Q2 2024 Standard BioTools Inc Earnings Call

Good day and welcome to the Std Biotools 2nd Quarter 2024 Earnings Conference Call.

Operator: Carter, 2024, Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad.

Operator: 2024 Earnings Conference Call. All participants will be in listen-only mode.

Operator: 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.

Speaker Change: All participants will be in listen-only mode.

Speaker Change: 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.

Operator: 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.

Speaker Change: 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.

David Holmes: I would not like to turn the conference over to David Holmes of Investor Relations. Please go ahead.

Michael Egholm: 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, the financial officer.

David Holmes: Thank you, operator, and good afternoon, everyone. Welcome to Std Biotools' second quarter 2024 earnings conference call. Leading the call today is Michael Egholm, President and Chief Executive Officer, and Jeff Black., Unknown Attendee, Unknown Attendee, Jeffrey Black, David Holmes, Wenbin Jiang, Matthew Stanton, Unknown Attendee, Michael Egholm, Adam Taich, Elizabeth Garcia, Scott Greenstone. At the close of market today, Std 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.

David Holmes: Thank you, Operator, and good afternoon, everyone. Welcome to Std 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.

Michael Egholm: 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.

Speaker Change: At the close of Market Today, Std Biotools released its financial results for the quarter ended June 30, 2024.

Speaker Change: During this call, we will review our results and provide an update on our financial and operational performance.

Speaker Change: 2024 Outlook, Market Trends, and Strategic Initiatives.

Michael Egholm: During the call, we will make four 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, 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 obligations to update these statements except as may be required by law.

David Holmes: 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, 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.

Speaker Change: 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.

Speaker Change: Our outlook for 2024 and future financial results.

Speaker Change: Market trends and opportunities, our expectations related to the combined operations with SomaLogic, including potential synergies and our business outlook for the combined company.

Speaker Change: These statements are subject to substantial risks and uncertainties that may cause actual events or results to differ materially from current expectations.

David Holmes: 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 gap and non-gap basis.

Speaker Change: The forward-looking statements on this call are based on information currently available to us.

Speaker Change: and we disclaim any obligation to update these statements except as as may be required by law.

Michael Egholm: 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 is 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 gap and non-gap basis.

Speaker Change: 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.

Speaker Change: We use these non-GAAP measures in our own evaluation of continuing operating performance.

Speaker Change: We encourage you to carefully consider our results on a gap and non-gap basis.

Michael Egholm: The reconciliation between non-GAAP measures and their GAAP equivalents is 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.

Speaker Change: The reconciliation between non- GAAP measures and their GAP equivalents are provided in the tables accompanying today's press release and as an appendix to today's presentation slides.

David Holmes: The reconciliation between non-GAAP measures and their GAAP equivalents is provided in the tables accompanying today's press release and as an appendix to today's presentation slide. Please note that management will be referring to a slide presentation, including updated supplemental financial information, during 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, in the Investor Relations section of the website. I would now like to turn the call over to Michael Egholm, President and CEO of Std Biotools.

Speaker Change: Please note that management will be referring to a slide presentation, including updated supplemental financial information within the webcast today.

Michael Egholm: 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.

Speaker Change: Following prepared remarks, we will host a Q&A session.

Speaker Change: 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 Egholm, President and CEO of Std Biotools. Michael.

Michael Egholm: I would now like to turn the call over to Michael Acom, President and CEO, Standard Bio Tools. Michael.

Michael Egholm: 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 a lot of public company located closer to home and family. Jeff helped us build a strong finance function with talented and capable leaders, but precision is well for seamless transition. We appreciate Jeff's contributions, his decision, and wisdom. All the best. He will remain with SBI True August 31st to ensure a smooth transition of his responsibilities.

Michael Egholm: Thank you, David. And good afternoon, everyone.

Michael Egholm: 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.

Michael Egholm: 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 that positions us well for a seamless transition. We appreciate Jeff's contributions and his decision and wish him all the best.

Speaker Change: As you saw from our announcement today, Jeff Black has accepted an opportunity in another public company located closer to home and family.

Speaker Change: Jeff helped us build a strong finance function with talented and capable leaders that position us well for a seamless transition. We appreciate Jeff's contributions, his decision, and wish him all the best.

Michael Egholm: 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're 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 Std Biotools, will take on the interim CFO role and will continue to lead strategic planning and integration of acquisitions.

Speaker Change: He will remain with SBI through August 31st to ensure a smooth transition of his responsibilities.

Michael Egholm: We have started our 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 IOTools 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.

Speaker Change: 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.

Speaker Change: Alex Kim, our long-time Chief Operating Officer and a co-founder of Std Biotools will take on the interim CFO role and will continue to lead strategic planning and integration of acquisitions.

Michael Egholm: We also recently appointed Sean MacKay as our new Chief Business Officer, who now assumes responsibility for strategic business development, product management, marketing, and investor relations. With that, let's discuss our results. Our team's focus on cost structure and early integration of SomaLogic has accelerated synergy realization in the quarter, and 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 breakeven-adjusted EBITDA for the full year 2023.

Speaker Change: We also recently appointed Sean McKay as our new Chief Business Officers, who now assumes responsibility for strategic business development, product management, marketing, and investor relations functions.

Michael Egholm: With that, let's discuss our results. Our team's focus on cost structure and early integration of Somalagic has accelerated synergy realization in the quarter, and we are now pulling forward the $80 million cost reduction target to the end of 2024, a year ahead of plan, keeping us in the track to achieve break even adjusted EBITDA for the full year 2026. The strong operational execution was offset by we got an anticipated second quarter revenue as Somalagic services experienced contract delays and instrument revenue was down year or year. While the latter is largely attributed to headwinds from the ongoing industry right, restricted capital purchasing environment as peers have reported, combined with the service business variability discussed, we are revising our revenue guidance to $175 million for the full year 2024.

Speaker Change: With that, let's discuss our results.

Speaker Change: Our team's focus on cost structure and early integration of SomaLogic has accelerated synergy realization in the quarter, and we are now pulling forward the $80 million cost reduction target.

Speaker Change: 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.

Michael Egholm: A strong operational execution was offset by weaker than anticipated second quarter revenue as Somerset services experienced contract delays and instrument revenue was down year-on-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 $170-175 million for the full year 2021. We're confident that industry issues are transitory, and some encouraging signs are emerging in particular markets.

Speaker Change: A strong operational execution was offset by weaker than anticipated second quarter revenue as SomaScan services experienced contract delays and instrument revenue was down year or year.

Speaker Change: While the latter is largely attributed to headwinds from the ongoing industry riot-restricted capital-purchasing environment, as peers have reported,

Speaker Change: Combined with the service business variability discussed, we are revising our revenue guidance to $170-$175 million for the full year 2024.

Michael Egholm: We're confident that industry issues are transitory, and some encouraging signs are emerging in particular markets. Further, our operating system, SPS, has become deeply embedded in the new businesses focused on delivering improved forecasting, short and sales cycles, and in time expand the product offerings to enable a more diversified customer base. Somalagic and its proprietary Optimist technology is a leading proteomics platform with tremendous upside. We're excited to be partnering with Illumina when their full commercial release in the first half of 2025, enabling the Somalagic and ASA on Illumina's Noiseic platform, which has an installed base of around 2,200 instruments.

Speaker Change: We're confident that industry issues are transitory and some encouraging signs are emerging in particular markets.

Michael Egholm: 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. SomaScan, and its proprietary Abtomer technology, is a leading proteomics platform with tremendous upside. And 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 NovaSeq platform, which has an installed base of around 2,200. Most importantly, we remain committed to a head break-even adjusted EBITDA for the full year 2021.

Speaker Change: 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.

Speaker Change: SomaScan and its proprietary Abtomer technology is a leading proteomics platform with tremendous upside.

Speaker Change: We're excited to be partnering with Illumina.

Speaker Change: on their full commercial release in the first half of 2025, enabling the SomaScan assay on Illumina's NuvaSeq platform, which has an installed base of around 2,200 instruments.

Michael Egholm: Most importantly, we remain committed to a 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, craftable, multiomic solution life science business. At Standabout Tools, we're grounded in the reality that the life science technology Jeffrey is highly fragmented, filled with small enabling solutions and brilliant technologies, but in desperate need of operational scale and the commercial and manufacturing expertise to achieve that. This is a perfect set of strategic M&A, which is central to our strategy and an area we continue to be active.

Speaker Change: Most importantly, we remain committed to a head break-even adjusted EBITDA for the full year 2026.

Michael Egholm: We're well capitalized with nearly 400 million in cash to execute on our strategic vision of building a scaled, profitable, multi-omics solution life-size. At Std 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 technologies but in desperate need of operational scale and the commercial and manufacturing expertise to achieve that. This is a perfect setting for strategic M&A, which is central to our strategy and an area we continue to be active in.

Speaker Change: 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.

StataBioTools: At Std 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 technologies, but in desperate need of operational scale.

StataBioTools: 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,

Michael Egholm: 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.

Michael Egholm: 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 a 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.

StataBioTools: We believe the current market dynamic is creating opportunities for us to accelerate our consolidation thesis to drive additional scale, diversification, and shareholder value.

Michael Egholm: In summary, despite a challenge in quarter, we remain confident in our long-term outlook, and we will state a cause on our visions to become a leading diversified life science leader with a 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, revenues 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.

