Q4 2024 Standard BioTools Inc Earnings Call

Speaker Change: Good day everyone and welcome to Standard Biotools fourth quarter and full year 2024 financial results conference call.

Speaker Change: As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, John Graziano from InvestRelations. Please go ahead.

John Graziano: Thank you, Operator, and good afternoon, everyone. Welcome to Standard Biotools' fourth quarter and full year 2024 earnings conference call. Leading the call today is Michael Egholm, President and Chief Executive Officer, and Alex Kim, Chief Financial Officer.

John Graziano: At the close of market today, Standard Biotools released its financial results for the quarter ended in year December 31st, 2024. During the call, we will review our results and provide an update on our financial and operational performance, 2025 outlook, market trends, and strategic initiatives.

John Graziano: During the call, we'll make forward-looking statements about events and circumstances that have not yet occurred, including plans and projections for our business, our outlook for 2025, and future financial results.

John Graziano: Market Trends and Opportunities, and our expectations related to the combined operations with Somalogic, including potential synergies and our business outlook for the combined company.

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

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

John Graziano: and we disclaim any obligation to update these statements except as they may be required by law.

John Graziano: 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.

John Graziano: We use these non-gap measures in our own evaluation of continuing operating performance. We encourage you to carefully consider our results on a gap and non-gap basis.

John Graziano: The reconciliation between non-GAAP measures and their GAAP equivalents are provided in the tables accompanying today's press release and as an appendix to today's presentation slides. Please note that management will be referring to a slide presentation including updated supplemental financial information within the webcast today.

Unidentified Moderator: Following prepared remarks, we will host a Q&A session. Today's slide presentation, along with a replay of the webcast, will be available on the investors section of our website. I would now like to turn the call over to Michael Egholm, President and CEO of Standard Biotools.

Michael Egholm: Thank you, John. Good afternoon, everyone, and welcome to Standard Biotools' fourth quarter and full year 2024 earnings call. Joining me today is Alex Kim, our Chief Financial Officer.

Michael Egholm: Before we dive in, I want to thank our customers, employees, and investors for their continued support.

Michael Egholm: It's what drives us forward and fuels our mission to set the new standard in life science tools industry to empower researchers and accelerate discovery while rewarding all of our stakeholders.

Michael Egholm: 2024 was all about hard work, execution, and transformation. We closed the year at the top end of our revised range, demonstrating our team's commitment to deliver in a dynamic environment.

Michael Egholm: We successfully merged two businesses under one roof, powered by Standard Biotools Business System, or just SBS. We exceeded cost synergy targets, improved our processes, and delivered better products and higher quality to our customers.

Thank you. Thank you. Thank you.

Michael Egholm: Phase one was just a start and we're far from done. Now comes phase two, driving the commercial flywheel, evolving our product mix and expanding into key markets organically and inorganically, all while constantly applying SBS to further enhance efficiency as we drive towards profitability.

Michael Egholm: With that, let's discuss our result of which I will be speaking to performer numbers.

Michael Egholm: In the fourth quarter we delivered $46.7 million in revenue and $175.1 million for the full year representing a 9% year-over-year decline for each period.

Michael Egholm: Performance for the quarter and full year was impacted by continued softness in instrument and services as capex constraints and cautious spending in biopharma and academia offset strong growth in consumables.

Thank you.

Michael Egholm: Stiff headwinds persist, but we are actively working to drive top-line performance through commercial execution, market diversification, and expanded customer engagement. Although the year-over-year revenue declined, our fourth quarter performance landed in line with mid-year expectations, reflecting improved forecasting and disciplined execution.

Michael Egholm: Looking ahead, we anticipate 2025 organic revenue between $165 million and $175 million, which is approximately a 3% decline at the midpoint of the range.

optimism for a gradual market recovery.

Michael Egholm: It remains a tough policy backdrop with several known unknowns that we're not willing to call at this moment.

Michael Egholm: Still, we are well-positioned for a return to growth, and our outlook takes a measured approach that will allow us to maintain levels against the top-line forecast as we move through seasonality and gain momentum to boost performance towards the second half.

