Standard BioTools Inc.

Good day, and welcome to the Standard BioTools, Inc. First Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please see the World Conference Specialist by pressing the star key followed by zero. Please note, today's event is being recorded. It's now my pleasure to introduce David Holmes of Investor Relations.

Thank you, Operator, and good afternoon, everyone. Welcome to Standard BioTools First Quarter 2024 Earnings Conference Call. Leading the call today is Michael Eggholm, President and Chief Executive Officer, and Jeff Black, Chief Financial Officer. At the close of market today, Standard BioTools released its financial results for the quarter ended March 31, 2024. During the call, we will review our results and provide an update on our financial and operational performance, 2024 outlook, market trends, and strategic initiatives. During this call, we will be making forward-looking statements about events and circumstances that have not yet occurred, including plans, projections of our business, our outlook for 2024, and future financial results, market trends and opportunities, and our expectations related to the combined operations with Somalogic, including potential synergies and our business outlook for the combined company. These statements are subject to substantial risks and uncertainties that may cause actual events or results to differ materially from current expectations. The four looking statements on this call are based on information currently available to us, and we disclaim any obligation to update these statements except as may be required by law. During the call, we will also present some financial information on a non-GAAP basis. We believe these non-GAAP financial measures are useful in evaluating our core performance and as a baseline for assessing the future earnings potential of the company. We use these non-GAAP measures in our own evaluation of continuing operating performance. We encourage you to carefully consider our results on a GAAP and non-GAAP basis. The reconciliation between non-GAAP measures and their GAAP equivalents are provided in the tables accompanying today's press release. and as an appendix to today's presentation slide. Please note management will be referring to a slide presentation including updated supplemental financial information within the webcast today. Following management's remarks, we will host a Q&A session. Today's slide presentation along with a replay of the webcast are available on the investor section of our website. I would now like to turn the call over to Michael Eggholt, President and CEO of Standard BioTools. Michael. Thank you, David.

