8-K: Quanterix Corporation Changes Auditors, Appoints KPMG After Dismissing Ernst & Young

Quanterix Corporation has dismissed Ernst & Young LLP and appointed KPMG LLP as its new independent registered public accounting firm, effective May 9, 2025.

Summary

• Quanterix Corporation dismissed Ernst & Young LLP (EY) as its independent registered public accounting firm on May 9, 2025.
• The dismissal is effective following the filing of the company's quarterly report on Form 10-Q for the quarter ended March 31, 2025.
• The Audit Committee approved the change after a competitive request for proposal process.
• EY's reports on the company's financial statements for 2023 and 2024 did not contain adverse opinions or disclaimers, but did contain adverse opinions on internal controls.
• There were no disagreements between Quanterix and EY on accounting principles or practices, financial statement disclosure, or auditing scope or procedures.
• Material weaknesses in internal controls related to inventory valuation and accounting for property and equipment were previously disclosed.
• A misstatement related to the capitalization of labor and overhead costs in inventory balances required a restatement of prior period financial statements.
• KPMG LLP was appointed as the company's new independent registered public accounting firm for the fiscal year ending December 31, 2025.
• Quanterix did not consult with KPMG on accounting principles or the type of audit opinion prior to the appointment.

Sentiment

Score: 4

Explanation: The sentiment is slightly negative due to the change in auditors, the disclosure of material weaknesses, and the restatement of financial statements. These factors raise concerns about the company's financial controls and reporting practices.

Positives

• The change in auditors was approved by the Audit Committee following a competitive request for proposal process.
• There were no disagreements between Quanterix and EY on accounting principles or practices, financial statement disclosure, or auditing scope or procedures.

Negatives

• EY's reports on internal control over financial reporting for 2023 and 2024 contained adverse opinions due to material weaknesses.
• The company identified an error related to the capitalization of labor and overhead costs in its inventory balances, leading to a restatement of prior financial statements.
• Material weaknesses relating to its internal controls related to the valuation of inventory, including excess and obsolescence reserves and the accounting for property and equipment, net continued to exist as of December 31, 2023.

Risks

• The company's ongoing material weaknesses in internal control over financial reporting could lead to further errors or misstatements in financial statements.
• The transition to a new auditor could present challenges in ensuring a smooth and effective audit process.
• Failure to remediate the identified material weaknesses could impact investor confidence and the company's ability to accurately report its financial performance.

Future Outlook

The company will be working with KPMG as its new auditor for the fiscal year ending December 31, 2025.

Industry Context

Changes in auditors are not uncommon, but they often raise questions about a company's financial controls and reporting practices. The disclosure of material weaknesses in internal control adds further scrutiny to the situation.

Comparison to Industry Standards

• It is difficult to compare Quanterix's situation directly to industry standards without knowing the specific nature and severity of the material weaknesses.
• However, companies like Laboratory Corporation of America Holdings (LH) and Quest Diagnostics Incorporated (DGX), which operate in related fields, are expected to maintain robust internal controls over financial reporting.
• The presence of material weaknesses and a restatement suggests that Quanterix's internal controls may be lagging behind industry best practices.

Stakeholder Impact

• Shareholders may be concerned about the material weaknesses and restatement, potentially impacting the stock price.
• Employees in the finance and accounting departments may face increased scrutiny and workload as the company works to remediate the weaknesses.
• The change in auditors could affect the company's relationship with its lenders and other stakeholders.

Next Steps

• Quanterix will file its quarterly report on Form 10-Q for the quarter ended March 31, 2025.
• KPMG will conduct the audit for the fiscal year ending December 31, 2025.
• The company will need to address and remediate the identified material weaknesses in internal control.

Key Dates

Keywords

auditor, KPMG, Ernst & Young, internal control, material weakness, financial reporting, Quanterix, accounting