Michael Egholm: Importantly, we are still on a path to adjusted EBITDA breakeven in 2026.

Michael Egholm: While improved market conditions and return to growth will be helpful, we have a plan and option to improve our profitability, and we will be disciplined stewards of our cash should the current environment persist.

Michael Egholm: More importantly, we have the balance sheet strength, nearly 300 million in cash, to execute our strategic plan, bring us to cash flow positive, and fund future bullrun acquisitions.

Michael Egholm: We recognize that macrochallenges are top of mind and creating a lot of anxiety and uncertainty in the market. While it's one of the most unique times in my decades of being in life sciences, I'll provide my perspective on three critical areas.

First, the potential reduction in NIH spending.

Michael Egholm: Our direct NIH exposure remains limited at less than 10% of revenue, while America's academic exposure is approximately a third of our revenue.

Michael Egholm: The situation remains fluid, evolving day by day, but we anticipate that a reduction in NIH funding is likely to impact overall academia spend and priorities, particularly delaying capital equipment purchases.

Michael Egholm: Our team has done careful analysis and research, which were factored into our guidance modeling a mid-team's percentage decline in America's academic revenue equating to roughly a high single-digit million dollars at the midpoint of our range.

Michael Egholm: Second, on the recent U.S. export control interim final rule, we have reviewed the regulations with counsel and have determined it does not apply to our CyTOF products.

Michael Egholm: These systems are designed and manufactured in Canada, composed predominantly of non-U.S. components, and shipped directly to China.

Michael Egholm: As such, we assume no impact at the midpoint of our guide. That said...

Michael Egholm: We continue to closely monitor the broader U.S.-China trade dynamics, including potential regulatory shifts.

Michael Egholm: that could impact procurement decisions. We remain proactive in managing potential challenges through regulatory engagement and supply chain flexibility.

Third, the terrors.

Michael Egholm: New import tariffs on Canada, ongoing China tariffs, and potential reciprocal measures add complexity to the global trade environment.

While we do not expect

Michael Egholm: Top line impact, we are taking targeted countermeasures to minimize any potential effects.

Michael Egholm: When possible, we'll pass costs on to our customers while balancing demand-impact.

Michael Egholm: If necessary, if we were to absorb these tariffs, we estimate a low single-digit million dollar impact to gross margin and adjusted EBITDA.

Michael Egholm: The world is changing, markets are shifting, and policies are evolving, and we continue to monitor developments closely.

Michael Egholm: Most importantly, we remain laser-focused on executing our strategy, protecting our P&L, and precision the business for sustainable long-term growth.

Thank you. Thank you. Thank you.

Michael Egholm: In an environment where growth is hard to come by, we remain fully focused on what we can control, driving productivity and cost management across the business. With the integration of SomaLogic Complete, the benefits of these efforts are becoming increasingly evident.

Michael Egholm: Throughout 2024, we operationalized $80 million and cost Synergy a full year ahead of plan.

Michael Egholm: strengthening our operating leverage and lowered our overall spend. These actions...

Michael Egholm: reinforcing our commitment and willingness to appropriately manage cost absent top-line growth.

Michael Egholm: Earlier this year, and with full awareness of the macro environment, we made the difficult but necessary decision to implement an additional $10 million in cost reductions.

Michael Egholm: primarily in research and development, bringing total operationalized synergies to 90 million over the past 12 months, and further tightening the bell to ensure we stay nimble in an evolving landscape.

Thank you for watching!

Michael Egholm: SPS is central to our success. It's a competitive advantage and it's applied to everything that we do.

I like to call it our not-so-secret weapon.

Michael Egholm: Beyond the profitability metrics highlighted above, the impact on delivery and quality is just as impressive.

In Q4, on-time delivery reached an industry-leading 98 percent.

Michael Egholm: up from 78% in Q4 of 2022, while customer complaints on our main instrument platform declined more than fourfold over the same period. These are leading indicators that reflect our unwavering continuous improvement.

Michael Egholm: commitment, product quality, and customer satisfaction factors that ultimately translate into long-term profitability.

Michael Egholm: At Standard Biotools, we are building a top-tier life science company.

