Rockley Photonics Announces Fourth Quarter and Full Year 2021 Financial Results

Customer Demand Drives Early Introduction of Bioptx™ Biomarker Sensing Platform, Adding Professional Healthcare Solution to Previously Announced Consumer Wearables Solution, VitalSpex™

Rockley Ends 2021 with 17 Consumer Electronics and Medtech Contracted Customers, First Commercial Products Expected to Be Available as Early as Second Half 2022 and Volume Ramp Expected in 2023

Rockley Photonics Holdings Limited (NYSE:RKLY) ("the Company" or "Rockley"), a global leader in photonics-based health monitoring and communications solutions, today announced its financial results for the fourth quarter and full year ended December 31, 2021.

"Throughout 2021, we made tremendous progress in product development and with our customers, exceeding many of our goals for the year," said Dr. Andrew Rickman, chairman and chief executive officer of Rockley. "The recently announced Bioptx platform for medtech, coupled with our VitalSpex solution for consumer wearables, demonstrates the success that we're having in both aspects of our business. Today, we believe we are well-positioned at the center of two large, converging markets, offering a unique biomarker sensing platform that addresses the needs and demands of our world-class customer base."

Dr. Rickman continued, "Our belief in our sensing platform's ability to provide a more complete, more accurate view into an individual's health and to provide these insights in a non-invasive manner is supported by our initial human studies. The recently released results from our core body temperature and blood pressure studies suggest that our approach will allow continuous insight into a person's individual health and wellness. We believe that the use of our platform could have a profound impact on the lives of individuals, patients, seniors, first responders, and more. The platform has the potential to help the current system evolve from ‘sick-care' to preventative healthcare by empowering individuals and by providing better tools for professional healthcare."

"During the quarter, we achieved many of our goals and strengthened our financial position," said Mahesh Karanth, chief financial officer of Rockley. "We implemented programs to help us to preserve capital and improve our cash efficiency, correlating expenditures to initiatives tied to accelerating the commercialization of our consumer wearables and medtech products. We are in the process of redeploying datacom engineers to biosensing projects."

Business Highlights:

• VitalSpex to Drive Continued Momentum in Consumer Wearables – During the quarter, the Company announced a significant expansion of its footprint in the consumer wearables market by signing new agreements with six global consumer electronics manufacturers. Rockley is actively working with 12 consumer electronics customers, including six of the top ten largest manufacturers of smart watches and wristbands, to design its chipsets and modules into consumer products as well as offer products that will provide access to its AI cloud suite.

• Bioptx Biomarker Sensing Platform to Serve Professional Healthcare Market – The Company announced its Bioptx product line, a platform featuring a non-invasive, continuous biosensing wristband enabled with technology that will measure an extensive range of biomarkers and leverage custom cloud analytics and AI. Bioptx was launched two years ahead of schedule to meet increasing demand from customers, accelerating the development of non-invasive remote monitoring solutions for healthcare. Engineering samples shipped in January to multiple customers, and availability of the first commercial products is expected in the second half of 2022. The Company also plans to generate recurring revenue from its AI cloud suite and subscription sales. Rockley plans to seek certification from the U.S. Food and Drug Administration and other regulatory agencies.

• Human Studies of Biomarkers to Continue in 2022 – Rockley recently announced initial results of its human studies of core body temperature and blood pressure. In the temperature study, Rockley demonstrated the initial efficacy of its photonics-based sensor for measuring core body temperature, surpassing the results achieved by auxiliary sensors like oral, ear, and infrared thermometers. Next, the Company released the results of its pilot blood pressure human study, using a cuffless, Rockley-powered, wrist-worn device. The results demonstrated promising signal quality, potentially providing an alternative method for measuring cardiovascular health, and also suggested a strong correlation to heart rate and heart rate variability measurements, which are commonly used in electrocardiogram equipment. Additional human studies for these and other biomarkers, including hydration, alcohol, lactate, and glucose trends, are ongoing, and the results are expected to be released throughout 2022.

• Membership in Center to Stream Healthcare in Place (C2SHIP) Accepted – During the quarter, Rockley joined C2SHIP, a consortium of academic centers and industry partners, including many leading researchers and academics, with a mission to develop technologies and approaches for high-quality personalized healthcare delivered at home. C2SHIP is sponsored by the National Science Foundation.

• ISO 9001 Certification Demonstrates Commitment to Quality Solutions – Following an extensive review process, Rockley achieved ISO 9001 certification, demonstrating its commitment to its customers, to optimizing its leadership team, to improving and fine-tuning its internal processes, and to the practice of continuous improvement. The Company is proud that its commitment to quality management principles has been recognized.