StataBioTools: In summary, despite a challenging quarter, we remain confident.

StataBioTools: in our long-term outlook, and we will stay the course on our vision to become a leading diversified life science leader with a best-in-class technology platform.

StataBioTools: and several differentiated growth vectors and a team of operators that understand what it takes to execute in any environment.

Michael Egholm: Turning to our quarterly performance and highlights, revenue on a reported basis grew 57% in the first half of 2024 and 34% in the second quarter. However, on a performed combined basis, revenue declined 11% in the first half and 23% in the second quarter.

StataBioTools: Turning to our quarterly performance

StataBioTools: 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.

Michael Egholm: Our lower than expected revenue results were driven primarily by two factors. First, we experienced project delays for storm scan asset services, largely by select customers in the mayor region. We are encouraged, however, by an early third quarter uptick and key family 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 were down year or year, but we saw a 40% sequential improvement compared to the first quarter of 2024. While we experienced continued economic pressure in decapics, instrument purchasing cycles in the second quarter, largely consistent with what we saw in the first quarter, we encouraged by this sequential increase in placements in the second quarter.

Michael Egholm: Our lower than expected revenue results were driven primarily by two factors. First, we experienced project delays for somat scan assay services, largely from select customers in the EMEA region. We are encouraged, however, by an early third-quarter uptick in key pharma account activity, which provides early optimism for potential improvement in this segment as we move through the second half. Instrument revenues were down year or year, but we saw a 40% sequential improvement compared to the first quarter of 2025.

StataBioTools: Our lower-than-expected revenue results were driven primarily by two factors.

StataBioTools: First, we experienced project delays for SomaSCAN Assay Services, lastly by select customers in the EMEA region.

StataBioTools: We are encouraged, however, by an early third quarter uptick in key pharma account activity, provided as an early optimism for potential improvement in this segment as we move through the second half of the year.

StataBioTools: Instrument revenues were down year over year, but we saw a 40% sequential improvement compared to the first quarter of 2024.

Michael Egholm: 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, we are encouraged by this sequential increase in placements. As stated above, we're seeing the sales cycle extend across the portfolio. The opportunities remain available on an elongated timeline. Against this challenging backdrop, we continue to deliver on operating cost reduction. On a pro-forma combined basis in the first half of 2024, we reduced our non-GAAP operating expenses by more than $30 million, 27% over the first half of 2023, and delivered another reduction in adjusted EBITDA loss for the quarter.

StataBioTools: While we experience continued economic pressure in the CapEx instrument purchasing cycles in the second quarter, largely consistent with what we saw in the first quarter, we are encouraged by this sequential increase in placements in the second quarter.

Michael Egholm: As stated above, we have seen sales cycle extent across the portfolio; the opportunities remain available just on an elongated timeline. Against this challenging backdrop, we continue to deliver on an operating cost reduction. On a performer combined basis in the first half of 24, we reduced our non-gab operating expenses by more than 30 million or 27% over the first half of 23 and delivered another reduction in the adjusted EBDA laws for the quarter. And we have already operationalized 60 million of our 80 dollar million target cost energies, which we expect will be fully reflected in our full year run rate entering 2025.

StataBioTools: As stated above, we've seen sales cycle extend across the portfolio. The opportunities remain available just on an elongated timeline.

StataBioTools: Against this challenging backdrop, we continue to deliver on an operating cost reduction.

StataBioTools: On a pro-forma combined basis in the first half of 2024, we reduced our non-GAAP operating expenses by more than $30 million.

StataBioTools: All 27% over the first half of 2023 and delivered another reduction in adjusted EBITDA loss for the quarter.

Michael Egholm: And we have already operationalized 60 million of our $80 million target cost synergies, which we expect will be fully reflected in our full year run rate entering 2025. Turning to the sales mix in the second quarter, instruments accounted for 19% of revenue, consumables and kits were 40%, instrument support services 17%, and somat scans services 21%. While our SomaScan service revenues remain concentrated and susceptible to quarterly variability, we are working hard to diversify our customer base, which will help to make 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 a partnership with Illumina.

StataBioTools: And we have already operationalized 60 million of our $80 million target cost synergies, which we expect will be fully reflected in our full-year run rate entering 2025.

Michael Egholm: Turning to sales mix in the second quarter, instruments accounted for 19% of revenue, consumables and kits were 40%, instrument support services 17%, and so much against services 21%. While our so much against service revenues remains concentrated and susceptible to quarterly variability, we are working hard to diversify our customer base, which would help to. 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. Furthermore, we continue to lean into our strategy to deploy our multi-omics as a service offering, which will leverage our summer scat and site of 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.

StataBioTools: Turning to sales mix in the second quarter, Instruments accounted for 19% of revenue, Consumables and Kits were 40%, Instruments Support Services 17%, and SomaScan Services 21%.

StataBioTools: While our SomaSCAN service revenues remain concentrated and susceptible to quarterly variability, we are working hard to diversify our customer base, which will help to mitigate this.

StataBioTools: We are also...

StataBioTools: expanding our near and medium-term growth drivers of this business.

StataBioTools: with more distributed solutions to complement our service business chiefly through our partnership with Illumina. In addition, we are exploring new models for selling SomaScan, both with a lower Plexmo cost-effective model and single SomaMir reagents.

Michael Egholm: In addition, we're exploring new models to sell SomaScan, both with a lower Plexmo cost-effective model and single SomaMir Rage. But a single SomaMirage 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 platform and future platforms developed and acquired for offerings to expand our lab services business, providing customers premium data with clinical solution support.

StataBioTools: But a single SomaMirage productization is underway with the goal to launch a minimal viable product this fall.

StataBioTools: 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.

StataBioTools: and future platforms developed and acquired.

Michael Egholm: This white-blob customer experience will further extend to it 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 buyer. As we look to the next several quarters and beyond, we're 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.

StataBioTools: for offerings to expand our lab services business.

StataBioTools: providing customers premium data with clinical solution support. This white block 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.

Michael Egholm: This might love customer experience with further extent to it or 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 phrasing the broader bioformer market.

StataBioTools: provides a quicker path to technology adoption while avoiding some of the capital budget constraints currently facing the broader biopharma market.

Michael Egholm: As we look to the next several quarters and beyond, we are incredibly well equipped to execute first. We have a sample of 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 improvements initiative, with a track record of driving growth, expanding growth margins, and reducing operating costs. And finally, our healthy balance sheet provides both one way and psi power to execute our long-term growth and strategic initiatives.

StataBioTools: As we look to the next several quarters and beyond, we are incredibly well equipped to execute first.

StataBioTools: We have assembled what we believe to be the most comprehensive proteomics platform in the industry.

StataBioTools: with multiple revenue drivers and a platform to expand and complement those sources of revenue.

Michael Egholm: Second, we have an experienced leadership team committed to our continuous improvement initiative, with a track record of driving growth, expanding gross 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. And with that, I'll now turn the call over to Jeff.

StataBioTools: both organically and inorganically.

StataBioTools: 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.

StataBioTools: And finally, our healthy balance sheet provides both runway and firepower to execute our long-term growth and strategic initiatives. We entered 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.

Michael Egholm: We ended the second quarter with over 396 million in gas, which we see as a significant competitive advantage in a highly consuming capital environment in our sector.

Jeff Black: And with that, I'll now turn the call over to Jeff. Thank you, Michael. And thank you all for joining us today.

StataBioTools: And with that, I'll now turn the call over to Jeff.

Jeff Black: Thank you, Michael. And thank you all for joining us today.

Jeff Black: I first want to say a few words about my decision to leave Center Bio Tools. Since I started at the company almost 15 months ago, we've set an incredibly strong foundation for transformation. We're only just getting started. It's been a tremendous opportunity to be the CFO here, working alongside Michael and the rest of our talented ELT team. I remain a steadfast believer in Michael, the team, and the SBI vision. I didn't take the decision lightly, but ultimately decided this new opportunity is the right move for me at this point in my career. It's an industry I know well, located closer to my home and my family.

Jeff Black: I first want to say a few words about my decision to leave Std Biotools. Since I started the company almost 15 months ago, we've set an incredibly strong foundation for transformation. We're only just getting started.

Jeff: Thank you Michael and thank you all for joining us today. I first want to say a few words about my decision to leave Std Biotools.

Jeff: Since I started the company almost 15 months ago, we've set an incredibly strong foundation for transformation. We're only just getting started. It's been a tremendous opportunity to be the CFO here, working alongside Michael and the rest of our talented ELT team.

Jeff Black: It's been a tremendous opportunity to be the CFO here working alongside Michael and the rest of our talented ELT team. I remain a steadfast believer in Michael, the team, and the SBI vision. I didn't take the decision lightly, but ultimately, I decided this new opportunity is the right move for me at this point in my career. It's an industry I know well, and it's located closer to my home and my family. There's never a great time for a move like this, but I'm firmly committed to making the transition a success.

Jeff: I remain a steadfast believer in Michael, the team, and the SBI vision.

Speaker Change: I didn't take the decision lightly, but ultimately decided this new opportunity is the right move for me at this point in my career. It's an industry I know well, located closer to my home and my family.