Speaker Change: leveraging consolidation to overcome the sector's innovation bottleneck and inability to scale.

Speaker Change: Our goal is to become the preferred industry partner to both customers and innovators. We're focused on providing a portfolio of consumables, instruments and services in attractive end markets, which shares a platform that drives quality, performance and profitability for stakeholders and shareholders alike.

Speaker Change: This brings me to our revenue mix for the year, which had consumables at 34%, instruments at 16%, and lab and field services at 33% and 14% respectively.

Speaker Change: Consumable strength was more than offset by a reduction in capital equipment spending as customers remained cautious with their budget, as well as headwind and lap services due to variability in demand from a few select large pharma accounts.

Speaker Change: Before I go through the rest of the pyramid, I would like to double-click on our SomaScan platform, the crown jewel of our portfolio.

Speaker Change: For decades, genomics has driven breakthroughs in medicine, and proteomics is the next big health transformation and is the next billion-dollar market opportunity for science research.

Speaker Change: The genome is important, but it's static, except in cancer. Proteins, the molecules that drive biology, on the other hand, are dynamic, changing as we age, respond to disease, treatment, and our environment. Until now,

Speaker Change: Proteomics research has been held back by legacy antibody-based technologies that simply don't scale.

Speaker Change: I'm emphasizing this not as a competitive comment per se. It is simply a technological reality. Somascan, on the other hand, is pushing the boundaries of what's possible in proteomics.

Speaker Change: Using a DNA aptamere-based approach, we already measured 10,000 proteins with unmatched precision, unlocking entirely new possibility for disease research and drug development.

Speaker Change: The momentum is real, and the data keeps showing it. Just last week, a new preprint came out comparing SomaScan to competitor platforms, and the results were clear.

Speaker Change: As prior studies have shown, SOMAscan provides a superior proteome coverage and lower technical variability. This cements SOMAscan as the most comprehensive, most precise, and most scalable platform for plasma proteomics.

To unlock its potential, we had to match

Somerset Scan's scientific scale with commercial heft.

Speaker Change: and a detection system able to scale outside a few labs. This is why we partnered with Illumina, the leading NGS provider, integrating our DNA-based aptamer technology with Illumina's 2000 plus NovaSeq installed base.

Speaker Change: Just as NDS revolutionized genomics, we believe this marks an inflection point for proteomics, making large-scale protein analysis accessible and actionable at unprecedented levels, enabling far more insight into human disease.

Speaker Change: We're on track to launch in the first half of this year and momentum is building.

Speaker Change: We're seeing real-world validation in collaboration with Illumina Deco Genetics and a pharma consortium inclusive of GSK, J&J, and Novartis. We are analyzing 50,000 samples from the UK Biobank, generating one of the largest

high-quality proteomics dataset ever assembled.

Speaker Change: recently showcased Somerscan's potential in nature medicine, uncovering new insights into GLP-1 drugs, not just confirming their metabolic and cardiovascular benefits, but also revealing the potential for smaller and faster clinical trials.

Speaker Change: These are tangible examples of how high-precision large-scale poliomics is transforming biomedical research and this is just the beginning and demonstrating that we are here to help pharma make better drugs faster.

Thanks for watching!

Speaker Change: This momentum is fueling broader commercial adoption with consumables leading the way.

Speaker Change: Consumables remain our most attractive product category, delivering double-digit growth in the fourth quarter and for the full year. This performance was driven by expansion of Somascan authorized sites,

Speaker Change: Illumina Early Access Program and elevated demand from our Fluidics Orion partner. In this environment, consumables continue to be a bright spot, providing consistent high-margin growth, reinforcing its position at the top of the product pyramid and a key strategic focus moving forward.

Speaker Change: Turning to our instruments, revenue declined 25% in Q4 and 27% for the year with the biggest impact coming from our higher-priced mass cytometry instruments.

Speaker Change: While the instruments market remains challenged, we're actively working with customers to adapt to shifting purchasing behaviors and budget constraint.

Speaker Change: Our OMICS-as-a-Service offering is a great example of this and an effort we're doubling down on.

