Q1 2025 Bionano Genomics Inc Earnings Call
Okay.
Operator: Good day and welcome to the BioNana First Quarter 2025 Earnings Conference Call. Today's conference is being recorded.
Speaker Change: Good day and welcome to the bio Nana first quarter 2025 earnings Conference call. Today's conference is being recorded at this time I would like to turn the conference over to David Holmes from Investor Relations. Please go ahead.
David Holmes: At this time, I would like to turn the conference over to David Holmes from Investor Relations. Please go ahead. Thank you, Lisa, and good afternoon, everyone.
David Holmes: Thank you Lisa and good afternoon, everyone.
David Holmes: Welcome to BioNano First Quarter 2025 Financial Results Conference Call.
Welcome to the bio first quarter 2020 financial results conference call.
David Holmes: Leaving the call today is Dr. Eric Holmlin, CEO and Principal Financial Officer of BioNano, and he is joined by Mark Adamczyk, BioNano's Vice President of Accounting and Principal Accounting Office. After market closed today, BioNano issued a press release accounting financial results for the first quarter 2025. A copy of the release can be found on the investor relations page of the company's website.
Speaker Change: Leading the call today is Dr. Eric Colson, CEO and principal financial officer of bio nano and he is joined by Mark Adam Chuck Bio Nanos, Vice President of accounting and principal accounting officer.
David Holmes: After market close today.
David Holmes: <unk> issued a press release to county.
David Holmes: Its financial results for the first quarter 2025, a copy of the release can be found on the Investor Relations page the company's web site.
David Holmes: Certain statements made during this conference call may be forward-looking statements, including statements about BioNano's revenue outlook, profitability, cash runway, cost savings initiatives, and commercialization and product plans. Such statements are based on current expectations, and there can be no assurances that the results contemplated in these statements will be realized. Actual results may differ materially from such statements due to several factors and risks. Some of which are identified in BioNano's press release and BioNano's reports filed with the SEC.
David Holmes: Certain statements made during this conference call may be forward looking statements, including statements about revenue outlook profitability cash runway cost savings initiatives and commercialization and product plans such statements are based on current expectations and there can be no.
David Holmes: Sharon.
Speaker Change: That the results contemplated in these statements will be realized actual results may differ materially from such statements due to several factors and risks some of.
Speaker Change: Which are identified in <unk> press release, and buyer Nanos reports filed with the SEC.
David Holmes: These forward-looking statements are based on information available to BioNano today, May 14, 2025, and the company assumes no obligation to update statements as circumstances change. In addition, to supplement BioNano's financial results in accordance with the U.S. Generally Accepted Accounting Principles, or GAAP, the company reports certain non-GAAP financial measures. A description of these non-GAAP financial measures, as well as a reconciliation to the nearest GAAP financial measures, are included at the end of the company's earnings release issued earlier today, which has been posted on the Investor Relations page of the company's website. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute to comparable GAAP measures.
Speaker Change: These forward looking statements are based on information available to the buyer in that I would say may 14th 2025, and the company assumes no obligation to update statements as circumstances change.
Speaker Change: In addition to supplement borrowed address financial results in accordance with U S generally accepted accounting principles or GAAP.
Speaker Change: He reports certain non-GAAP financial measures a description of these non-GAAP financial measures as well as a reconciliation to the nearest GAAP financial measures are included at the end of the company's earnings release issued earlier today, which has been posted on the Investor Relations page of the company's website.
These non-GAAP financial measures are not meant to be considered in isolation or as a substitute to comparable GAAP measures.
David Holmes: be read in conjunction and the company's consolidated financial statements prepared in accordance with GAAP, have no standardized meaning prescribed by GAAP, and are not prepared under any comprehensive set of accounting rules or principles.
Speaker Change: Be read in conjunction to the company's consolidated financial statements prepared in accordance with GAAP.
Speaker Change: No standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles.
David Holmes: and audio recording and webcast replay for today's conference call will also be available online on the company's investor relations page.
Speaker Change: An audio recording and webcast replay for today's.
Speaker Change: The conference call will also be available online on the company's Investor Relations page.
Eric Holmlin: With that, I will turn the call over to Eric. Thank you, David, and good afternoon, everyone. I'm pleased to provide you all with an update on this first quarter of 2025.
Eric: With that I will turn the call over to Eric.
Eric: Thank you David and good afternoon, everyone I'm pleased to provide you all with an update on this first quarter of 2025.
Eric Holmlin: I'd like to start off by reiterating the strategic shift we implemented in September of 2024, going away from heavy spending on customer acquisition. associated with new instrument placements and toward a focus concentrated on those customers who use our OGM products and via software routinely in cytogenomics. We still expect to see growth of the installed base, but our investments in capital sales and new installations have been scaled back to focus on users with the potential to be routine users of our products. We believe this group of users are the ones who will drive most of our profit and growth while we await improvements in the equity capital markets and clarity in the global trade situation.