Fourth Quarter and Fiscal Year 2021 Financial Highlights:

Non-GAAP Financial Highlights:

A reconciliation of GAAP financial measures to non-GAAP financial measures is included in the financial statement tables included in this press release. For more information regarding the non-GAAP financial measures discussed in this press release, please see "Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures" below.

Revised Outlook for Fiscal Year 2022:

Actual results may differ materially from Rockley's financial outlook as a result of several factors, including the factors described under "Cautionary Statement Regarding Forward-Looking Statements" below.

Conference Call Information

Rockley will host a conference call and webcast to discuss the fourth quarter and full year results at 5:00 p.m. Eastern Time today, March 8, 2022. The live audio webcast along with accompanying presentation materials will be accessible on the Company's Investor Relations website at investors.rockleyphotonics.com.

The U.S. dial-in for the call is 877-407-0784 or +1 201-689-8560 for international callers. Please reference access code 13727060. A replay of the conference call will be available until March 22, 2022, at 11:59 p.m. Eastern Time, while an archived version of the webcast will be available on Rockley's Investor Relations website for one year. The U.S. dial-in for the conference call replay is 844-512-2921 or +1 412-317-6671. The replay access code is 13727060.

Disclosure Information

In compliance with disclosure obligations under Regulation FD, Rockley announces material information to the public through a variety of means, including filings with the Securities and Exchange Commission, press releases, public conference calls and webcasts, as well as the investor relations website.

About Rockley

A global leader in photonics-based health monitoring and communications solutions, Rockley is developing a comprehensive range of photonic integrated circuits and associated modules, sensors, and full-stack solutions. From next-generation sensing platforms specifically designed for mobile health monitoring and machine vision to high-speed, high-volume solutions for data communications, Rockley is laying the foundation for a new generation of applications across multiple industries. Rockley believes that photonics will eventually become as pervasive as micro-electronics, and it has developed a platform with the power and flexibility needed to address both mass markets and a wide variety of vertical applications.

Formed in 2013, Rockley is uniquely positioned to support hyper-scale manufacturing and address a multitude of high-volume markets. Rockley has partnered with numerous Tier-1 customers across a diverse range of industries to deliver the complex optical systems required to bring transformational products to market.

To learn more about Rockley, visit rockleyphotonics.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release that are not historical facts constitute "forward-looking statements" for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding Rockley's future expectations, beliefs, plans, objectives, and assumptions regarding future events or performance. The words "anticipate," "believe," "continue," "could," "develop," "enable," "estimate," "eventual," "expect," "future," "intend," "may," "might," "opportunity," "outlook," "plan," "possible," "position," "potential," "predict," "project," "revolutionize," "seem," "should," "trend," "will," "would" and other terms that predict or indicate future events, trends, or expectations, and similar expressions or the negative of such expressions may identify forward-looking statements, but the absence of these words or terms does not mean that a statement is not forward-looking. Forward-looking statements in this press release include, but are not limited to, statements regarding the following: (a) the potential of the Company's solutions to improve individuals' health and well-being and enable the transition from reactive to proactive healthcare; (b) the anticipated retirement of the Company's remaining debt obligation and timing thereof; (c) the Company's financing agreement with Lincoln Park; (d) the status and timing of the Company's qualification of a second source for its silicon photonics chip supply; (e) backlog; (f) the anticipated and potential features, scope, goals, and benefits of the Company's platform, products, technology, and partnerships with third parties; (g) the Company's continued development of a range of photonic integrated circuits and associated modules, sensors, and full-stack solutions; (h) Rockley's belief that photonics will eventually become as pervasive as micro-electronics; and (i) Rockley's potential to support hyper-scale manufacturing, address a multitude of high-volume markets, and deliver the complex optical systems required to bring transformational products to market.