Speaker Change: It leverages our full suite of solutions to deliver white glove premium lab services to prospective customers.

Speaker Change: This helps customers overcome capital budget constraints currently facing the broader biopharm market while accelerating adoption of our products while adding to our assay lab services revenue stream.

Thank you. Thank you. Thank you.

Speaker Change: Service revenue was down mid-teams year-over-year in the fourth quarter and full years.

Speaker Change: driven primarily by Somerset Gantt services, which remains constrained to a few large customers.

Speaker Change: We're working hard to diversify our customer base to help mitigate this.

Speaker Change: And we are encouraged by the consolidated momentum, by the continued momentum, revenue beyond our top five accounts grew double digits year-over-year, a strong signal of a broadening adoption.

Speaker Change: As we roll out additional solutions to democratize access to this technology, we believe utilization will continue to expand significantly, positioning us as a leader in the larger proteomics market that commands a healthy mid-team SKGOS for years to come.

It's an exciting portfolio.

Speaker Change: as I just described, in addition to the soma scan traction spatial proteomics where our IMC product line, including the Hyperion XTI, plays a role, was named 2024 Nature Methods of the Year, a strong validation from the scientific community.

beyond our current portfolio strategic M&A

Speaker Change: is part of our founding thesis and remains a core part of our strategy.

Speaker Change: The market needs consolidation, and we approach it with exceptional discipline as we look to identify and integrate high-value assets onto our platform. The current market, with all of its operational hurdles, presents a unique window for us.

Speaker Change: Valuations are down. Funding is tight. But innovation hasn't slowed. If anything, it's accelerating. This is exactly where we thrive.

and it's bringing more quality opportunities.

Speaker Change: our way at the attractive valuation. A prime example is our recent acquisition of Syngenex, a strategic bolt-on that enhances our soma scan service business with antibody profiling.

Speaker Change: Looking ahead, we have a robust pipeline with four to six strategic transactions targeted over the next two years.

Speaker Change: to commercialization, good margin potential, and exposure to attractive end market. With this market correction, we're seeing tremendous opportunity, but it's one that requires a mindful approach.

Speaker Change: To wrap things up, we have a proven leadership team committed to continuous improvement with a track record of driving growth, expanding markets, while reducing cost.

Speaker Change: We made significant progress over the past few years, merging two businesses, repositioned the portfolio and driving operational efficiencies. Through execution guided by SBS, we built a stronger, leaner and more resilient enterprise.

Speaker Change: But our work is far from done, and we're diving headfirst into phase two, focused on scaling the business.

Speaker Change: diversifying end markets and shifting towards higher margin consumables while staying strategically active and delivering long-term shareholder value. With that, I'll turn the call over to Alex. Alex, go ahead. Thank you, Michael.

Alex Kim: So I'll walk us through our financial results in more detail and provide some additional context.

Alex Kim: But first, I want to remind you that on an as-reported basis, our fourth quarter and full year 2024 results include the combined operations of Standard Biotools and SomaLogic since the close of the merger on January 5th of 2024.

Alex Kim: while the same periods in 2023 include the financial results of the legacy Standard Biotools business only.

Alex Kim: Therefore, for comparative purposes, and as Michael has done, we think it's more meaningful to look at the results for both businesses combined.

Alex Kim: And so, as I speak to our Q4 financial results, my commentary will focus on the Proforma combined results of operations for both Standard Biotools and Somalogic for 2023 and 2024.

Alex Kim: Please refer to today's press release and the appendix to our investor deck for more information, including a reconciliation of GAAP to non-GAAP measures that I will be discussing here.

Alex Kim: Starting with revenue on slide 13, our fourth quarter of 2024 came in at $46.7 million and full year 2024 at $175.1 million, both down 9% year over year.

Alex Kim: Sequentially, from the third quarter of 2024, revenue grew 4% with a notable increase in instrument placements.

Alex Kim: Breaking down revenue further, consumables grew 10% in the fourth quarter and 18% for the full year 2024. This was driven by strong kit sales to our Somascan authorized sites as well as from the Illumina Early Access Program.

Alex Kim: Traction of our authorized sites is a good validation of our distributed solution strategy.