Eric: I'd like to start off by reiterating the strategic shift we implemented in September of 2024 going away from heavy spending on customer acquisition.
Eric: Associated with new instrument placements and toward a focus concentrated on those customers, who use our ODM products and via software routinely.
Eric: Insider genomics, we still expect to see growth of the installed base, but our investments in capital sales and new installations.
Eric: I have been scaled back to focus on users with the potential to be to be.
Eric: Routine users of our products.
Eric: We believe this group of users are the ones, who will drive most of our profit and growth.
Eric: While we await improvements in the equity capital markets and clarity in.
Eric: The global trade situation.
Eric Holmlin: This strategy has four pillars. support and sustain the install base of routine OGM and VIA software users. drive utilization through adoption via software across OGM users and facilitate menu expansion. build support needed for OGM reimbursement and inclusion in medical society recommendations and guidelines. and four, improve profitability and scalability with lower costs, higher volumes and improvements in gross profit.
Eric: This strategy has four pillars.
Eric: Support and sustain the installed base of routine ODM and via software users.
Eric: Drive utilization through adoption of via software across our G M users and facilitate.
New expansion.
Eric: Build support needed for <unk> reimbursement and inclusion in medical society recommendations and guidelines.
And for improved profitability and scalability with lower costs higher volumes and improvements in gross profit.
Eric Holmlin: Let me now turn to the results for Q1 2025. We believe these results in Q1 reflect excellent progress. Total revenue for the first quarter of 2025 was $6.5 million, which is a decrease of 26% compared to the first quarter of 2024. Q1 2024 revenues included $1.4 million from discontinued clinical services compared to no revenue from such clinical services in Q1 2025. We sold 6,994 flow cells in the first quarter of 2025. Now, keep in mind, the flow cell is the unit consumable that applies to a single genome to be analyzed across all of our platforms. This quantity reflects a 15% decrease compared to the same period last However, if we exclude flow cells that were sold to new customers in each period...
Eric: Let me now turn to the results for Q1 2025.
Eric: We believe these results in Q1 reflect excellent progress.
Total revenue for the first quarter of 2025 was $6 5 million, which is a decrease of 26% compared to the first quarter of 2024.
Eric: Q1, 2024 revenues included $1 $4 million from discontinued clinical services compared to no revenue from such clinical services in Q1 2025.
Eric: We sold 6994 flow cells in the first quarter of 2025 now keep in mind the flow cell as the unit consumable that applies to a single genome to be analyzed across all of our platforms.
Eric: This quantity reflects a 15% decrease compared to the same period last year. However, if we exclude flow cells that were sold to new customers in each period.
Eric Holmlin: The Q1 2025 flow cells sold were up 1%. compared to the period a year before. And I will drill down into those numbers a little bit more. later on in the call. Now GAAP gross margin for the first quarter of 2025 was 46%, which was significantly higher than the 32% GAAP gross margin reported for the first quarter of 2024. Non-GAAP gross margin for the first quarter of 2025 was also 46%, and that can be compared to 34% for the first quarter of 2024. First quarter 2025 gap operating expense was $11.4 million, compared to $33.9 million in the first quarter of 2024.
Eric: The Q1 2025 flow cell sold were up 1%.
Eric: Compared to the period a year before.
Eric: And I will drill down into those numbers a little bit more.
Eric: Later on in the call.
Eric: Now GAAP gross margin for the first quarter of 2025 was 46%, which was significantly higher than the 32% GAAP gross margin reported for the first quarter of 2024 non-GAAP gross margin for the first quarter of 2025 was also 40.
Eric: 6% and that can be compared to.
Eric: 34% for the first quarter of 2024.
Eric: First quarter 2025, GAAP operating expense was 11 4 million compared to $33 9 million in the first quarter of 2020 for the year over year decrease was primarily driven by cost savings initiatives across the whole.
Eric Holmlin: The year-over-year decrease was primarily driven by cost savings initiatives across the whole company. First quarter 2025 non-GAAP operating expense was $8.5 million, which can be compared to $24.4 million in the prior year. The installed base of OGM systems grew to 379, which is a 9% year-over-year increase and a net increase of 8 systems versus December 31, 2024, after 9 new installations in the quarter. Cash, cash equivalent and available for sale securities as of March 31st, 2025, were $29.2 million, of which $11 million was subject to certain restrictions. We completed a $10 million registered direct offering in January of and raised net proceeds of $3.2 million through ATM sales through the first quarter of 2025.
Eric: Company.
Eric: First quarter 2025, non-GAAP operating expense was $8 5 million, which can be compared to $24 $4 million in the prior year.
Eric: Year.
Eric: The installed base of <unk> systems grew to 379, which is a 9% year over year increase and a net increase of eight systems versus December 31, 2024, after nine new installations in the quarter.
Eric: Cash cash equivalents and available for sale Securities as of March 31, 2025 were $29 2 million of which $11 million was subject to certain restrictions, we completed a $10 million registered direct offering in January of 2025 and raised net proceeds of three.