We greatly appreciate everyone joining us on today's call after a successful first year of operation at Standard BioTools, and now onto our first full quarter with an integrated SomaScan platform and SomaLogic team. Integrating technologies is hard. Integrating culture is harder. but this has been one of the smoothest of the dozens I've been involved in over my career. Thanks go to the management team at Somalogic who leaned in and helped the operating team at StandUp chew through the hard work of bringing diverse organizations and platforms together. It is a testament to both cultures and clear recognition that each believed in the statement that we are indeed better together. So thank you to everyone involved. Now on to the realization of that teamwork on the power of scale in life sciences. We are ahead of plan on operating synergy targets and now expect to achieve 50 million of the 80 million expected synergies we projected by the end of this year. Next year, we'll capture the remaining 30 million of that initial synergy target. As an organization, we are laser focused on reducing cash burn and accelerating profitability while maintaining long-term growth prospects through focused investments in our commercial organization and our R&D pipeline. Importantly, in addition to the operational, technological, and financial leverage achieved in the combination, we are experiencing the early benefits of a more diversified revenue and customer mix. As our peers have discussed this quarter, it remains a challenging market for capital equipment sales in life sciences, perhaps one of the most challenging in the last decade. At Standard, while we're seeing similar headwinds, our consumable and service business, which now includes SomaScan and its high-quality service offering, are helping to smooth our growth while we continue to expand our overall corporate growth margins and reduce cost and cash burn. Now, let's dive into our quarterly performance and some highlights from our product portfolio. In the first quarter, on a performer combined basis, we observed revenue growth of roughly 2% year-over-year. This is 80% revenue growth on an as-reported basis year-over-year with the impact of SomaScan revenue in 2024. This is largely in line with our expectation, considering the aforementioned ongoing macroeconomic challenges impacted the life science industry, which extended sales cycles, which again pushed some instrument purchases beyond Q1. Importantly, with the benefits of cost rationalization, we delivered a 26% reduction in non-gap operating expenses and 45% adjusted EBITDA improvement on a performer combined basis. This is the power of the standard BioTools model, actively pursuing M&A as an augmentation to organic growth, building scale in a highly fragmented space, and using that to achieve operational leverage. Our expanded portfolio offers product across multiple distinct product categories, including instruments, consumables, field-based service, and now our SomaScan service. To give you a sense of our sales mix this quarter, on a performer combined basis, instruments accounted for approximately 11% of revenue in Q1, consumables and kits made up 40%, instrument support services 13%, and SomaScan services 34%. Importantly, our combined recurring sources of consumable and instrument support services, revenue bolstered by our expansive service and kit offerings, represented about 90% of total revenue, which served as a nice offset to softer capital equipment purchases. While our SomaScan business is still concentrated in a few handful of key farmer accounts, where revenue can be lumpy and is dependent on timing of projects and available budgets, these expanded revenue sources further enhanced our diversification. And the more diversified we become, the better we can navigate capital cycles like we currently like the one we currently find ourselves operating in. Furthermore, these offerings cater to a broad customer base across academic research and biopharma, positioning us well for sustained growth in these large and attractive markets. We believe it's a key opportunity to leverage our combined technology platforms for future offerings, particularly expanding our existing lab service business into a multi-modality offering providing customers premium data with clinical solution support in a model we call multi-omics as a service. This approach is a natural extension of what we are and provides a quicker path to technology adoption while avoiding some of the capital budget constraints currently facing the broader biopharma market. We are also exploring new models to selling Somascan both with a lower-plex, more cost-effective model and a single Summa Reagents. Of the most exciting is the early enthousiasm attraction from our partnership with Illumina, which will broaden market access through the Illumina NGS partnership. We are off to a strong start, and Illumina began its early access program with a small number of customers in the first quarter. Early feedback has been overwhelmingly positive. As a reminder, this jointly developed product allows customers to run the highest plexoma scan assay utilizing the installed base of NOAA CX as an NDS readout. As demonstrated by our successful authorized size program, there is clear demand from our customers to be able to run the assay on a distributed basis or kits basis. The teams from both companies are working closely together and Illumina is on track for full commercial release in early 2025. Standard BioTools is a true enabler for scientists, allowing them to answer the most difficult questions they have. While we focus on building omics solutions, our job is to supply services, instruments, and consumables for researchers to produce the omic answer that's relevant to their scientific question. This is how we fundamentally look at our business and business units. If you look at our business today through an omic lens, our performance was as follows. Polyomics accounted for roughly 80% of our total revenue this quarter, representing a 3% increase year-over-year. We continue to lead with the industry's most comprehensive and differentiated polyomics platform, comprising high-plex plasma polyomics, flow cytometry, and spatial biology. Despite the modest year-over-year growth, We have a high conviction that these technologies represent exciting near- and long-term growth opportunities due to their innovative applications and strong end-market demand. Our genomic solutions are currently in decline, and as discussed before, we manage our legacy microfluidic solutions for profitability, not growth. While down 6% year-over-year, the bright spot is our strategic transition to use this technology as an OEM provider and strategic enabler to a core set of customers, including another leading proteomics company, which currently has approximately 200 of the OEM instruments in the field, which are, again, dependent on our microfluidics consumables. Finally, we have been laser focused on strategic capital allocation to drive long-term value creation. We are committed to targeted investment in our existing technologies and platforms and to M&A, of which we have a full pipeline of potential partners. We also preserve shareholder value via share buybacks and opportunistically simplifying our capital structure. To that end, in mid-March, we announced an agreement with our two largest shareholders, Viking Global and Kasten Capital, to exchange all outstanding shares of their CSB convertible preferred stock for shares of common stock and eliminated all associated CSB preferred rights and privileges. Coupled with our share buyback, these actions represent major steps forwards in streamlining and simplifying our capital structure, which we believe will ultimately make us more attractive to new long-term investors and potential M&A partners. Standard buy tools today is a growing leader in the life science tool sector, which remains fragmented, under-resourced, and for most companies, unprofitable. Today, I'm excited to address you as a unified company with a fortified balance sheet, diverse product mix, and a scaled platform that integrates critical life science solutions under one roof and equally abhorred on a firm path to profitability in early 26th. Looking ahead, we are reaffirming our full-year revenue guidance of $200 million to $205 million for 2024, and we are on track to achieve approximately $300 million in revenue in 2026. I'll now turn the call over to Jeff to discuss our financial results in more detail. Jeff?