Alex Kim: As our installed base across our portfolio continues to expand, we will focus on driving usage of our platforms and in growing this attractive, reoccurring, consumable revenue stream.

Alex Kim: Instrument sales were down 25% in the fourth quarter and down 27% for the full year 2024 as capital spending in our end markets remained constrained.

While we didn't pick up on any material trends...

Alex Kim: We were encouraged, as we saw a few pockets here and there, of funds being released that drove a 53% sequential growth.

Alex Kim: over Q3 2024, and in particular we saw good growth of our Hyperion XTi spatial proteomics platform.

Alex Kim: Lab services sales were down 18% in the fourth quarter and down 21% for the full year 2024. Historically, we have had high customer concentration.

Alex Kim: In 2024, as we've mentioned before, our top customers have smaller projects versus 2023.

Alex Kim: Recognizing this, we have strategically focused on expanding and diversifying our customer base.

Alex Kim: And we made good progress in gaining new customers in 2024 and reducing our customer concentration.

Alex Kim: including our top five customers, our lab services revenue through strong double digits for the full year.

Alex Kim: Our field services were down 10% in the fourth quarter of 2024, and down 2% for the full year of 2024. Lower instrument sales led to lower installation services.

Alex Kim: And finally, our collaboration and other revenue saw a one-time increase from our patent litigation settlement.

Alex Kim: Our non-GAAP gross margin on a performer basis was 52.5% in the fourth quarter of 2024 versus 55.4% prior year.

Alex Kim: and 53.0% for the full year 2024 compared to 53.1% in 2023.

Alex Kim: As we mentioned in our Q3 2024 earnings call, we expected lingering gross margin headwinds and one-time costs for the rest of 2024.

Alex Kim: Year-over-year our fourth quarter was impacted by lower volume and a few instrument replacements, partially offset by incremental improvements from SBS.

Alex Kim: We have made great strides, as Michael mentioned, in improving the quality of our instruments, paying down our technical debt, and we believe this is now largely in our rearview mirror.

Alex Kim: As we head into 2025, strong SPS improvements in quality, yield, and waste will offset lower volume and a negative makeshift to more instrument sales.

Alex Kim: More instrument sales, of course, is a positive thing for us as it drives both consumable pull-through and field service revenue.

Moving on to our operating expenses on slide 15.

Alex Kim: Our non-GAAP operating expenses on a per-forma basis was $42.9 million in the fourth quarter of 2024 versus $56.5 million last year, which is a 24% year-over-year reduction.

Alex Kim: and $180.1 million for the full year 2024 versus $232.2 million in 2023, which is a 22% reduction.

Alex Kim: Our operating expense reductions are a result of the ongoing realization of merger cost synergies we've spoken of before.

Alex Kim: To remind you, when we announced the Sumo Logic merger back in October of 2023, the combined operating expenses were annualized at $250 million.

Alex Kim: We set out an objective to achieve $80 million in cost synergies by the end of 2025.

Alex Kim: As we came out of our combined strategic planning and integration efforts, we were able to accelerate and operationalize the full $80 million as we exited 2024.

Alex Kim: On slide 16, our adjusted EBITDA was a $18.4 million loss in the fourth quarter of 2024 compared to a $28 million loss last year, which is a 34% year-over-year improvement.

Alex Kim: an $87.3 million loss for the full year 2024 versus a $130.1 million loss in 2023, which is a 33% improvement.

Alex Kim: A core tenet of SBS is continuous improvement, and we plan to continue to eliminate waste and improve productivity, and thereby improving profitability, while balancing reinvestment in the business to drive long-term growth.

Alex Kim: and this brings me to cash on slide 17. We ended the year with about 295 million dollars in cash, cash equivalents, restricted cash, short-term investments.

Alex Kim: A total cash burn was $73 million in the fourth quarter of 2024. This included $55 million used to repay our convertible debt. And we now have substantially no debt on our balance sheet.

Alex Kim: We also had about $5 million in M&A transactions, restructuring, and integration costs.