Eric: $2 million through ATM sales through the first quarter of 2025 and quarter to date Q2 net ATM proceeds were one 3 million, we believe our cash runway extends into the first quarter of 2026.
Eric Holmlin: And quarter to date, Q2 net ATM proceeds were $1.3 million. We believe our cash runway extends into the first quarter of 2026. This first quarter of 2025 is the first full quarter of execution with our new cost and we believe the year-over-year comparison. should be useful in determining whether our hypothesis... The hypothesis is that there is a committed group of routine users. who use our consumables and software. at higher rates than average across all of our customers and therefore a focus on their success. as a critical mass group of users can help us as we seek to drive toward profitable growth.
Eric: This first quarter of 2025 is the first full quarter of execution with our new cost structure.
Eric: And we believe the year over year comparisons.
Eric: Should be useful in determining whether our hypothesis.
Eric: Is accurate.
Eric: The hypothesis is that there is a committed group of routine users.
Eric: Who use our consumables and software.
Eric: At higher rates than average across all of our customers and therefore, our focus on their success.
Eric: As a critical mass group of users can help us as we seek to drive toward profitable growth.
Eric Holmlin: When we look at just two metrics. revenues and the number of flow cells. we can see support for this hypothesis. First for revenue, the $8.8 million in revenues. in the first quarter of 2024 included $1.4 million in revenue. from Discontinued. Clinical Services, and it also included $1.6 million of instrument sales revenue. The revenues from OGM and software sales to customers that were in place as of December 31st, 2023 was $5.8 million. conducting the same analysis. for the $6.5 million in Q1 2025 revenues, which had none of the discontinued clinical services, but did have. $700,000 in instruments.
Eric: When we look at just two metrics revenues and the number of flow cells. So we can see support for this hypothesis.
Eric: First for revenue the $8 $8 million in revenues.
Eric: In the first quarter of 'twenty 'twenty four included $1 $4 million in revenues from discontinued.
Eric: Clinical services and it also included $1 $6 million of instrument sales revenues.
Eric: The revenues from ODM and software sales to customers that were in place as of December 31, 2023 was $5 8 million.
Eric: Conducting the same analysis for the $6 $5 million in Q1, 2025 revenues, which had none of the discontinued clinical services, but did have.
Eric: $700000 in instrument sales, we see that the installed base of customers generated the same $5 $8 million in revenues in Q1 2025.
Eric Holmlin: We see that the installed base of customers generated the same $5.8 million in revenue. and Q1 2025. When we look then at flow cells. we can make a year-over-year comparison by removing the flow cell soul. to any new customers in the first quarter of 2024 and the same thing in Q1 2025. Now doing so reveals that flow cells sold to this existing customer group increased on an apples-to-apples basis by one percent. So, flat revenues and 1 percent volume increase in sales of consumables are not necessarily our long-term objective for these superusers, but we do expect them to increase volume and utilization going forward.
Eric: When we look then at flow cells sold we can make a year over year comparison by removing the flow cell sold to.
Eric: To any new customers in the first quarter of 2024 and.
Eric: The same thing in 'twenty Q1 2025.
Eric: Now doing so reveals that flow cells sold to this existing customer group increased on an apples to apples basis by 1%.
Eric: So flat revenues and 1% volume increase in sales of consumables are not necessarily our long term objective for the super users, but we do expect them to increase volume and utilization going forward and we want to keep in mind that bio nano during this period.
Eric Holmlin: And we want to keep in mind that BioNano during this period of 2024 was undergoing rather disruptive organizational change. which was a challenge for us inside the company, but also a challenge for our customers as they sought to find the right cadence for working. We view stability on a year-over-year basis as a great outcome. and we feel it reflects the fact that we have gotten through. much of the heavy disruption associated with this strategic shift, and we are now ready to support who want to run more OGM and via software. Now, among the strategic pillars, we have a focus on supporting the routine use customers through training and menu expansion, as well as helping build the support needed for reimbursement.
Eric: Of 2024 was undergoing rather disruptive organizational change, which was a challenge for us inside the company, but also a challenge for our customers as they sought to find the right cadence for working with US we view stability on a year over year basis as a great.
Eric: Outcome.
Eric: And we feel it reflects the fact that we have gotten through.
Eric: Much of the heavy disruption associated with this strategic shift and we are now ready to support customers, who want to run more ODM and via software.
Eric: Now among the strategic pillars, we have a focus on supporting the routine use customers through training and menu expansion as well as helping build the support needed for reimbursement.
Eric Holmlin: The best tools for these activities are generated by our customers themselves and those tools are public. The first quarter of 2025 had 95 publications, second only to the 99 publications in the first quarter of 2024, but reflecting a strong start. 2020. In 2025, this first quarter of 2025, we also had 978 clinical research genomes published, bringing the total to over 9,100, which is remarkable progress when you consider that there were only 500 published clinical research genomes as of 12-31-2020. All the publications that appeared this quarter were outstanding, but four of them stood out in particular.