Jeff Black: There's never a great time for a move like this, but I'm firmly committed to making the transition and success. Alex and I have been aligned in lockstep since my first day here, and our finance and IT organization is second to none. The leaders are hand selected, and the most capable team I know to continue the great work we started together.

Speaker Change: There's never a great time for a move like this, but I'm firmly committed to making the transition a success.

Jeff Black: Alex and I have been aligned in lockstep since my first day here, and our finance and IT organization is second to none. The leaders are hand-selected, and the most capable team I know to continue the great work we started to build.

Alex: Alex and I have been aligned in lockstep since my first day here and our finance and IT organization is second to none. The leaders are hand-selected and the most capable team I know to continue the great work we started together.

Jeff Black: Now turning to our results, and as a reminder, our second quarter and first half 2024 results on an as-reported basis include the combined operations of Std Biotools and Somalogic since the close of our merger on January 5th of this year, while the same periods in 2023 include the financial results of Std Biotools' legacy business only. And so, for comparative purposes, we think it's more meaningful to look at the combined operations of both businesses.

Jeff Black: Turning to our results, and as a reminder, our second quarter and first half 2024 results on an as-reported basis include the combined operations of center bio tools. And some logic since the close of our merger, January 5th of this year, while the same periods in 2023 include the financial results of Center Bio Tools legacy business only. And so, for comparative purposes, we think it's more meaningful to look at the combined operations for both businesses. So my commentary today will focus on the pro forma combined results of operations for Center Bio Tools and some logic for both 23 and 24.

Speaker Change: Now, turning to our results, and as a reminder, our second quarter and first half 2024 results

Speaker Change: On an as-reported basis include the combined operations of Std Biotools and Somalogic since the close of our merger January 5th of this year, while the same periods in 2023 include the financial results of Std Biotools' legacy business only.

Speaker Change: And so for comparative purposes, we think it's more meaningful to look at the combined operations for both businesses.

Jeff Black: So my commentary today will focus on the pro forma combined results of operations for and SomaLogic for both 23 and 24. Please refer to today's press release in the appendix to our investor deck for more information, including a reconciliation of GAAP to the non-GAAP measures I'll be discussing. Starting with revenue, in the second quarter, pro forma combined revenue was just over $37 million, down 23%, and just over $83 million, down 11% for the first half of the year.

Speaker Change: So my commentary today will focus on the proforma combined results of operations for

Speaker Change: and SomaLogic for both 23 and 24. Please refer to today's press release in the appendix to our investor deck for more information, including a reconciliation of GAP, the non- GAAP measures I'll be discussing here.

Jeff Black: Please refer to today's press release in the appendix store investor deck for more information, including a reconciliation of GAAP. The now I'm GAP measures, I'll be discussing. So starting with revenue in the second quarter, pro-forma combined revenue was just over $37 million, down 23%, and just over $83 million, down 11% for the first half of the year. This is as we continue to navigate the lingering headwinds from a challenging African-American environment and timing of orders from large farm accounts. As Michael mentioned, second-core revenue was predominantly impacted by our summer scan assay services, where we saw a number of customer projects extend past the second quarter. Approximately $9 million and the $11 million decrease in our second-core revenue was attributed to our assay services business.

Speaker Change: Starting with revenue in the second quarter, pro forma combined revenue was just over 37 million dollars.

Speaker Change: Down 23% and just over 83 million dollars down 11% for the first half of the year This is as we continue to navigate lingering headwinds from a challenging macroeconomic environment and timing of orders from large pharma accounts

Jeff Black: This is as we continue to navigate lingering headwinds from a challenging macroeconomic environment and timing of orders from large pharma accounts. As Michael mentioned, second quarter revenue was predominantly impacted by our Somascan assay services, where we saw a number of customer projects extend past the second quarter. Approximately $9 million of the $11 million decrease in our second quarter revenue was attributed to our assay services.

Speaker Change: As Michael mentioned, second quarter revenue was predominantly impacted by our SomaSCAN assay services where we saw a number of customer projects extend past the second quarter. Approximately $9 million of the $11 million decrease in our second quarter revenue was attributed to our assay services business.

Jeff Black: Product revenue was just over $22 million in the second quarter, down 10% compared to 2023, and just under $46 million in the first half, up 6% compared to 2023. This is driven by the traction we're seeing in our summer scan assay kits and related businesses, or business, with continued expansion in our authorized sites and related pull-through, as well as our Illumina Early Access Program. Instruments and conservables was $16 million in the second quarter, down 27%, and 31 million in the first half of 2024, down 20%. We continue to navigate a macro environment that is constrained customer funding cycles and is extended sales cycles.

Jeff Black: Product revenue was just over $22 million in the second quarter, down 10% compared to 2023, and just under $46 million in the first half, up 6% compared to 2023. This is driven by the traction we're seeing in our Somascan assay kits and related businesses, or business with continued expansion in our authorized sites and related pull-through, as well as our Illumina early access program. Instruments and consumables were 16 million in the second quarter, down 27%, and 31 million in the first half of 2024, down 20%.

Michael Egholm: Product revenue was just over $22 million in the second quarter, down 10% compared to 2023, and just under $46 million in the first half, up 6% compared to 2023.

Speaker Change: This is driven by the traction we're seeing in our Somascan assay kits and related businesses or business with continued expansion in our authorized sites and related pull-through as well as our Illumina early access program.

Speaker Change: Instruments and Consumables was $16 million in the second quarter, down 27% and $31 million in the first half of 2024, down 20%.

Jeff Black: We continue to navigate a macro environment that has constrained customer funding cycles and has extended sales cycles. We're seeing this impact on instrument orders with a correlated impact on consumables, but we're encouraged by the sequential uptick we saw in instrument shipments and revenue growth compared to the first quarter. Service revenue was down 14 million in the second quarter, 37% down versus 2023, and 36 million in the first half, down about 25%.

Speaker Change: We continue to navigate a macro environment that has constrained customer funding cycles and has extended sales cycles.

Jeff Black: We're seeing this impact our instrument orders with a correlated impact on consumables, but we're encouraged by the sequential uptick we saw in instrument places and revenue growth compared to the first quarter. Service revenue was down 14 million in the second quarter, 37% down versus 2023, and 36 million in the first half, down about 25%. As mentioned, the biggest driver of this decline was the summer scan related business, contributed about 8 million in revenue for the second quarter, down 50%, and just over 23 million in the first half of the year, down about 35%. But, as Michael mentioned, we are encouraged by the early two-three uptick and sample delivery from key farm accounts.

Speaker Change: We're seeing this impact our instrument orders with a correlated impact on consumables, but we're encouraged by the sequential uptick we saw in instrument places and revenue growth compared to the first quarter.

Jeff Black: And as mentioned, the biggest driver of this decline was the SomaScan related business contributed about 8 million in revenue for the second quarter, down 50%, and just over 23 million in the first half of the year, down about 35%. But, as Michael mentioned, we are encouraged by the early Q3 uptick in sample delivery from ePharma accounts.

Speaker Change: Service revenue was down $14 million in the second quarter, 37% down versus 2023, and $36 million in the first half, down about 25%. And as mentioned, the biggest driver of this decline was the SomaScan-related business.

Speaker Change: Contributed about $8 million in revenue for the second quarter, down 50%, and just over $23 million the first half of the year, down about 35%.

Speaker Change: But as Michael mentioned, we are encouraged by the early Q3 uptick in sample delivery from ePharma accounts. We expect that to continue to improve as we move through the back half of the year.

Jeff Black: We expect that to continue to improve as we move through the back half of the year. Instrument Support Services contributed over $6 million in revenue in the second quarter, a 9% decrease over 2023, and $13 million in the first half of 2024, roughly flat with 2023. And like our consumables, this revenue source is highly correlated with instrument placement, and we expect this will continue to expand as we grow the installed base over time.

Jeff Black: We expect that to continue to improve as we move through the back half of the year. Instruments support services contributed over 6 million in revenue in the second quarter, a 9% decrease over 2023, and 13 million in the first half of 2024, roughly flat with 2023. And like our consumables, this revenue source is highly correlated with instrument placement, and we expect this will continue to expand as we grow the installed base over time.

Speaker Change: Instrument Support Services contributed over $6 million in revenue in the second quarter, 9% decrease over 2023, and $13 million in the first half of 2024, roughly flat with 2023. And like our consumables, this revenue source is highly correlated with instrument placement.

Speaker Change: and we expect this will continue to expand as we grow the installed base over time.

Jeff Black: Turning quickly to our segment, our segment revenue, the proteomics business as a whole today represents 75 to 80% of our revenue. This segment, which includes our flow cytometry, imaging instruments, consumables, and instrument support services, as well as our soma scan assay services and kits business, is more prone to variability from customer purchasing cycles than our genomic segment.

Jeff Black: Turning a quickie to our segment revenue, proteomics business as a whole today represents 75 to 80% of our revenue. This segment includes our flow cytometry, imaging instruments, consumables and instrument support services, as well as our summer scan assay services and kits business, which is more prone to variability from customer purchasing cycles than our genomic segment. It was down 27% for the quarter and 12% for the first half of 2024, but we expect proteomics to be our highest growth segment over the long term. Genomics was down 6% in the second quarter and in the first half of 24. That's in line with the expectations as we continue to manage the business through its planned transition, focusing on OEM and key strategic customer accounts.

