Standard BioTools Inc.

will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to David Holmes of Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to Standard BioTools' second quarter 2024 earnings conference call. Leading the call today is Michael Egholm, 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 June 30, 2024. During this call, we will review our results and provide an update on our financial and operational performance, 2024 outlook, market trends, and strategic initiatives. During the call, we will make forward-looking statements about events and circumstances that have not yet occurred, including plans and projections for our business, our outlook for 2024 and future financial results, market trends and opportunities, are 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 forward-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 slides. Please note that management will be referring to a slide presentation, including updated supplemental financial information within the webcast today. Following prepared remarks, we will host a Q&A session. Today's presentation will be available on the website, as well as the webcast on the investor relations section of the website. I would now like to turn the call over to Michael Eggholm, President and CEO of Standard BioTools. Michael.

Thank you, David, and good afternoon, everyone. We appreciate you joining us today. Before we discuss our quarterly results, I want first to touch on the leadership news we announced this afternoon. As you saw from our announcement today, Jeff Black has accepted an opportunity in another public company located closer to home and family. Jeff helped us build a strong finance function with talented and capable leaders, but positioned us well for seamless transition. We appreciate Jeff's contributions, his decision, and wish him all the best. He will remain with SBI through August 31st to ensure a smooth transition of his responsibilities. We have started a search for a permanent successor, and we are fortunate to already have a deep bench of talent across our leadership team and throughout our finance and IT organizations. Starting on September 1, Alex Kim, our longtime chief operating officer and a co-founder of Standard BioTools, will take on the interim CFO role and will continue to lead strategic planning and integration of acquisitions. We also recently appointed Sean McKay as our new Chief Business Officer, who now assumes responsibility for strategic business development, product management, marketing, and investor relations functions. With that, let's discuss our results. Our team's focus on cost structure and early integration of Summer Logic has accelerated synergy realization in the quarter, We are now pulling forward the $80 million cost reduction target to the end of 2024, a year ahead of plan, keeping us on the track to achieve break-even adjusted EBITDA for the full year 2026. The strong operational execution was offset by weaker than anticipated second quarter revenue as Somerscan Services experienced contract delays and instrument revenue was down year over year. While the latter is largely attributed to headwinds from the ongoing industry-wide restricted capital purchasing environment, as peers have reported, combined with the service business variability discussed, we are revising our revenue guidance to 170 to 175 million for the full year 2024. We're confident that industry issues are transitory and some encouraging signs are emerging in particular markets. Further, our operating system, SBS, has become deeply embedded in the new businesses, focused on delivering improved forecasting, shortened sales cycles, and in time, expanded product offerings to enable a more diversified customer base. SomaScan and its proprietary Aptima technology is a leading proteomics platform with tremendous upside. We're excited to be partnering with Illumina on their full commercial release in the first half of 2025, enabling the SomaScan assay on Illumina's NovoSig platform, which has an installed base of around 2,200 instruments. Most importantly, we remain committed to hit break even adjusted EBITDA for the full year 2026. We're well capitalized with nearly 400 million in cash to execute on our strategic vision of building a scaled, profitable, multi-omic solution life science business. At Standard BioTools, we're grounded in the reality that the life science technology and service industry is highly fragmented, filled with small enabling solutions and brilliant technologists but in desperate need of operational scale and the commercial and manufacturing expertise to achieve that. This is a perfect setup for strategic M&A, which is central to our strategy and an area we continue to be active. In fact, we believe the current market dynamic is creating opportunities for us to accelerate our consolidation thesis to drive additional scale diversification and shareholder value. In summary, despite a challenging quarter, we remain confident in our long-term outlook and we will stay the course on our vision to become a leading diversified life science leader with the best in class technology platform and several differentiated growth vectors and a team of operators that understand what it takes to execute in any environment. Turning to our quarterly performance and highlights Revenue on a reported basis grew 57% in the first half of 24 and 34% in the second quarter. On a performed combined basis, revenue declined 11% in the first half and 23% in the second quarter. Our lower than expected revenue results were driven primarily by two factors. First, we experienced project delays for SomaScan assay services. Lastly, by select customers in the EMEA region. We are encouraged, however, by an early third quarter uptick in key farmer account activity, provided as an early optimism for potential improvement in this segment as we move through the second half of the year. Instrument revenues was down year-on-year, but we saw a 40% sequential improvement compared to the first quarter of 2024. While we experienced continued economic pressure in the CapEx instrument purchasing cycles in the second quarter, largely consistent with what we saw in the first quarter, were incurred by this sequential increase in placements in the second quarter. As stated above, we've seen sales cycle extend across the portfolio. The opportunities remain available just on an ill-engaged timeline. Against this challenging backdrop, we continue to deliver on an operating cost reduction. On a pro forma combined basis in the first half of 24, we reduced our non-GAAP operating expenses by more than 30 million, or 27% over the first half of 23, and delivered another reduction in adjusted EBITDA laws for the quarter. And we have already operationalized 60 million of our $80 million target cost synergies, which we expect would be fully reflected in our full year run rate entering 2025. Turning to sales mix in the second quarter, instruments accounted for 19% of revenue, consumables and kits were 40%, instrument support services 17%, and SomaScan services 21%. While our SomaScan service revenues remains concentrated and susceptible to quarterly variability, We are working hard to diversify our customer base, which will help to mitigate this. We are also expanding our near and medium-term growth drivers of this business with more distributed solutions to complement our service business, chiefly through our partnership with Illumina. In addition, we are exploring new models to selling SomaScan, both with a lower-plex, more cost-effective model and single Soma reagents, but a single SomaMir agent's productization is underway with the goal to launch a minimal viable product this fall. Furthermore, we continue to lean into our strategy to deploy our multi-omics as a service offering, which will leverage our SomaScan and CyTOF combined technology platforms and future platforms developed and acquired for offerings to expand our lab services business, providing customers premium data with clinical solution support. This white-glove customer experience will further accentuate the complementarity of lab technologies and where they can best be applied. It's a natural extension of our existing offerings and provides a quicker path to technology adoption while avoiding some of the capital budget constraints currently facing the broader biopharma market. As we look to the next several quarters and beyond, we are incredibly well equipped to execute. First, we have assembled what we believe to be the most comprehensive proteomics platform in the industry with multiple revenue drivers and a platform to expand and complement those sources of revenue, both organically and inorganically. Second, we have an experienced leadership team committed to our continuous improvement initiative with a track record of driving growth, expanding growth margins, and reducing operating costs. And finally, our healthy balance sheet provides both runway and firepower to execute our long-term growth and strategic initiatives. We ended the second quarter with over 396 million in gas, which we see as a significant competitive advantage in a highly constrained capital environment for our sector. And with that, I'll now turn the call over to Jeff.