Eric: The best tools for these activities are generated by our customers themselves and those tools are publications.
Eric: The first quarter of 2025 had 95 publications.
Eric: Only to the 99 publications in the first quarter 2024, but reflecting a strong start to.
Eric: 2025.
Eric: In 2025. This first quarter of 2025, we also had 978 clinical research genomes published bringing the total to over 9100, which is remarkable progress. When you consider that there are only 500 published clinical research genomes as of 12 31.
Eric: 2020.
Eric: All of the publications that appeared this quarter were outstanding but four of them stood out in particular.
Eric Holmlin: A large international group of experts from what is called the International Consortium of OGM, for OGM, published the first recommendations for integration of OGM into the standard of care in hematologic malignancies, both as a first-line analysis. in some hematologic malignancy subtypes and as an alternative to karyotyping fish and chromosomal microarray analysis in others. Second, a leading team in France at the CHU Lille published their method for analysis of multiple myeloma, a commonly difficult subtype to analyze by traditional methods. The innovation they published allows for the sample input requirement for multiple myeloma to be reduced by a factor of two.
Eric: A large international group of experts from what is called the International consortium of ODM for ODM published the first recommendations for integration of <unk> into the standard of care in hematologic malignancies, both as a first line analysis in some.
Eric: Hematologic malignancies subtypes, and as an alternative to carry OTI big fish and chromosomal microarray analysis and others.
Eric: Second a leading team in France at the CH you Lil published their method for analysis of multiple myeloma are commonly difficult subtype to analyze by traditional methods. The innovation. They published allows for sample the sample input requirements for multiple myeloma.
Eric: Be reduced by a factor of two.
Eric Holmlin: which we believe can open the door for other users to expand their menu of OGM research applications to now readily include multiple myelin. Third, an OGM routine user in the Netherlands. Radboud University Medical Center published a study showing OGM's performance for analysis of repetitive segments of the genome for use with repeat expansion disorder research, which is a large body of study and potential in constitutional genetic disorders. And then lastly, very recently, the University of Texas MD Anderson Cancer Center published the largest OGM study, 519 hematologic malignancy cases. in which they evaluated the clinical utility of optical genome mapping.
Eric: Which we believe can open the door for other users to expand their menu of ODM research applications to now readily includes multiple myeloma.
Speaker Change: Third an O G M routine user in the Netherlands.
Eric: Radboud University Medical Center published a study showing Oh gm's performance for analysis of repetitive segments of the genome for use with repeat expansion disorder research, which is a large body.
Eric: Study and potential in constitutional genetic diseases, and then lastly, very recently the University of Texas, MD answer and MD Anderson Cancer Center published the largest ODM study 519, hematologic malignancy cases and.
Eric: Which they evaluated the clinical utility of optical genome mapping.
Eric Holmlin: showing that in 15% of these cases, optical genome mapping detected critically important tier one variants that were missed by standard cytogenomics. Now these tier one variants are those with direct diagnostic, prognostic, and therapeutic significance. and overall in 58% of the cases. OGM detected at least one Tier 1, Tier 2, or Tier 3 variant that were not picked up by the standard cytogenetic methods, meaning that optical genome mapping has the potential to add tremendously to cytogenetic analysis. Hematologic Malignancy Research.
Eric: Showing that in 15.
Eric: <unk> of these cases optical genome mapping detected critically important tier one variance that were missed by standard cider genomics now these tier one variance are those with direct diagnostic prognostic and therapeutic significance.
Eric: And overall in 58% of the cases.
Eric: Oh G M detected at least one tier one tier two or tier three variant that we're not picked up by the standard cytogenetic methods, meaning that optical genome mapping has the potential to add tremendously to cider genetic analysis.
Eric: Hematologic malignancy research.
Eric Holmlin: Finally, for the quarter, reducing cash burn by lowering expenses. An increasing gross margin remains a cornerstone of our strategic shift. Operating expense on a gap basis is down 66% year over year and down 65% on a non-gap basis year over year. This is driven by a variety of cost reduction initiatives across the whole company, including a rather substantial impact to headcount. Perhaps the most striking amongst these cash burn initiatives is the improvement that we are seeing in gross margin, which was 46% for both gap and non-gap in the first quarter of 2025 versus 32% on a gap basis and 34% on a non-gap basis in the first quarter of 2024.
Eric: Finally for the quarter, reducing cash burn by lowering expenses.
Eric: An increasing gross margin remains a cornerstone of our strategic shift.
Eric: Operating expense on a GAAP basis is down 60%, 66% year over year and down 65% on a non-GAAP basis year over year.
Eric: This is driven by a variety of cost reduction initiatives across the whole company, including a rather substantial impact to head count.
Eric: Perhaps the most striking amongst these cash burn initiatives is the improvement that we're seeing in gross margin, which was 46% for both GAAP and non-GAAP in the first quarter of 2025 versus 32% on a GAAP basis, and 34% on a non-GAAP basis.
