Standard BioTools Inc. Q1 FY2024 earnings call

• Successfully integrated with SomaLogic, with ahead of plan on operating synergy target, expecting to achieve EUR 50 million of the EUR 80 million expected synergies by end of 2024.
• On a pro forma combined basis, revenue grew ~2% YOY, non-GAAP operating expenses reduced by 26%, and adjusted EBITDA improved by 45%.
• Product mix: Instruments 11%, consumables/kits 40%, instrument support service 13%, SomaScan service 34%. Recurring revenue from consumables and instrument support services made up ~90% of total revenue.
• Partnership with Illumina launched early access program in Q1 with positive feedback, jointly developed product allows customers to run high plex SomaScan using Illumina NGS readout.
• Focus on strategic capital allocation, including share buybacks and simplifying capital structure, announced exchange of CSB convertible preferred stock for common stock with major shareholders.

On a pro forma combined basis, Standard BioTools saw revenue growth of roughly 2% year-over-year in the first quarter. Product segment breakdown: Instruments accounted for approximately 11% of revenue, consumables and kits made up 40%, instrument support service is 13%, and SomaScan service is 34%. Recurring sources of consumable and instrument support services represented about 90% of total revenue. Proteomics accounted for roughly 80% of total revenue this quarter, up 3% year-over-year. Genomics was down 6% year-over-year, but the company is transitioning this business to an OEM provider model with some leading proteomics companies having ~200 OEM instruments in the field dependent on their microfluidics consumables.

• Reaffirmed full year revenue guidance of $200 million to $205 million for 2024.
• On track to achieve approximately $300 million in revenue in 2026.
• Expect operating cash burn to reduce significantly in the coming quarters, with focus on realizing $80 million in non-GAAP operating cost savings, with $50 million operationalized in 2025.
• Confident in long-term growth despite current macroeconomic challenges impacting capital equipment sales.

• Macro-economic challenges impacting capital equipment sales in the life sciences industry, leading to softer capital equipment purchases.
• Lumpy revenue from SomaScan business concentrated in a few key pharma accounts dependent on project timing and budgets.
• Merger-related costs and restructuring activities may result in continued cash outlays, though expecting operating cash burn to reduce.
• Transitory headwinds related to legacy service and warranty-related costs could create pressure in 2024.

Q: Matthew Stanton asked about early findings from Illumina partnership, timing of commercial launch, and quantification of Illumina contribution.

A: Michael Egholm said teams have been working on it, full launch in early 2025, Illumina contribution is in very low single millions. Also discussed multi-omic as a service, single SOMAmer reagents, and M&A pipeline with healthy pipeline and disciplined approach.

Q: Daniel Brennan asked about Q2 guide, SomaLogic growth sustainability, and OpEx leverage.

A: Michael Egholm mentioned sales funnels getting larger, no cancellations, just purchases pushed out, and Jeff Black discussed OpEx leverage with $50 million in savings operationalized in 2025, with impact seen in second half of 2024.

Q: Paul Knight asked about NGF readout competition, genomics OEM, and cash payments.

A: Michael Egholm said SomaScan assay is highly competitive with lower CV and scalable, confident in genomics OEM business with existing partnerships and new ones like Next Gen Diagnostics. Jeff Black explained $71 million cash payments included $11 million share buyback, $8 million debt retirement, $30 million merger costs, etc., with adjusted operating burn expected in $29-30 million range.