pathway towards >70% gross margin as the
business scales. The company does not expect to incur significant capex in 2018.
 Consumable pull-through. In both the U.S. and the EU, reagent pricing on
average is current around $220/kit, with customers running 1-1.5 tests per
system per day on average.
 Menu expansion. In addition to BC, AXDX has achieved CE Mark for its
severe pneumonia assays as expected, expanding the Pheno menu into
respiratory in Europe. In the U.S., the company plans to begin clinical trial for
the pneumonia assays in late 2Q / early 3Q, with a focus on fully automating the
tests. With a market of 2.8M tests per year, the severe pneumonia assay is
expected to become a significant revenue contributor in 2019+. Besides
respiratory, AXDX also plans to concurrently develop tests for acute urinary
tract infections (6.5M tests per year) and intra-abdominal infections (1.7M tests
per year).


(1-212) 622-6568 10 January 2018
intervention.

Diagnostics.
50 OW $32
OW $31
40
OW $17 OW $25 OW $28 OW $27 ($) ($)
30 24-Mar-16 OW 12.02 17.00
Price($)
08-Aug-16 OW 20.97 25.00
20 27-Feb-17 OW 26.95 28.00
03-May-17 OW 27.40 31.00
03-Aug-17 OW 25.15 32.00
10
03-Nov-17 OW 19.30 27.00
0
15 15 15 15 16 16 16 16 17 17 17 17 18
period.
2

(1-212) 622-6568 10 January 2018


(buy) (hold) (sell)
IB clients* 53% 50% 35%
IB clients* 70% 66% 54%
above.
Other Disclosures
representative.

3

(1-212) 622-6568 10 January 2018

4

(1-212) 622-6568 10 January 2018

5
ADVISORS 10 JanINC
2018 09:28 AM EST
Disseminated 10 Jan 2018 09:28 AM EST
10 January 2018
Overweight
Price: $27.15
4Q Revenue Miss Pre-announced - ALERT 09 Jan 2018
This morning, Accelerate Diagnostics (AXDX) pre-announced preliminary 4Q17 Life Science Tools & Diagnostics
results, with revenues of $2.1M coming in significantly below JPMe/Street of Tycho W. Peterson
AC
$3.0M. Instruments under agreement increased by 42 in 4Q, bringing the total (1-212) 622-6568
number of instruments under agreement to 337, although actual placement tycho.peterson@jpmorgan.com
numbers were not disclosed. AXDX also announced achieving CE Mark for its Bloomberg JPMA PETERSON <GO>
severe pneumonia assays, which expand the Pheno assay menu. The company will Julia Qin
presents at our healthcare conference later this morning, and we expect additional (1-212) 622-9253
color on the quarter, Pheno placement, and updated timeline expectations for julia.qin@jpmorgan.com
ongoing test menu expansion. Tejas Savant

(1-212) 622-5650
Steven Reiman, CFA
(1-212) 622-6545


(1-212) 622-6568 10 January 2018
intervention.

Diagnostics.
50 OW $32
OW $31
40
OW $17 OW $25 OW $28 OW $27 ($) ($)
30 24-Mar-16 OW 12.02 17.00
Price($)
08-Aug-16 OW 20.97 25.00
20 27-Feb-17 OW 26.95 28.00
03-May-17 OW 27.40 31.00
03-Aug-17 OW 25.15 32.00
10
03-Nov-17 OW 19.30 27.00
0
15 15 15 15 16 16 16 16 17 17 17 17 18
period.
2

(1-212) 622-6568 10 January 2018


(buy) (hold) (sell)
IB clients* 53% 50% 35%
IB clients* 70% 66% 54%
above.
Other Disclosures
representative.

3

(1-212) 622-6568 10 January 2018

4

(1-212) 622-6568 10 January 2018


AXDX Analysts Reports

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This document is being provided for the exclusive use of SUNNY PURI at ANSON ADVISORS INC

North America Equity Research

Tycho W. Peterson North America Equity Research

Price Performance Summary Investment Thesis and Valuation

Key Metrics (FYE Dec)

Tycho W. Peterson North America Equity Research

Investment Thesis, Valuation and Risks

Risks to Rating and Price Target

Tycho W. Peterson North America Equity Research

Figure 1: AXDX Model

Tycho W. Peterson North America Equity Research

Figure 2: DCF Analysis

Discounted PV of Terminal Value ($M) at a Equivalent Terminal

Net Debt (Cash) Terminal Value

Source: J.P. Morgan estimates, Company data.

Tycho W. Peterson North America Equity Research

Accelerate Diagnostics: Summary of Financials

Tycho W. Peterson North America Equity Research

Accelerate Diagnostics (AXDX, AXDX US) Price Chart

22 03-May-17 OW 27.60 31.00

Tycho W. Peterson North America Equity Research

Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:

J.P. Morgan Equity Research Ratings Distribution, as of April 06, 2019

Tycho W. Peterson North America Equity Research

or http://www.finra.org/sites/default/files/Security_Futures_Risk_Disclosure_Statement_2018.pdf for a copy of the Security Futures Risk Disclosure

Legal Entities Disclosures

Country and Region Specific Disclosures

Tycho W. Peterson North America Equity Research

"Other Disclosures" last revised April 20, 2019.

Buy 0 218 Reduce 0 9 Hold 0 123 IBC 0

$#,##0;(#,##0) positive studies may drive up volumes. As we had conservatively modeled

  timelines but dialogue productive. Mgmt noted that it is

Please Read: Important disclosures and analyst’s certification appear in Appendix

Exhibit 1. Model Changes

New Old Change

BTIG LLC Sean Lavin, MD (212) 527-3570 www.btigresearch.com

BTIG LLC Sean Lavin, MD (212) 527-3570 www.btigresearch.com

BTIG LLC Sean Lavin, MD (212) 527-3570 www.btigresearch.com

BTIG LLC Sean Lavin, MD (212) 527-3570 www.btigresearch.com

Distribution of Ratings and Investment Banking Clients

Distribution of BTIG’s Research Recommendations (as of March 31, 2019):

Distribution of BTIG’s Investment Banking Services (as of March 31, 2019):

Company Valuation and Risk Disclosures

BTIG LLC Sean Lavin, MD (212) 527-3570 www.btigresearch.com

Company–Specific Regulatory Disclosures

BTIG LLC Sean Lavin, MD (212) 527-3570 www.btigresearch.com

BTIG LLC Sean Lavin, MD (212) 527-3570 www.btigresearch.com

Jurisdiction and Dissemination

BTIG LLC Sean Lavin, MD (212) 527-3570 www.btigresearch.com

Accelerate Diagnostics, Inc. (AXDX) Overweight

REVENUE (US$ m) EARNINGS PER SHARE (US$)

Accelerate Diagnostics, Inc. Page 2 of 4

IMPORTANT RESEARCH DISCLOSURES

Created by: BlueMatrix

Distribution of Ratings/IB Services

Analyst Certification — William R. Quirk, CFA, Sr Research Analyst

Time of dissemination: 9 May 2019 22:00EDT.

Accelerate Diagnostics, Inc. Page 3 of 4

Other Important Information

Accelerate Diagnostics, Inc. Page 4 of 4

Accelerate Diagnostics, Inc. (AXDX) Overweight

demonstrated in several single center studies. 26

REVENUE (US$ m) EARNINGS PER SHARE (US$)

Accelerate Diagnostics, Inc. Page 2 of 4