Eric: In the first quarter of 2020 for this margin expansion has been the result of significant work internally to reduce costs, but also in working with suppliers to reduce input costs and improved yields.
Eric Holmlin: This margin expansion has been the result of significant work internally to reduce costs, but also in working with suppliers to reduce input costs and improve yields. And this has been going on going back for at least the previous nine quarters.
Eric: And this has been going ongoing back for at least the previous nine quarters now.
Eric Holmlin: To wrap up, I would like to provide our outlook on the second quarter and the remainder of 2025. With our strategic pillars as the underpinning of our streamlined business focus, we expect full-year revenues to be in the range of $26 million. to $30 million, which is an update.
Eric: To wrap up I would like to provide our outlook on the second quarter and the remainder of 2025.
Eric: With our strategic pillars as the underpinning of our streamline business focus we expect full year revenues to be in the range of 26.
Eric: To $30 million, which is an update.
Eric Holmlin: compared to our previous views on March 31st during our Q4 2024 call, and it simply reflects the turbulence we have seen this quarter related to the global trade and uncertainty. Q2 revenues are expected to be in the range of $6.3 to $6.8 million.
Eric: Compared to our previous views on March 34, 31 during our Q4 2024 call.
Eric: It simply reflects the turbulence, we have seen this quarter related to the global trade and uncertainty there.
Eric: Sure.
Eric: Q2 revenues are expected to be in the range of $6 three to $6 $8 million and with nine new ODM system installations in the first quarter. We are reiterating our expectation to install 15 to 20, new OEM systems over the course of the full year 2025, and we expect.
Eric Holmlin: And with nine new OGM system installations in the first quarter, we are reiterating our expectation to install 15 to 20 new OGM systems. over the course of the full year of 2025, and we expect those to be primarily at...
Eric: Those to be primarily.
Eric: <unk>.
Eric: Routine use sites.
Operator: And so with that, operator, please go ahead and open the line for questions. Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. You will then hear an automated message advising your hand is raised. If you would like to withdraw your question, press star 11 again. One moment for the first question.
Eric: So with that operator. Please go ahead and open the line for questions.
Speaker Change: Thank you.
Speaker Change: If you would like to ask a question. Please press star one on your telephone you will then hear an automated message advising your hand is raised if you will.
Speaker Change: Like to withdraw your question Press Star one again, one moment for the first question.
Sung Nam: And the first question will be coming from the line of Sung Ji Nam of Scotiabank. Your line is open. Hi, thanks for taking the questions. Maybe starting out with the MD Anderson study that was published, it's really exciting to see that. Was wondering, is MD Anderson a big customer currently? It's not, could this be an impetus for that institution to broadly adopt OGM going forward? Well, you know, so they are an existing user, and I think it's a really good story of how. These sites progress over time and we've been working with them for quite some time, but they started out using the product in some basic research studies and began to see the value in OGM, published a really groundbreaking paper in August of 2020 .
Speaker Change: And the first question will be coming from the line of sung Jean Ann.
Eric: <unk> Bank your line is open.
Speaker Change: Hi, Thanks for taking the question.
Eric: Maybe starting out with the MD Anderson study that was published really exciting to see that with wondering MD Anderson a big customer currently.
Eric: Would this could this be an impetus for that institution to broadly adopt ogn going forward.
Speaker Change: Well so.
Speaker Change: They are at.
Speaker Change: The existing user.
Speaker Change: And I think it's a really good.
Speaker Change: Story of how.
Speaker Change: These sites progress over time, and we've been working with them for quite some time, but they started out.
Speaker Change: Using the product and some basic research studies and began to see the value in ogn published a really groundbreaking paper and.
Speaker Change: August of 2020.
Eric Holmlin: we're just verifying there, in August of 2022, which showed that, OGM compared to the standard of care would give really outstanding prognostic scores and showed that the standard of care was wrong in something like 17 or 21 percent of cases. And that was such an exciting paper and got so much attention at MD Anderson that the cytogenetics group that provides services for the oncologists there began getting interested in OGM and they have developed a validated workflow that they offer to oncologists there. And what we're told anecdotally is that every new leukemia case at MD Anderson Cancer Center is mapped.
Speaker Change: 2022.
Speaker Change: Just verifying there in August of 2022, which showed that.
Speaker Change: Oh GM compared to the standard of care would give really outstanding.
Speaker Change: Like prognostic scores and showed that the standard of care was wrong in something like 17 or 21% of cases.
Speaker Change: And that was such a exciting paper and got so much attention at MD Anderson that the Cytogenetics group that provides services for the oncologist theyre bigger.
Speaker Change: Began getting interested in O G M and they have developed a validated workflow that they offer to oncologists there and what we're told anecdotally is that oncology every new leukemia case at MD Anderson cancer Center has mapped.