Speaker Change: Turning quickly to our segment, our segment revenue, proteomics business as a whole today represents 75 to 80 percent of our revenue. This segment includes our flow cytometry, imaging instruments, consumables and instrument support services.

Speaker Change: as well as our Somascan assay services and kits business.

Speaker Change: is more prone to variability from customer purchasing cycles than our genomic segment.

Jeff Black: It was down 27% for the quarter and 12% for the first half of 2024, but we expect proteomics to be our highest growth segment over the long term. Genomics was down 6% in the second quarter and in the first half of 2024. That's in line with expectations as we continue to manage the business through its planned transition, focusing on OEM and key strategic customer accounts. We've right-sized the OpEx over the past two years, and we're now driving the genomic segment to a positive contribution margin, with margin targeting mid-single digits, but profitable revenue growth over the long term.

Speaker Change: It was down 27% for the quarter and 12% for the first half of 2024, but we expect proteomics to be our highest growth segment over the long term.

Speaker Change: Genomics was down 6% in the second quarter and in the first half of 24. That's in line with expectations as we continue to manage the business.

Speaker Change: through its planned transition, focusing on OEM and key strategic customer accounts. We've right-sized the OpEx over the past two years, and we're now driving the genomic segment to a positive contribution margin, targeting mid-single digits, but profitable revenue growth over the long term.

Jeff Black: We've right sized the off-ax over the past two years, and we're now driving the genomic segment to a positive contribution margin targeting mid-single digits, but profitable revenue growth has been a long time.

Jeff Black: Peter. Moving to our operating performance, starting with gross margin, our non-GAAP gross margin, on a pro-forma combined basis, was 45% of the second quarter versus 53% in 2023 and 51% for the first half of 24 compared to 53% in the same period last year. In the second quarter, we did see headwinds of around 250 basis points from lower capacity utilization related to our lower, so much, so much again, assay services volumes, and over 300 basis points impact from strategic decisions to replace or upgrade instruments in the field. Excluding the impact of these items, our non-GAAP gross margin would have been 51%, and we expect to continue to see improvements as our so-and-the-scan revenue volumes recover, replacement upgrade costs decline, with some expected headwinds to continue in the second half of 2024. But, encouragingly, we're beginning to see our run rate warranty cost decrease.

Jeff Black: Moving to our operating performance, starting with gross margin, our non-GAAP gross margin on a pro forma combined basis was 45% in the second quarter versus 53% in 2023 and 51% for the first half of 24 compared to 53% in the same period last year. In the second quarter, we did see headwinds of around 250 basis points from lower capacity utilization related to our lower somascan assay volumes and over 300 basis points impact from strategic decisions to replace or upgrade instruments in the field.

Speaker Change: Moving to our operating performance starting with gross margin. Our non-gap gross margin on a pro forma combined basis was 45% in the second quarter versus 53% in 2023 and 51% for the first half of 24 compared to 53% in the same period last year.

Speaker Change: In the second quarter, we did see headwinds of around 250 basis points from lower capacity utilization related to our lower somascan assay services volumes, and over 300 basis points impact from strategic decisions to replace or upgrade instruments in the field.

Jeff Black: Excluding the impact of these items, our non-GAAP gross margin would have been 51 percent, and we expect to continue to see improvements as our SOMA scan revenue volumes recover, replacement upgrade costs decline, with some expected headwinds to continue in the second half of 2024. But, encouragingly, we're beginning to see our run rate warranty costs decrease. This is an early indicator that our corrective actions are beginning to have an impact on longer-term gross margin expansion.

Speaker Change: Excluding the impact of these items, our non-GAP gross margin would have been 51%.

Speaker Change: And we expect to continue to see improvements as our SomaScan revenue volumes recover, replacement, upgrade costs decline, with some expected headwinds to continue in the second half of 2024.

Speaker Change: But encouragingly, we're beginning to see our run rate warranty costs decrease. This is an early indicator that our corrective actions are beginning to have impact on longer-term gross margin expansion.

Jeff Black: This is an early indicator that our corrective actions are beginning to have an impact on longer-term gross margin expansion. With all that said, we still remain confident in our ability to drive non-GAAP gross margins into the mid-60s over time, especially as we move past these transitory headwinds, we grow sales, we drive costs, and efficiency improvements across our combined operations.

Jeff Black: So with all that said, we still remain confident in our ability to drive non-gap gross margins into the mid-60s over time, especially as we move past these transitory headwinds, we grow sales, and we drive costs and efficiency improvements across our combined operations. Moving to operating expenses, as Michael mentioned, we're pleased to report that we're ahead of plan on our operating expense reduction initiatives. On a combined pro forma basis, our non-GAAP OPEX of just under $48 million decreased by about $11 million, or 19%, in the second quarter, reflecting continued traction on expense reduction that began in the second half of 2023.

Speaker Change: So with all that said, we still remain confident in our ability to drive non-gap gross margins into the mid-60s over time, especially as we move past these transitory headwinds, we grow sales, we drive costs and efficiency improvements across our combined operations.

Jeff Black: Moving on to operating expenses, as Michael mentioned, we're pleased to report that we're ahead of plan on our operating expense reduction initiatives. On a combined pro-former basis, our non-gap off-ex have just under 48 million, decreased by about 11 million or 19% in the second quarter. Reflecting continued traction on expense reduction that began in the second half of 23. For the first half of 2024, our non-GAAP off-ex decreased by about 33 million or 27%, and as seen by the slight uptick in R&D spend for the second quarter, we continue to take a thoughtful strategic approach to our cost reduction actions, preserving core R&D investments as necessary.

Speaker Change: Moving to operating expenses, as Michael mentioned, we're pleased to report that we're ahead of plan on our operating expense reduction initiatives.

Michael Egholm: On a combined proforma basis, our non-GAAP OPEX of just under $48 million decreased by about $11 million, or 19% in the second quarter, reflecting continued traction on expense reduction that began in the second half of 2023.

Jeff Black: For the first half of 2024, our non-GAAP OPEX decreased by about $33 million, or 27%. And, as seen by the slight uptick in R&D spend for the second quarter, we continue to take a thoughtful strategic approach to our cost reduction actions, preserving core R&D investments as necessary. And these reductions are all before we see the full impact of the restructuring initiatives that we implemented earlier this year and before the impact of any future cost reductions we plan to operationalize in the second half.

Michael Egholm: For the first half of 2024, our non-GAAP OPEX decreased by about 33 million, or 27%. And as seen by the slight uptick in R&D spend for the second quarter, we continue to take a thoughtful, strategic approach to our cost reduction actions.

Michael Egholm: Preserving core R&D investments as necessary.

Jeff Black: And these reductions are all before we see the full impact from restructuring initiatives that we implemented earlier this year, and before the impact of any future cost reductions we plan to operationalize in the second half. Today, we've operationalized 60 million and annualized operating expense reductions versus our 2023 jumping off point of 250 million. We've now committed to accelerate remaining 20 million target by the end of the year. So, in total, we expect it over 25 million of these savings will actually show up in the P&L in '24, that the full P&L impact reflected in 2025.

Michael Egholm: And these reductions are all before we see the full impact from restructuring initiatives that we implemented earlier this year and before the impact of any future cost reductions we plan to operationalize in the second half.

Jeff Black: To date, we've operationalized $60 million in annualized operating expense reductions versus our 2023 jumping off point of $250 million. We've now committed to accelerate the remaining $20 million target by the end of the year. So in total, we expect that over $25 million of these savings will actually show up in the P&L in 2024, with the full P&L impact reflected in 2025. Based on these efforts, we're more enthusiastic than ever about the value we expect to generate under our now combined cost structure, leveraging the scale and reach of our diversified portfolio. We remain committed to achieving EBITDA breakeven for the full year 2026.

Michael Egholm: Today, we've operationalized $60 million in annualized operating expense reductions versus our 2023 jumping off point of $250 million. We've now committed to accelerate the remaining $20 million target by the end of the year.

Michael Egholm: So in total, we expect that over $25 million of these savings will actually show up in the P&L in 2024, with the full P&L impact reflected in 2025.

Jeff Black: Based on these efforts, we're more enthusiastic than ever about the value we expect to generate under our now combined cost structure, leveraging the scale and reach of our diversified portfolio. We remain committed to just the EBITDA break even for the full year of 2026. We're prepared to manage costs even more aggressively if needed to get there. At the same time, as I said, we continue to maintain folks' investments in commercial and R&D pipeline to support long-term growth.

Michael Egholm: Based on these efforts we're more enthusiastic than ever about the value we expect to generate under our now combined cost structure, leveraging the scale and reach of our diversified portfolio.

Michael Egholm: We remain committed to our adjusted EBITDA breakeven for the full year of 2026. We're prepared to manage costs even more aggressively if needed to get there.

Jeff Black: We're prepared to manage costs even more aggressively if needed to get. At the same time, as I said, we continue to maintain focus investments in commercial and R&D pipeline to support long term. And finally, uh... Cash Flow and the Balance Sheet. We ended the quarter, as Michael said, with about $396 million in cash, cash equivalents, restricted cash, and short-term investments. As we expected, our cash burn, while it sequentially improved over the first quarter, was still atypically high in the second quarter due to several merger-related and other non-operating uses of cash.