Forward-looking statements are subject to several risks and uncertainties (many of which are beyond the Company's control) or other assumptions that may cause actual results or performance to differ materially from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following: (i) the Company's ability to achieve commercial production of its products and technology, including in a timely and cost-effective manner; (ii) the Company's ability to achieve customer design wins, convert memoranda of understanding and development contracts into production contracts, and achieve customer acceptance of its products and technology; (iii) risks related to purchase orders, including the lack of long-term purchase commitments, the cancellation, reduction, delay, or other changes in customer purchase orders, and if and to the extent customers seek to enter into licensing arrangements in lieu of purchases; (iv) the Company's history of losses and need for additional capital and its ability to access additional financing to support its operations and execute on its business plan, as well as the risks associated with any future financings; (v) legal and regulatory risks, including those related to its products and technology and any threatened or actual litigation; (vi) risks associated with its fabless manufacturing model and dependency on third-party suppliers; (vii) the Company's reliance on a few significant customers for a majority of its revenue and its ability to expand and diversify its customer base; (viii) the Company's financial performance; (ix) the impacts of COVID-19 on the Company, its customers and suppliers, its target markets, and the economy; (x) the Company's ability to successfully manage growth and its operations as a public company; (xi) fluctuations in the Company's stock price and the Company's ability to maintain the listing of its ordinary shares on the NYSE; (xii) the Company's ability to anticipate and respond to industry trends and customer requirements; (xiii) changes in the Company's current and future target markets; (xiv) intellectual property risks; (xv) the Company's ability to compete successfully; (xvi) market opportunity and market demand for, and acceptance of, the Company's products and technology, as well as the customer products into which the Company's products and technology are incorporated; (xvii) risks related to international operations; (xviii) risks related to cybersecurity, privacy, and infrastructure; (xix) risks related to financial and accounting matters; (xx) general economic, financial, legal, political, and business conditions and changes in domestic and foreign markets; (xxi) the Company's ability to realize the anticipated benefits of the business combination; (xxii) changes adversely affecting the businesses or markets in which the Company is engaged; and (xxiii) risks related to the Company's backlog, including the risk that backlog may not translate into future revenue, as well as other factors described under the heading "Risk Factors" in the registration statement on Form S-1 filed by the Company on October 7, 2021, and declared effective on October 19, 2021, and in other documents the Company files with the Securities and Exchange Commission in the future. The forward-looking statements contained in this press release are based on various assumptions, whether or not identified in this press release, and on the Company's current expectations, beliefs, and assumptions and are not predictions of actual performance. If any of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, actual results may differ materially from those discussed in or implied by these forward-looking statements. There can be no assurance that future developments affecting the Company will be those that have been anticipated. These forward-looking statements speak only as of the date hereof and the Company does not intend to update or revise any forward-looking statements, whether because of new information, future events, or otherwise, except as required by law.

Use of Non-GAAP Financial Measures

In addition to financial information presented in accordance with GAAP, this press release includes certain financial measures that are not prepared in accordance with generally accepted accounting principles in the United States, including: non-GAAP SG&A, non-GAAP R&D, non-GAAP net loss, non-GAAP net loss per share, and adjusted EBITDA, each of which is a non-GAAP financial measure. The Company defines non-GAAP SG&A as GAAP SG&A other than stock-based compensation, non-capitalized transaction costs and forgiveness of PPP loan, and non-GAAP R&D as GAAP R&D other than stock-based compensation. The Company defines non-GAAP net loss as net loss other than the non-GAAP cost of revenue adjustment, non-GAAP SG&A adjustment, and non-GAAP R&D adjustment (in each case as described above), and defines non-GAAP net loss per share as net loss other than non-GAAP adjustments noted above divided by weighted shares outstanding. The Company defined adjusted EBITDA as net loss before interest expense, taxes, depreciation and amortization, stock-based compensation, change in fair value of debt instruments and warrants, and non-capitalized transaction costs as the Company believes they are not indicative of its core operating performance. As noted below, none of these non-GAAP financial measures is a substitute for or superior to measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any other performance measures derived in accordance with GAAP.

The Company believes that presenting these non-GAAP financial measures provides useful supplemental information to investors about the Company in understanding and evaluating its operating results, enhancing the overall understanding of its past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by its management in financial and operational-decision making. The Company uses these non-GAAP measures to help assess its operating performance and operating leverage in its business, analyze its financial results, establish operational goals, develop operating budgets, and make strategic decisions. The Company also believes that the presentation of these non-GAAP financial measures provides an additional tool for investors to use in comparing its core business and results of operations over multiple periods with other companies in its industry, many of which present similar non-GAAP financial measures to investors, and to help analyze the Company's cash performance.

Other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore any non-GAAP measures the Company uses may not be directly comparable to similarly titled measures of other companies. Further, there are a number of limitations related to the use of non-GAAP measures and their nearest GAAP equivalents. Accordingly, these non-GAAP financial measures should be considered as supplemental in nature, should not be considered as the sole measure of the Company's performance, and are not intended to be construed, and should not be considered, in isolation from, or as a substitute for, the comparable or related financial information calculated in accordance with GAAP.

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* Non-capitalized transaction costs include non-recurring expense related to the issuance of convertible loan notes and the Business Combination.

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