Eric Holmlin: and that oncologists at MD Anderson Cancer Center are reluctant. manage their patients without the OGM results, it's that impactful. So, their publication is amazing, and I think it shows the progress that they've made. Some of the authors on those papers are influential and involved with groups like NCCN, and so we believe that those kinds of data can be key to inclusion of OGM into medical society guidelines. And it provides an example for labs all around the country, and indeed the world, how to use OGM. And we believe that we don't need to go through that basic research study now, but folks can just adopt and validate these workforces.
Speaker Change: And that oncologists at MD Anderson cancer Center are reluctant.
Speaker Change: Two.
Speaker Change: Manage their patients without the ogn results that impactful there.
Speaker Change: No.
Speaker Change: Yes, Theyre publication is amazing and I think <unk>.
Speaker Change: <unk> the progress that they've made.
Speaker Change: Some of the authors on those papers are.
Speaker Change: Influential and involved with groups like N CCN and so we believe that those kinds of data can be key to inclusion of OTI ODM into medical Society guidelines.
Speaker Change: And it provides an example for labs all around the country and indeed, the world how to use ODM and we believe that we don't need to go through that basic research study now but.
Speaker Change: Folks can just adopt and validate these workflows that MD Anderson already has running.
Eric Holmlin: That's super helpful. And then just in terms of your gross margins, it's also great to see continuous improvement there. So is the mid kind of 40% range, do you think, is that sustainable for the remainder of the year, or could you also see some potential further upside to those numbers? I think we'll probably hang out in this general vicinity for the remainder of the year. You know, overall, we do expect it to continue to rise, but it'll take some time for the cost structure to have another significant shift before that happens. But we believe what we're seeing now is stable.
Speaker Change: Got you that's Super helpful. And then just in terms of gross margin also great to see continuous improvement are so is the mid kind of 40% range. Do you think is that sustainable for the remainder of the year or could you also see some potential further upside.
Speaker Change: Numbers.
Speaker Change: I think we will probably hang out in this general vicinity for the remainder of the year overall, we do expect it to continue to to rise.
Speaker Change: But it will take some time for the cost structure too to have another significant shift before that happens, but we believe what we're seeing now is stable.
Sung Nam: Got it.
Eric Holmlin: And then lastly, you know, you mentioned kind of the global trade situation currently, would you be able to provide a bit more color in terms of your kind of the, you know, manufacturing footprint exposure? or Supply Chain, and are there kind of countermeasures that you're implementing going forward, or is that just pretty much manageable, just given you're very much focused on your research? commercial strategy currently? Yeah, a couple of things to comment on there. You know, based on the inventory that we have in place, you know, from a cost structure to the inputs of our products, we have somewhat limited exposure for a while.
Speaker Change: Got it and then lastly, you mentioned kind of the global trade situation. Currently would you be able to provide a bit more color in terms of your kind of the <unk>.
Speaker Change: Manufacturing footprint exposure.
Speaker Change: Or is supply chain and are there kind of counter measures that you're implementing.
Speaker Change: Going forward the way that just pretty much manage the ball just given you are very much focused.
Speaker Change: Commercial strategy currently.
Speaker Change: A couple of things to comment on there.
Speaker Change: Based on the inventory that we have in place from a from a cost structure to the inputs are.
Speaker Change: <unk> we have.
Speaker Change: What limited exposure for a while.
Eric Holmlin: We will need to begin sourcing some new materials in the future. A relatively small portion of them come from outside the United States, and so, you know, we've got to be mindful of it. Some things that we do buy and need to continuously replenish do come from places outside the United States, but it seems like a manageable situation for now. We're not too overly concerned about input costs being impacted. It's something that we need to pay attention to. The issue I think that we have had to deal with because you know, nearly half of our revenues are coming from outside the United States, is just the uncertainty that customers in those jurisdictions face with the, you know, import tariffs that they may have to experience.
Speaker Change: We will need to begin sourcing some some new materials in the future.
Speaker Change: A relatively small portion of them come from outside the United States and so.
Speaker Change: We've got to be mindful of it.
Speaker Change: Yes.
Speaker Change: Some things that we do buy and need to continuously replenish.
Speaker Change: Do come from.
Speaker Change: Places outside the United States.
Speaker Change: But it seems like a manageable situation for now.
Speaker Change: We're not too overly concerned about input costs being impacted.
Speaker Change: It's something that we need to pay attention to.
Speaker Change: The issue I think that we have.
Speaker Change: Had to deal with because.
Speaker Change: Nearly half of our revenues are coming from outside the United States is just the uncertainty that customers in those jurisdiction space with the import tariffs that they may have to experience and so I really do believe that we have seen.
Eric Holmlin: And so, I really do believe that we have seen you know, some deals. You know, slow down a little bit as a result of needing to pay attention to what's going on. And so we added some conservatism into our full year guide to account for that. With regard to this idea of managing the impacts of terrorists, what we see is that a lot of our input suppliers are working to kind of reconfigure where things are made and produced to optimize that situation. So, you know, it's under control but it's something that that we need to pay attention to and could have and Negative Impact Download.