Alex Kim: Excluding the impact of these items, our adjusted cash burn plus CapEx was about 13 million dollars, representing a 45% reduction versus the third quarter adjusted cash burn plus CapEx of 23.5 million dollars.

Alex Kim: This reduction in cash burn was driven by ongoing realized merger synergies, continued expense management, and improved collections performance in the quarter.

Alex Kim: Now, as we look forward, our revenue guidance for the 2025 fiscal year is expected to be in the range of $165 to $175 million.

Alex Kim: As Michael mentioned, we have modeled in headwinds from the current environment based on internal analysis.

Alex Kim: particularly with anticipated lower America's academic spend on the order of high single-digit millions decline to our business.

Alex Kim: as well as potential terrorist impact on our margins with no impact on the China export controls.

Alex Kim: Beginning the year, we do expect the current environment to persist and then expect to build momentum through the rest of 2025.

Alex Kim: Beyond this, we expect growth in our instruments as farmer activity and global capital spending slowly returns.

Alex Kim: but offset by lower field service revenue from fewer service contracts on fewer instrument sales last year.

Alex Kim: We also expect growth from SomaSCAN services outside the top customers as we continue to expand our service base.

Alex Kim: and with our SomaSCAN kit sales to our expanding authorized sites and from the upcoming Illumina launch in the first half of 2025.

Alex Kim: Finally, we expect our collaborations and other revenue to be minimal in 2025.

Alex Kim: In spite of the current environment that we are navigating, we are well-positioned with our strategic plan and our strong balance sheet to support the growth of our business to adjust it even to our breakeven.

Back to you, Michael.

Michael Egholm: Thanks, Alec. We thank you all for your continued support as we advance our mission and strive to set the new standard in the life science tools industry.

Alex Kim: We look forward to seeing many of you at upcoming investor conferences throughout March. And now I hand the call back over to the operator.

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

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

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

Matt Stanton: Hey, thanks. First one, I appreciate the color around what you're baking in the guide for the Americas due to some of the NIH noise. We would just love a little bit of

Speaker Change: , , , , , , , , , , , , , ,

Thank you.

Thanks, Matt. Great question. As I...

Speaker Change: As I just stated here, we are laser focused on running our business every day and safeguarding the P&L here and execute to the long-term strategy.

Speaker Change: A lot yet, but anticipate that people will spend less in the America's academia.

Speaker Change: and probably consistent with what you have heard from others. Alex, anything, any caller to add? Yeah, maybe to add where we anticipate some of the impact is more on the instrument side, the heavier capital requiring the budget there, some impact on to our consumables and services, but the majority on our instruments.

Thank you very much.

Speaker Change: Okay, great. That's helpful. And then maybe shifting over proteomics and the Illumina partnership. I think in the...

Speaker Change: Pickering. Please be seated. Thank you. Mr. Tuang, you reasons to do alumni, I want come to you again. Today, we know students attending alumni sessions, are here working. We like to thank you for all the great works you are doing in our labs, and of course draw the labs in the first half of this year. Thank you. Thank you. Thank you.

any

Speaker Change: More color you could add just in terms of how you you know expect that to play out or what you're penciling in for For 25 obviously given the market size there doesn't make you know Take much to to penetrate that to start to show up in a more meaningful way for you guys So any more color on what you're kind of penciling in and expectations for 25 when to get the launch out there. Thank you

No, you're right, Matt. It is indeed...

Speaker Change: Today there are already billions of dollars spent in other areas of proteomics but not where it really matters which is

Speaker Change: plasma proteomics across thousands of patients, and as I pointed out, we're the only one that can read a substantial part of the proteome, so very excited about their launch. I would also say that to get

Speaker Change: comps for the market, look at what's spent on LC-MS on one side, and then what's spent on genomics, and then think about the informational content that is in the proteomic analysis as an outline.

Speaker Change: genuine excitement and we feel very comfortable throwing the billion-dollar number around for the opportunity here. Alex, maybe you can address what's baked into the forecast.

Alex Kim: Yeah, we've mentioned this in the past. We have had strong Illumina revenue in 24 driven by development ramp-up and early access customers and now as we shift into full commercial launch

Alex Kim: We do expect an increase in Illumina revenue, but as they get new sites on board, it'll take those customers time to ramp up, and so we still expect 2025 to be a transition year, with stronger growth coming in in 2026 and beyond.