Michael Egholm: At the same time we, as I said, we continue to maintain focus investments in commercial and R&D pipeline to support long-term growth.

Jeff Black: And finally, a cash flow and the balance sheet. We ended the quarter, as Michael said, about 396 million in cash, cash equivalent, restricted cash, and short term investments. As we expected, our cash burn, while sequentially improved over the first quarter, was still typically high in the second quarter due to several merger-related and other non-operating uses of cash. In the aggregate during the second quarter, we made about 38 million in cash payments for transaction and merger related expenses and share repurchases, but excluding the impact of these items, our adjusted operating cash burn was about 28 million, representing about a 7% reduction over our pro-former combined burn a year ago, even had to reduce revenue level.

Michael Egholm: And finally,

Michael Egholm: Cash Flow and the Balance Sheet. We ended the quarter, as Michael said, with about $396 million in cash, cash equivalents, restricted cash, and short-term investments.

Michael Egholm: As we expected, our cash burn, while it sequentially improved over the first quarter, was still atypically high in the second quarter due to several merger-related and other non-operating uses of cash.

Operator: In the aggregate, during the second quarter, we made about $38 million in cash payments for transaction and merger-related expenses and share repurchases, but excluding the impact of these items, our adjusted operating cash burn was about $28 million, representing about a 7% reduction over our pro forma combined burn a year ago, even at a reduced revenue. So while not at the levels we saw in the first and second quarter, we do expect continued cash outlays for And as we think about any future M&A, we remain very thoughtful and disciplined about additional strategic M&A when such opportunities arise, including the related use of cash.

Speaker Change: In the aggregate, during the second quarter, we made about $38 million in cash payments for transaction and merger-related expenses and share repurchases.

Speaker Change: But excluding the impact of these items, our adjusted operating cash burn was about $28 million, representing about a 7% reduction over our pro forma combined burn a year ago, even at a reduced revenue level.

Jeff Black: So while not at the levels we saw in the first and second quarter, we do expect continued cash outlays for merger, integration and restructuring activities, but were well positioned to fund both these non-operating cash needs and to support the combined business with cash flow over at Geven. And as we think about any future M&A, we remain very thoughtful and disciplined about additional strategic M&A when such opportunities arise, including the related use of cash.

Speaker Change: So while not at the levels we saw in the first and second quarter, we do expect continued cash outlays for merger, integration, and restructuring activities.

Speaker Change: But we're well positioned to fund both these non-operating cash needs and to support the combined business, the cash flow break-even.

Speaker Change: As we think about any future M&A, we remain very thoughtful and disciplined about additional strategic M&A when such opportunities arise, including the related use of cash.

Jeff Black: And then one final update on capital structure initiatives. As we previously announced in February, the Board approved a new share repurchase program of up to $50 million, due the first half of 2024. We purchased approximately 15.4 million shares, about 4% of our common outstanding shares, for about $41 million in cash and an average repurchase price of $266 per share. As we shared in our first quarter call, where we still have room available under the $50 million authorization, we suspended the buyback plan on May 2nd.

Operator: And then one final update on capital structure initiatives. As we previously announced, in February, the board approved a new share repurchase program of up to $50 million. Through the first half of 2024, we purchased approximately 15.4 million shares, about 4% of our common outstanding shares, for about $41 million in cash and an average repurchase price of $2.66 per share. As we shared in our first quarter call, while we still have room available under the $50 million authorization, we suspended the buyback plan on May 2nd. And in summary, we remain responsible stewards of our assets. We are committed to creating long-term value for our shareholders. And with that, I'll turn the call back to the operator for Q&A.

Speaker Change: And then one final update on capital structure initiatives, as we previously announced in February , the board approved a new share repurchase program of up to $50 million. Through the first half of 2024, we purchased approximately 15.4 million shares, about 4% of our common outstanding shares.

Speaker Change: for about $41 million in cash and an average repurchase price of $2.66 per share. As we shared in our first quarter call, while we still have room available under the $50 million authorization, we suspended the buyback plan on May 2nd.

Jeff Black: And in summary, we remain responsible to our stewards of assets; we committed to create long-term value for shareholders.

Speaker Change: And in summary, we remain responsible stewards of our assets, we committed to create long-term value for our shareholders.

Operator: And with that, I'll turn the call back to the operator for Q&A.

Speaker Change: And with that I'll turn the call back to the operator for Q&A.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Matt Stanton with Jeffreys. Please go ahead.

Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad.

Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Operator: At this time, we will pause momentarily to assemble our roster.

Matthew Stanton: The first question comes from Matt Stanson with Jeffries. Please go ahead.

Michael Egholm: Thanks. Maybe the first one for Jeff. On the guidance cut, so lower by 39 at the midpoint, 2Q was about 10 or so below expectations. Can you just talk about the remainder of the bridge on the cut in terms of products for service, proteomics versus genomics? What are you assuming for each of those for the year now? And then talk about visibility or clarity around the step-up into the second half. I think even on the new guide, it implies kind of a 10 percent step-up in the back half for revs versus the first half.

Speaker Change: The first question comes from Matt Stanton with Jeffreys. Please go ahead.

Matthew Stanton: Thanks, maybe first one for Jeff on the guidance cuts, so lower by 39 at the midpoint. 2.2 was about 10 or so below expectations.

Matthew Jay Stanton: Thanks. Maybe first one for Jeff on the guidance cut. So lower by 39 at the midpoint, 2Q was about 10 or so below expectations. Can you talk about

Michael Egholm: If you talk about the remainder of the bridge on the cotton terms of products for service, proteomics, first genomics, what are you assuming for each of those for the year now? And then talk about visibility or clarity around the step up in the second half. I think even on the new guidance applies kind of a 10% step up in the back half for Rav's first half.

Speaker Change: The remainder of the bridge on the cut in terms of products-first service, proteomics-first genomics.

Speaker Change: What are you assuming for each of those for the year now?

Speaker Change: Talk about visibility or clarity around the step-up into...

Speaker Change: Second half, I think, even on the new guide, it implies kind of a...

Michael Egholm: Sounds like maybe early signs on soma skin and 3Q are encouraging, but anything else to help bridge the back half relative to the first half here? Hey, Matt. I'll let Jeff answer in a little bit more detail, but let me just sort of grab the horn first here.

Speaker Change: 10% step up in the back half for Ravsburst.

Jeff Black: Sounds like maybe early signs on suma skin and to be curing purging, but anything else to help bridge the back half. for the first half here.

Speaker Change: [inaudible]

Matthew Stanton: Thanks.

Michael Egholm: Hey Matt, I'll let Jeff, like a little bit more detail. Let me just sort of grab the horn first here.

Speaker Change: Hey Matt, I'll let Jeff answer in a little bit more detail. Let me just sort of grab the horn first here. First of all, with Jeff and I in the room, we have Alex Kim who will step in.

Michael Egholm: First of all, with Jeff and I in the room, we have Alex Kim, who will step in as... interim CFO here in a month when Jeff leaves us. First off, very excited, and remain very excited about the SomaScan business. When we took it over, we knew it was heavily concentrated. So what we're seeing here is really a year-over-year tough comp on big customers and then a miss in forecasting, not applying our SPS principles here in the SOMASCAN business.

Michael Egholm: First of all, with Jeff and I in the room, we have Alex Kim, who will step in as interim CFO here in the end of the month, when Jeff leaves us. First off, very excited, remain very excited about the so much getting business when we took it over. We knew it, and it was heavily concentrated. So what we have seen here is really a year or a year tough comp on big customers and then a miss in forecasting, not applying our SPS principles here in the so much get business. And we now have have addressed that, so we have a firm grip on the business. We're definitely excited on where the business is going, with the papers coming out showing the superiority of the platform, the growth we're seeing in the border customer base, and with time the big customers will level out and be a healthy component of the business, but not dominating like this.

Speaker Change: Interim CFO here in a month when Jeff leaves us.

Jeff: First off,

Jeff: Very excited, remain very excited about the SoMuchGantt business. When we took it over, we knew it was heavily concentrated. So what we have seen here is really a year-over-year

Jeff: tough comp on big customers and then a miss.

Jeff: in forecasting not applying our SPS principles here in the SOMASCAP business.

Michael Egholm: And we now have addressed that, so we have a firm grip on the business. We're definitely excited about where the business is going with the papers coming out showing the superiority of the platform, the growth we're seeing in the broader customer base, and with time, the big customers will level out and be a healthy component of the business but not dominate like that, just any color you want to add on just

Jeff: And we now have addressed that, so we have a firm grip on the business. We're definitely excited on where the business is going with the papers coming out showing the superiority of the platform.

Jeff: The growth we're seeing in the broader customer base and with time the big customers will level out and be a healthy component of the business but not dominating like this.

Jeff Black: Jeff, any call you want to add on just a bridge? Yeah, Matt, we don't, we've not broken out the components either by segment or by product line in terms of what the back half looks like. But I think you hit on it: we are seeing encouraging signs of an uptick in some of the large form accounts. We're encouraged by the existing pipeline on the instrument side of the business, and so what you'll see is really just a mix of components that will drive that 10% sequential second half versus first half. And maybe just let me pipe in here again, I actually I think in earlier investor talks, I pointed out that we're so overly dependent on a few big farmer companies, so a project anyone corner can make us look like Harris or whatever the opposite is, and indeed we find ourselves here.