Speaker Change: Some deals.
Speaker Change: Slow down a little bit as a result of needing to pay attention to what's going on.
Speaker Change: So we added some conservatism into our full year guide to account for that.
Speaker Change: With regard to this idea of managing the impacts of tariffs what we see is that a lot of our input.
Speaker Change: The suppliers are working to kind of reconfigure, where things are made and produced to optimize that situation. So.
Speaker Change: It's under control, but it's something that that we need to pay attention to and could have.
Speaker Change: A negative impact down the road.
Sung Nam: This sounds great. Thank you so much for taking the questions.
Speaker Change: Sounds great. Thank you so much for taking the question.
Speaker Change: Thank you and one moment, Sir the next question.
Vivian: The next question will come from the line of Mark Massaro of BTIG. Your line is open. Hey guys, this is Vivian on for Mark. Thanks for taking the questions. So I believe you've had the Category 1 CPP code in hand for about five months now. I think this was intended to incentivize customers to get reimbursed for running applications. Just wondering how you've seen this play out as a tailwind thus far?
Speaker Change: The next question will come from the line of Mark Massaro of <unk>. Your line is open.
Speaker Change: Hey, guys. This is Ian on for Mark Thanks for taking my questions.
Speaker Change: So I think we'll have the category one CPT code and plan for about five months now.
Speaker Change: I think this is intended to incentivize customers to get reimburse for.
Running applications.
Speaker Change: Wondering how you're seeing that as a car running thus far.
Eric Holmlin: Yeah, thank you, Vivian. A couple of things, just to... We make sure that we vocalize the situation around the Category 1 CPT code accurately. That was something that a OGM customer petitioned the AMA for, and through that process, the AMA established the code. And that process includes a pretty rigorous and deep interaction through the applicant, but with the field in representing Current Utilization characteristics and future plans. And so, you know, the AMA establishing that CPT code indicates that, you know, optical genome mapping and hematologic malignancies is something that is well established and part of the routine.
Speaker Change: Yes, Thank you Vivian so.
Speaker Change: A couple of things just to.
Speaker Change: Make sure that we.
Speaker Change: Vocalize the situation around the category one CPT code accurately that that was something that a ODM customer.
Speaker Change: Petition the MAA for <unk>.
Speaker Change: Through that process the MMA established the code ad.
Speaker Change: That process includes a pretty rigorous and deep interaction through the applicant, but with the field and representing <unk>.
Speaker Change: Current utilization.
Speaker Change: Characteristics and future plans and so yes the.
Speaker Change: The MAA, establishing that CPT code indicates that optical genome mapping in hematologic malignancies is something that is.
Speaker Change: Well established and part of the routine what we can say anecdotally ourselves is that earlier that one of the number. One question that is asked when somebody is evaluating optical genome mapping is whether there is a CPT code for it so it's obviously something that.
Eric Holmlin: What we can say anecdotally ourselves is that really that one of the number one questions that is asked when somebody is evaluating optical genome mapping is whether there is a CPT code for it. So, it's obviously something that prospective customers have in mind. And so, you know, we're able to cite the fact that the AMA has established this code. And so we do believe that it is something that reduces barriers to adopt.
Speaker Change: Prospective customers have in mind and so.
Speaker Change: We're able to.
Speaker Change: Cite the fact that the AMA has established this code and so we do believe that it is something that reduces barriers to adoption.
Eric Holmlin: Okay, perfect. And then in your last quarter, you've disclosed some metrics around your routine user customer group that are driving the majority of consumables purchasing and how you're expecting that rev per customer to take up. Just how are you seeing either of those two metrics trend here? Yes, they're stable. So I think we talked about an estimate of 118 customers as of the end of the year. David Holmes, Sung Nam, David Holmlin, Destiny Buch, Michael Okunewitch, Gulsen Kama, Eduardo Subjective classification that we make, which is why I'm saying, you know, relatively stable and gone up a little bit and not citing specific numbers.
Speaker Change: Okay perfect.
Speaker Change: And one last quarter.
Question on optics around Europe.
Speaker Change: Customer groups.
Speaker Change: And that is driving the majority of consumables purchasing and how you're expecting that rev per customer to take up.
Speaker Change: How are you seeing either of those two metrics trend here.
Speaker Change: Yes, they are stable.
Speaker Change: So I think we talked about an estimate of 118.
Speaker Change: Customers.
Speaker Change: As of as of the end of the year.
Speaker Change: Falling into that group and that number is is pretty stable. It's gone up a little bit we have had some new installations going into these.
Speaker Change: Labs, it's a little bit of a.
Speaker Change: Subjective classification that we make which is why I'm, saying.
Speaker Change: Relatively stable and gone up a little bit and not citing specific numbers, it's something that we need to pay attention to and see how that categorization and metric evolves over time, but when we look at.