Super, thank you.

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

Speaker Change: Hey, good afternoon guys. This is Kyle on for Dan. I wanted to go back to the guide and you didn't you don't have anything baked in for you know tariff and Tariff impact and export control impact in China. Do you see any opportunity in China on the instrument stimulus side for for your? You know proteomics instruments

Speaker Change: We have a strong team in China and we're seeing good traction so far and and we'll keep keep keep absolutely pushing that so certainly looking this year looks better than than last year.

Speaker Change: Got it. Then on the M&A side, you know, you laid out the four to six deals, 25, 26. You know, you laid out some of the types of assets that you'd like to go after, but how should we think about, you know, maybe the size and timing of any of these deals?

Speaker Change: We have a rich funnel. We are working this every day as we speak.

Speaker Change: M&A has its own timing so at any one time we are working on multiple parallel deals. I did touch upon a bit on the criteria that we are looking at.

Speaker Change: It has to be a proven technology. We do not do science projects. They have to be de-risked.

Speaker Change: and they've got to have a strong gross margin profile. So, in other words, that they sit on the top of our value pyramid.

Speaker Change: And so we're looking at that as the lens here, but we're aggressive. We've done two major deals here over the last three years, and we did a talk-in with Centenix, where integration is just a couple of months in.

Speaker Change: It's close to the end of the road here for integration and now offering this up as part of our SomaScan services.

Got it. Thank you, guys.

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

Paul Knight: Michael, I don't know if this has been answered, but what's your target cash burn in 2025?

Thank you. Thank you. Thank you.

I'll let Alex handle that one.

Speaker Change: You know, we're not providing short-term guidance on our cash burn, but maybe to give you a sense, you could look at the second half exit rate and assume that we're going to continue to make improvements off of that.

Speaker Change: We feel like we've got a very strong balance sheet to even weather the current environment we're at and get us to cash flow break-even and to fund some of these smaller bolt-on acquisitions. So, we feel like we're in a pretty good position.

Speaker Change: Well, I think the original cash flow break-even was, what, 2026?

That's the adjusted EBITDA break-even in 2026. That's correct.

Speaker Change: Okay. And then, Michael, if the NIH ended up, you know, we're, I guess, kind of, in effect, a continuing resolution, if the NIH ended up and where we kind of get back to normal, which I think is mid-single, maybe ...

Speaker Change: better NIH budget growth. Where would that put you in terms of what guidance could be?

I think we already bracketed the all NIH impact.

Speaker Change: I would say though and maybe building a little bit on the answer to Matt's question before

We haven't seen

Speaker Change: impact yet on sales. Again, we're only a couple of months into the year, or barely two months into the year. What we have heard is a lot of changed behaviors.

Speaker Change: and should this miraculously be solved in a short term, I think we'll go through still a couple of quarters of changed behaviors.

Speaker Change: and so we feel comfortable with the guidance we've given here.

Speaker Change: truly and genuinely believe that routine plasma proteomics is a market like MGS that will evolve in time and grow quite large.

Think about it.

Speaker Change: We have we have one genome and other than in cancer a little bit with the immune system you don't actually need repeated sequencing. You need it once for your proteome.

Speaker Change: a number of study and cases here where we would have to do the samples yearly or more or follow pre, post-treatment, et cetera. So the number of...

Speaker Change: of proteomes that are going to get enumerated are just mind-boggling and certainly draw off genomics. And then, as I've shared here on recent conferences, the informational content you get from proteomics

Speaker Change: While genomics is important and genomics and proteomics together add a lot, the like per dollar information content

Speaker Change: much much much higher from from poliomics and I mentioned a couple of studies here in the commentary. I'm happy to share the references.

Okay.

Thank you.

Unidentified Moderator: As a reminder, if you have a question, please press star 1.

and Michael Egholm. Thank you. Thank you.

Unidentified Moderator: This concludes our question and answer session and the conference is now concluded. Thank you for attending today's presentation. You may now disconnect.