Jeff Black: Yeah, Matt, we don't haven't broken out the components either by segment or by product line in terms of what the back half looks like, but I think you hit on it, is that we are seeing encouraging signs of an uptick in some of the large pharma accounts. You know, we're encouraged by the existing pipeline on the instrument side of the business, and so what you'll see is really just a mix of components that'll drive that 10% sequential second half versus first half.

Speaker Change: Do you have any color you want to add to it on just the bridge?

Speaker Change: Yeah, Matt, we don't, we've not broken out the components either by segment or by product line in terms of what the back half looks like, but I think you hit on it is we are seeing encouraging signs of an uptick in some of the large pharma accounts.

Speaker Change: We're encouraged by the existing pipeline on the instrument side of the business.

Speaker Change: And so what you'll see is really just a mix of components that'll drive that 10% sequential second half versus first half. And maybe just let me pipe in here again.

Jeff Black: Yeah, and maybe just let me pipe in here again. I actually... In earlier investor talks, I pointed out that we're so overly dependent on a few big pharma companies. So a project, any one quarter can make us look like heroes, or whatever the opposite is. And indeed, we find ourselves here. So it was a known, not known risk, that the myth, on my part, was not soon enough to implement this rigorous SPS forecasting style which we have now, very good visibility to the second half, hence the updated guidance.

Speaker Change: I actually, I...

Speaker Change: In earlier investor talks I pointed out that

Speaker Change: We're so overly dependent on a few big pharma companies, so a project, any one quarter can make us look like heroes, or whatever the opposite is, and indeed we find ourselves here.

Michael Egholm: So it was a known not known risk that the miss on on on my part was not so not enough to implement this rigorous SPS forecasting style which we which we have now so we're very good visibility to the to the to the second half hence the updated guidance. Okay, and maybe sticking with that lumpiness on the summer side, the use picked up kind of high single digit millions impacted in to you from that. Just to be clear, that's kind of timing related revenue and it didn't really go elsewhere. Do you suspect to kind of recoup that over the coming quarters as those handful of projects start to resume or spend in a more earnest way.

Speaker Change: So it was a known risk that the miss on my part was not sooner enough to implement this rigorous SPS forecasting style which we have now.

Speaker Change: very good visibility to the second half, hence the updated guidance.

Michael Egholm: Okay, and maybe sticking with that lumpiness on this, I think you spiked that kind of high single-digit million impact and took you from that. Just to be clear, that's kind of timing-related revenue, and it didn't really go elsewhere. Do you still expect to kind of recoup that over the coming quarters as those handful of projects start to resume or spend in a more earnest way?

Speaker Change: Okay, and maybe sticking with that lumpiness on the SOMA side, I think you spiked that kind of high single digit.

Speaker Change: millions impacted and took you from that. Just to be clear, that's kind of timing-related revenue and it didn't really go well. So do you still expect to kind of recoup that over the coming quarters as those handful of projects start to resume or spend in a more earnest way?

Michael Egholm: Yes, so maybe back to the big case, I'll make sure to answer the question, yeah, so mostly timing here on the forecasting risk. We are overly reliant on a few big customers. So we have year-over-year headwinds here.

Michael Egholm: Yeah, so maybe sort of back to the big case, I'll make sure to answer the question. Yeah, so mostly timing here on the forecasting miss, we are overly reliant on a few big customers. So we have year-to-year headwinds here. It's the nature of the business. We're working very deliberately at diversifying the mix through our authorized sites, where we saw a healthy growth.

Speaker Change: Yes, so maybe sort of back to the big case, I'll make sure to answer the question, yeah, so mostly timing here on the forecasting this.

Speaker Change: We are overly reliant on on a few big customers. So we have year-over-year headwinds here. It's the nature of the business.

Michael Egholm: It's the nature of the business. We're working very deliberately at diversifying the mix through our authorized sites, where we have seen healthy growth. We have Illumina coming online here in the first half of 25, going well, we're excited about them taking over. And then we also, as I said, here, we're launching a minimum viable product version of individual solar mayors all the time with a drive to diversify the revenue. But for this quarter here, it's really timing, but tough year over year comes also on the big service contracts.

Speaker Change: We're working very deliberately at diversifying the mix.

Michael Egholm: We have Illumina coming online here the first half of 25. It's going well; we're excited about them taking over. And then we also, as I said here, we're launching a minimum viable product version of individual souvenirs all the time with the drive to diversify the revenue. But for this corner here, it's really timing, but 12 year or year costs also on the big service contracts.

Speaker Change: through our authorized sites where we saw a healthy growth. We have Illumina coming online here the first half of 2025.

Speaker Change: We're excited about them taking over and then we also, as I said here, we are launching a minimum viable product version of individual soma mares all the time.

Speaker Change: we'll drive to diversify the revenue. But for this quarter here, it's really timing, but tough year-year come also under big service contracts.

Michael Egholm: Okay, and then maybe one more, if I can. You're taking a step back; you reiterated the commitment to adjust to break even in '26, pulled forward the rest of the cost interviews by a year. How should we be thinking about the top line from here, and any additional color you can provide in terms of the revenue base or growth between now and in 26? I think it's probably unlikely that 300 million from prior, but just give me reiterated the adjusted break even any more color you can talk about on the revenue or growth side as we think about that in 26.

Michael Egholm: Okay, and then maybe one more, if I can, you know, taking a step back, you reiterated the commitment to adjusted breakeven in 26, pulled forward the rest of the cost synergies by a year. How should we be thinking about the top line from here and any additional color you can provide in terms of the revenue base or growth between now and 26? I think it's probably unlikely that 300 million from prior, but just give me an reiterate the adjusted breakeven, any more color you can talk about on the revenue or growth side, as we think about

Speaker Change: Okay and then show you one more if I can you know taking a step back you reiterated the commitment to adjusted break-even in 26 pulled forward the rest of the cost synergies

Speaker Change: by a year. How should we be thinking about the top line from here and any additional color you can provide in terms of...

Speaker Change: the revenue base or growth between now and 26, I think.

Speaker Change: It's probably unlikely the $300 million from prior, but just giving you a reiterate, the adjusted break even, any more color you can talk about on the revenue or growth side as we think about that.

Michael Egholm: Thanks. Yeah, thank you. Obviously, the 300 seems a bigger stretch given our call back here. We do, and let me be very clear about this: we do see very healthy growth across our own export volume, which is about 80% of the revenue, and even in our genomics portfolio as our biggest OEM vendor have burned down their inventory. And now, part of Thermal, we also even see an uptake here in the back half and certainly by next year. The way we think of it is that we will be adjusted EBITDA positive, no matter the top line.

Michael Egholm: Thank you. Obviously, the 300 seems a bigger stretch given our call back here. We do, and let me be very clear about this, we do see very healthy growth across our Proterra OMICS portfolio, which is about 80% of revenue. And even in our genomics portfolio, as our biggest OEM vendor burns down their inventory and is now part of Thermo, we also see an uptick here in the back half and certainly by next year.

Speaker Change: in 26. Thanks.

Speaker Change: Thank you. Obviously, the 300 seems a bigger stretch given our call back here. We do, and let me be very clear about this, we do see very healthy growth across our portfolio, OMICS portfolio, which is about 80%.

Speaker Change: of the revenue. And even in our genomics portfolio, as our biggest OEM vendor has burned down their inventory and now part of Thermo, we also even see an uptick here in the back half and certainly by next year.

Michael Egholm: The way we think of it is that we will be adjusted EBITDA positive no matter the top line. So, irrespective of the top line, we will get to EBITDA break even in 26. And so that's how we think of it. If we hit the higher end of our revenue outlook, no additional actions are acquired, although we'll probably go after it if we can. If we hit the low end, I will have

Speaker Change: The way we think of it is that we will be adjusted EBITDA positive no matter the top line. So irrespective of the top line, we will get to EBITDA break-even in 2026. And so that's how we think about it.

Michael Egholm: So, in respect of the top line, we will get to EBITDA break even in 26. And so, that's how we think about it. And if we hit the high end of our revenue outlook, no additional actions are required; although we'll probably go after it if we can. And if we hit the low end, I will have to take out more costs than which I remain committed to. Thank you.

Speaker Change: If we hit the higher end of our revenue outlook, no additional actions are acquired, although we'll probably go after it if we can.

Speaker Change: If we hit the low end, I will have to take out more costs, which I remain committed to.

Speaker Change: Thank you.

Daniel Brennan: The next question comes from Dan Brennan with TD Cowan. Please go ahead.

Operator: The next question comes from Dan Brennan with TD Cowen. Please go ahead.

Speaker Change: The next question comes from Dan Brennan with TD Cowen. Please go ahead.

Daniel Brennan: Hey guys, thanks for the questions.

Daniel Gregory Brennan: Hey guys, thanks for the questions. Maybe Jeff, obviously, sorry to leave. Sorry to see you leave. Excuse me.

Jeff Black: Maybe Jeff, obviously, sorry to see you leave. Excuse me, good luck with the next endeavor. Anything else you can share? Just about the decision, leave now. I mean, you've been at the helm for 15 months, you know, in particular, after kind of a mixed quarter to send it else, you can kind of share about that, you know, the decision to part. Yeah, Dan, it's absolutely a personal decision by returning to an industry I know well, you know, with working with people that I've worked with in the past, much closer to family and home. There's never a great time for these types of decisions.

Daniel Gregory Brennan: Hey guys, thanks for the questions. Maybe Jeff, obviously sorry to see you leave, excuse me, good luck.

Jeff Black: Good luck with the next endeavor. Anything else you can share just about the decision to leave now? I mean, you've been at the helm for 15 months, you know, particularly after kind of a mixed quarter. Just anything else you can kind of share about that, you know? the decision to depart.

Daniel Gregory Brennan: With the next endeavor anything else you can share just about the decision to leave now I mean, you've been at the helm for 15 months, you know, particularly after kind of a mixed quarter Just anything else you can kind of share about that, you know, the you know, the decision to depart

Jeff Black: Yeah, Dan, it's absolutely a personal decision by returning to an industry that I know well and with working with people that I've worked with in the past, much closer to family and home. There's never a great time for these types of decisions.

Daniel Gregory Brennan: Yeah, Dan, it's absolutely a personal decision, right, returning to, um,

Daniel Gregory Brennan: in the industry I know well, working with people that I've...

Daniel Gregory Brennan: Worked with in the past

Daniel Gregory Brennan: much closer to family and home. There's never a great time for these.

Jeff Black: It's just the right decision for me, you know, at this point in my career. You know, I have no disagreements with the management team. You know, I remain a loyal shareholder who believes in the vision. I think it's, you know, I'm proud of the fact that I was able to come in and really rebuild a finance organization that will now flourish under Alex. We're greatly aligned in our strategic and operational views, and we have an incredibly strong team under me that's going to carry it on. So I wouldn't read into it at all, other than it's just a very personal decision at an inopportune time for the company.

Jeff Black: It's just the right decision for me at this point in my career. No disagreements with the management team. I remain a loyal shareholder who believes in the vision. I think it's, you know, I and I'm proud of the fact that I was able to come in and really rebuild a finance organization that will now flourish under Alex. We're greatly aligned in our strategic and operational views, and we have an incredibly strong team under me that's going to carry it on. So wouldn't read into it at all, other than just a very personal decision at an opportune time for the company.

Speaker Change: Jeff Black, Michael Egholm, Peter DeNardo, David Holmes, Jeffrey Black, Michael Egholm,

Speaker Change: I'm proud of the fact that I was able to come in and really rebuild a finance organization.

Speaker Change: that will now flourish.

Alex: under Alex were greatly aligned in our strategic and operational.

Speaker Change: We have an incredibly strong team under me that's going to carry it on. So I wouldn't read into it at all, other than it's just a very personal decision at an inopportune time for the company.

Daniel Brennan: No, thank you for that.

Michael Egholm: And then maybe back to the question, I know that was asked just earlier, Michael, you kind of addressed it a little bit with, you know, the rigorous kind of forecasting process that's now in place. But, you know, stocks are going to be down a fair amount, you know, I assume just on the miss and Jeff's departure. So you have the opportunity to really reset the guide and get it to a point where people, you know, investors really feel good that it's... Unknown Attendee, Michael Egholm, Adam Taich, Elizabeth Garcia, Scott Greenstone, Std Biotools

Michael Egholm: And then maybe back to the question, I know that was asked just earlier. Michael, you kind of addressed it a little bit with the rigorous kind of forecasting processes now in place, but you know, it's not going to be down a fair amount. I assume just on the miss and Jeff departure.

Speaker Change: Thank you for that.

Speaker Change: And then maybe back to the question I know that was asked just earlier. Michael, you kind of addressed it a little bit with, you know, the rigorous kind of forecasting.

Speaker Change: [inaudible]

Michael Egholm: So you have the opportunity to really reset the guide and get it to a point that people, you know, investors really feel good that it's pretty much be risk. Can you speak a little bit more? To like what the any any components and then you guys don't got back components and videos you can share about how you guys arrived at the new number and kind of what you've kind of assumed terms of the spending environment or anything like that that will give people confidence. No, no, thanks. It definitely instituted a tight process now on the summer scant side, like following the projects from signing of the contract to sample receipt, which is remarkably difficult, not trivial that piece, but rigorous daily visual management in place.

Speaker Change: you know, pretty much de-risked. Can you speak a little bit more to like what the, any, any components? I know you guys don't go out by components. Anything else you can share about how you guys arrived at the new number and kind of what you've kind of assumed in terms of the spending environment or anything like that that'll give people confidence?

Michael Egholm: No, no, thanks. That definitely instituted a tight process now on the SOMA scan site, like following The projects from signing up the contract to sample receipt, which is, remarkably difficult, non trivial, that piece, but rigorous daily visual management in place. So the updated guidance is what we have visibility on today. To answer your questions, we, this is done with the backdrop of a contained Pharma Spending Environment Board on projects and on instruments, should the market recover here in the second half? I'll be the happiest man man on earth here.

Speaker Change: The projects from signing of the contract to sample receipt, which is...

Speaker Change: remarkably difficult, non-trivial that piece, but rigorous daily visual management in place.

Michael Egholm: So the updated guidance is what we had visibility today to answer your questions. We, this is done in with the backdrop of a contained farmer spending environment, both on projects and on on on instruments. And should the market recover the second half? I would be the happiest man man on earth here, but we're not; we're not assuming that for this piece on the instrument side here. We keep we keep building a funnel to sort of start before my my team should be equally busy whether people are buying instruments or not. If we're not selling instruments, we're building the funnel.

Speaker Change: So the updated guidance is what we have visibility today.

Speaker Change: To answer your questions, this is done with the backdrop of a contained...

Speaker Change: Farmer Spending Environment Board on projects and on instruments.

Speaker Change: Should the market recover in the second half, I'll be the happiest man on earth here, but we're not we're not assuming that for

Michael Egholm: But we're not assuming that for this piece. On the instrument side here, we keep building funnels. This was said before.

Speaker Change: for this piece on the instrument side here. We keep building a funnel. This was sort of before my team should be equally busy whether people are buying instruments or not. If we're not selling instruments, we're building the funnel. And then maybe just.

Michael Egholm: My team should be equally busy whether people are buying instruments or not. If we're not selling instruments, we're building the funnel. And then maybe just the other growth vectors we're really leaning into now, it doesn't have a big impact here in the second half, but next year, we actually expect it to be another growth driver. It's this omics as a service where we lean into the fact that Sumo Logic built a very nicely, fully integrated service organization.

Michael Egholm: And then maybe just the other road vectors we're really leaning into now. It's not a big impact here in the second half, but next year we actually expected to be another grow driver. Is this all makes us a service where we lean into the fact that some logic build a very, we're nicely fully into an integrated service organization. We're adding side to our other technologies we're thinking of adding to what now will be sort of come and leading a lot of profiling business. The way we're going to go and lead with service sales instead of instrument sales.

Speaker Change: The other growth factors we are really leaning into now.

Speaker Change: It's not a big impact here in the second half, but next year we actually expect it to be another growth driver. It's this omics as a service where we lean into the fact that Sumo Logic built a very nicely, fully end-to-end integrated service organization.

Michael Egholm: We're adding CyTOF, other technologies we're thinking of adding to what is now sort of a leading, not profiling business, where we're going to go and lead with service sales instead of instrument sales. And that's what we're working on now, both selling instruments and services, but really different customers, different solutions. And we expect that that will lead to higher growth in the future. A huge impact on the second half, but it will be a tailwind for sure, though on second half revenue, but not quite as strong enough.

Speaker Change: We're adding CyTOF, other technologies we're thinking of adding to what now will sort of become a leading, not profiling business.

Speaker Change: We are going to go and lead with service sales.

Michael Egholm: And that's what we're working through in our boat selling instruments and service, but really different customers, different solutions. And we expect that that will lead to higher growth in the future.

Speaker Change: instead of instrument sales. And that's what we're working through now, both selling instruments and service, but really different customers, different solutions. And we expect that that will lead to higher growth in the future.

Michael Egholm: Jeff, a huge impact, the second half, but we'll be a tailman for sure, though, on the second half revenue, but not strong enough.

Speaker Change: A huge impact the second half, but will be a tailwind for sure though on

Speaker Change: on second half revenue, but not not strong enough.

Michael Egholm: I mean, one final, just like interested in the two goals, obviously you were in a tough, cat-backed environment, anything you could speak to about the relative trends in the quarter and how they came in and, you know, kind of how you thinking about the back half of those. Yeah, so the consumable spend is a considerable revenue if you include the authorized sites in the way I look at it. We actually have a flat year or year; we should have been increasing. So, but any one contract will can post it so I wouldn't over index on what is a flat number.

Michael Egholm: Got it. I mean, one final question, just like instruments and consumables, obviously you're in a tough... CapEx environment. Anything you could speak to about the relative trends in the quarter and how they came in and, you know, kind of how you're thinking about the back half of the year?

Speaker Change: Got it. And maybe one final, just like instruments and consumables, obviously we're in a tough CapEx environment, anything you could speak to about the relative trends in the quarter and how they came in and, you know, kind of how you're thinking about the back half of those?

Michael Egholm: Consumable spend is our consumer revenue; if you include the authorized sites in it, the way I look at it, we actually have a flat year over year, we should have been increasing it. So, but any one contract can push it, so I wouldn't over index on what is a flat number. It's also still very early in the XTi launch, the Hyperion XTi imaging platform, which will drive a lot of future consumable revenue because of its much higher throughput and then all the fixing we had to do on our site of XT flow business, but we really believe we're on the other side of a number of issues we had to work through.

Speaker Change: Yes, so,

Speaker Change: Consumable spend is, or consumable revenue, if you include the authorized sites in it, the way I look at it, we actually have a flat year-over-year, we should have been increasing.

Speaker Change: So, but any one contract can push it, so I wouldn't over-index on what is a flat number.

Michael Egholm: It's also still very early in the XTI launch, the Hyperion XTI, the imaging platform, which will drive a lot of future consumable revenue because of a smart, higher throughput. And then all the fixing we had to do on our site of XTI, flow business, but really believe we're on the other side of a number of issues we had to work through. And eventually, our customers will step up the consumable pull-through. But, you know, a million dollar farmer contract, even on consumables here, it can move from one quarter to another. And you may recall we actually had a very good due to last year.

Speaker Change: It's also still very early in the XTI launch, the Hyperion XTI, the imaging platform which will drive

Speaker Change: a lot of future consumable revenue because of its much higher throughput and then...

Speaker Change: All the fixing we had to do on our site of XT float business, but we really believe we're on the other side of a number of issues we had to work through, and eventually our customers will step up.

Michael Egholm: And eventually, our customers will step up the consumable pull through, but you know, a million-dollar pharma contract, even on consumables here, can move it from one quarter to another. And you may recall, we actually had a very good Q2 last year. So it's also a tough year, over a year from now. So I would not over-index on it.

Speaker Change: You may recall we actually had a very good Q2 last year, so it's also a tough year or year to come, so I would not over-index on it.

Michael Egholm: So it's also a tough year or year, so we're not over index on it.

Operator: Okay. All right, guys. Thank you very much. The next question comes from Paul Knight with KeyBank. Please go ahead. Hi, Michael, what was genomics?

Michael Egholm: Okay, all right, guys, thank you very much.

Speaker Change: Okay. All right, guys. Thank you very much.

Paul Knight: The next question comes from Paul Knight with KeyBank. Please go ahead.

Operator: The next question comes from Paul Knight with KeyBank. Please go ahead. Hi Michael, what was the genomics business in terms of revenue?

Speaker Change: The next question comes from Paul Knight with KeyBank. Please go ahead.

Michael Egholm: Michael, what was a genomics in the quarter in terms of revenue? And I think you're calling out a pickup sequentially in the second half. But is that a growing business in future years, first question?

Paul Richard Knight: Hi Michael, what was genomics in the corner in terms of revenue, and I think you're calling out a pickup sequentially in the second half.

Speaker Change: but

Paul Richard Knight: Is that a growing business in future years? First question.

Michael Egholm: You know, so we last year, when we talked about what was fluidized, we did surgery on the car structure, changed the strategy, read it to eat. And so it's down, what was it, 6% in the first half of the year. And that's, and it's sort of what we call a managed decline as we're bleeding off. Well, people that are moving to NGS, like long-term trend, I've been talking about that, I think the last three or four earnings calls. We're going to be through that 12, 18 months. So this is sort of the headwind. The tailwind here is that our OEM now partners; we have OEM connection diagnostic as partners.

Michael Egholm: Last year, when we took over what was Fluidigm, we did surgery on the cost structure, and changed the strategy radically. And so it's down almost 6% in the first half of the year. And that's because it's sort of what we call a managed decline as we're bleeding off. Unknown Attendee Well, people that are moving to NGS, like long-term trends, I've been talking about that, I think, in the last three or four earnings calls. We're gonna be through that. Std Biotools, Dr. Peter Taich, Dr. Wenbin Jiang, Dr. Scott Greenstone, Dr. Matthew Stanton, are experiencing healthy growth.

Speaker Change: Unknown Attendee You know, so

Speaker Change: We last year, when we took over Fluidigm, we did surgery on the car structure, changed the strategy radically.

Speaker Change: And so it's down almost 6% in the first half of the year. And it's sort of what we call a managed decline as we're bleeding off.

Speaker Change: people that are moving to NGS like long-term trend I've been talking about that I think the last three or four earnings calls

Speaker Change: We're going to be through that.

Speaker Change: 12, 18, so this is sort of the headwind, the tailwind here.

Speaker Change: is that our OEM now partners, we have O-Link and NextGen Diagnostic as partners and a working additional relationship are picking up. Plus we found a couple of nice niches that are actually experiencing healthy growth so

Michael Egholm: And a working additional relationship are picking up. So, as we found a couple of nice niches that I actually experienced in healthy growth. So the second half next year should be flat, and then we should see a nice tick. And it is, as Jeff pointed out, the business is creative on a contribution base. and we've preserved with that a very strong technology basis like that. So we still have that core microfluidic technology capability, which we believe is the useful choice in the future. And we have a state-of-the-art manufacturing plant in Singapore that we actually expect to leverage across the business.

Michael Egholm: So second half next year should be flat and then we should see a nice take. And, and it is, as Jeff pointed out, the business is creative on a contribution, contribution basis, and we preserve. With that, so very strong technology basis, like that, so we still have that core microfluidics technology capability, which we believe will be useful for us in the future, and we have a state-of-the-art manufacturing plant in Singapore that we actually expect to leverage across the, So so we're absolutely going to keep the microfluidics business and we're going to grow it and it's going to be a nice driver profit here in the coming, And on the logic decline year over year is that business that can be recouped or no?

Speaker Change: second half next year should be flat and then we should see a nice tick and and it is as Jeff pointed out the business is a creative on a contribution contribution basis

Jeff Black: and we preserved...

Speaker Change: With that, a very strong technology basis, so we still have that core microfluidics technology capability, which we believe will be useful for us in the future, and we have a state-of-the-art manufacturing plant in Singapore that we actually expect to leverage across the business.

Michael Egholm: So we're absolutely going to keep the microfluidic business, and we're going to grow it, and it's going to be a nice drive-up profit here in the coming years.

Speaker Change: So, we're absolutely going to keep the microfluidics business and we're going to grow it and it's going to be a nice driver of profit here in the coming years.

Jeff Black: And on the formal logic decline year over year, is that business that can be recouped or no? Yeah, so Paul, you have to remember a handful of customers in any one year makes up the majority of the revenue on the summer scant service side. And so, any one year it will fluctuate.

Speaker Change: And on the thermologic decline year over year, is that business that can be recouped or no?

Michael Egholm: Yeah, so it's like, Paul, you have to remember a handful of customers. Anyone here makes up the majority of the revenue on the SomaScan service side. And so any one year, it will fluctuate. As I said, we're leaning in to that service, expanding the service, building it, and want to expand it to more than a few handfuls. And then we are moving to a distributed solution for now with our authorized size, and then with Illumina, and then getting the auto revenue driver on. And the particular projects delayed here, yeah, they will come later, but all projects are shifted out, hence the takedown of the guide. Okay, thanks. I haven't lost any one project, just to be clear.

Speaker Change: Yeah, so it's like, Paul, you have to remember a handful of customers.

Speaker Change: Anyone here makes up the majority of the revenue on the SomaScan service side?

Michael Egholm: As I said, we lean again to that service, expanding the service, building it, and want to expand it to more than a few handful. And then we are moving to a distributed solution for now with an authorized size and then we're eluminate and then getting the auto revenue driver on. And the particular projects that will come later, but all projects are shifted out; hence the take-down of the guide.

Paul Richard Knight: And so any one year it will fluctuate. As I said, we're leaning in.

Paul Richard Knight: to that service, expanding the service, building it, and want to expand it to more than a few handful. And then we are moving...

Speaker Change: to distribute a solution for now with an authorized size and then with Illumina and then getting the auto revenue driver on. And the particular projects delayed here, yeah, they will come later. But all projects are shifted out, hence the takedown of the guide.

Michael Egholm: Okay, thanks. I haven't lost any one project.

Speaker Change: Okay, thanks. I haven't lost any one project, just to be clear.

Michael Egholm: This concludes our question and answer session. I would like to turn the conference back over to Michael Eggholm for any closing remarks. Yeah, thanks, Drew. And thank you for the question, and thank you for listening. And we thank you all for your continued support. We look forward to seeing many of you at the Cannacode Genuity 44th. And you'll go up conference on August 13th in Boston and then at the UBS Genome Medicine Summit on August 14th in Laguna Beach. So looking forward to see you all, and back to you, Drew.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Michael Egholm for a closing remark.

Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Michael Egholm for any closing remarks.

Michael Egholm: Yeah. Thanks, Drew. And thank you for the question. Thank you for listening. And we thank you all for your continued support. We look forward to seeing many of you at the CannaCode Genuity 44th Annual Growth Conference on August 13 in Boston and then at the UPS Genome Medicine Summit on August 14 in Laguna Beach. So we're looking forward to seeing you all. And back to you, Drew.

Michael Egholm: Thanks Drew and thank you for the question and thank you for listening and we thank you all.

Speaker Change: your continued support. We look forward to seeing many of you at the CannaCode Genuity 44th Annual Group Conference on August 13th in Boston, and then at the UBS Genome Medicine Summit on August 14th in Laguna Beach. So looking forward to see you all, and back to you, Drew.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.