Eric Holmlin: It's something that we need to pay attention to and see how that categorization and metric evolves over time. But when we look at the For example, the, you know, the sort of like same-store sales, if you will, the year-over-year purchases of flow cells amongst that stable group, amongst the entire user base, it's these routine users that are purchasing about 80 to... you know, 80, more than 80% of the total number of flow cells sold are sold into this routine use group. So, I feel like it's consistent with what we expect, and if you dig a little bit deeper, you find that that utilization rate is about double the average, and so I think we're continuing to see that pattern, and the question is, you know, can we drive those numbers up in terms of the average utilization?
The.
Speaker Change: For example, the.
Speaker Change: The sort of.
Speaker Change: Same store sales, if you will the year over year purchases of flow cells amongst that stable group.
Speaker Change: Amongst the entire user base.
Speaker Change: These routine users that are purchasing about 80.
Speaker Change: Two.
Speaker Change: 80, more than 80% of the total number of flow cell sold are sold into this routine use group. So I feel like it's consistent with what we expect and if you dig a little bit deeper you find that that utilization rate is.
Double the average and so I think we're continuing to see that pattern.
Speaker Change: And the question is can we drive those numbers up in terms of the average utilization.
Eric Holmlin: Thank you. per purchaser. I think that'll take a little bit of time as our strategy you know, is implemented, but we're starting out good there. And, and, you know, we see consistent. you know, consistent number.
Speaker Change: Her purchase or I think that it'll take a little bit of time as our strategy.
Speaker Change: Is implemented but we're starting out good there and we see consistent.
Speaker Change: Consistent numbers.
Eric Holmlin: Okay, got it. And if I could just squeeze in one more. Just on the folio guide for instrument placements is understandably conservative. It just seems like you're not seeing that much attrition in your existing installed base, which I might have expected, just given the focus on the prior utilization customers. Can you just talk about your assumptions for instrument placements for the rest of the year? Yeah, I mean, I think that, you know, it's based on, it's based on a plan that we have, you know, of doing, you know, Five or so new installs per quarter.
Speaker Change: Okay got it and if I could just squeeze in one more.
Speaker Change: For you guys for instrument placements.
Speaker Change: And understandably conservative.
Speaker Change: It just seems like youre not seeing that much attrition in your existing.
Speaker Change: Called base, which I might have expected just given the focus on the high utilization customers can you just talk about I.
Speaker Change: Our assumptions for instrument placements for the rest of the year.
Speaker Change: Yes, I mean I think that.
Speaker Change: It's based on.
Speaker Change: It's based on a plan that we have.
Speaker Change: Doing.
Speaker Change: Five or so new installs per quarter. So that gets you to 15 to 20 now we did nine new installs here in this first quarter some of that is.
Eric Holmlin: So that gets you the 15 to 20 now We did nine new installs here in this first quarter. Some of that is is is carry over from of the fourth quarter, so a little bit of a. momentum going into the year, you know, I think for the remainder of the year, if we're staying around this, you know, five level, that'll be a good outcome. So, you know, those are the assumptions that are driving that. And, you know, we are seeing some attrition in the install base as we start to move away from basic research. Some labs that have been on short-term contracts, for example, are saying, okay, well, if you're not supporting these applications, you know, we'll wait until you support those applications.
Speaker Change: Is carryover from.
Speaker Change: The fourth quarter, so a little bit of a.
Speaker Change: Momentum going into the year.
Speaker Change: For the remainder of the year, if we're staying around this.
Speaker Change: <unk>.
Speaker Change: Level that will be a good outcome. So those are the assumptions that are driving that.
Speaker Change: And we are seeing some attrition in the install base as we start to move away from basic research. Some labs that have been on short term contracts for example are saying, okay well.
Speaker Change: Youre not supporting these applications.
Speaker Change: We'll wait until you support those applications and so we are seeing some systems coming back and it's not alarming to us and we're not seeing it at all across our group of routine users. So.
Eric Holmlin: And so we are seeing some systems coming back, and it's not alarming to us, and we're not seeing it at all across our group of routine users. So, you know, there will be attrition, but we don't expect that attrition to have a meaningful, meaningfully negative effect on consumables.
Speaker Change: There will be attrition, but we don't expect that attrition to have a meaningful meaningfully negative effect on consumables purchases.
Operator: Thanks so much for taking the questions. Thank you. If you would like to ask a question, please press star 11 on your telephone. One moment, please.
Speaker Change: Perfect. Thanks, so much for taking the questions.
Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone.
Joanne Lee: And our next question will be coming from the line of Jason McCarthy of Maxim Group. Your line is open.
Speaker Change: On that please and our next question will be coming from the line of Jason Mccarthy of Maxim Group. Your line is open.
Eric Holmlin: Hi, this is Joanne Lee on the call for Jason McCarthy. Thanks for taking our question. Just one from us. Could you just talk a little bit about what steps you're taking to increase SAFIRE utilization among existing routine use? Yeah. It's, you know, a handful of, you know, interactions, but I would really cite three things. Number one is working with those customers. especially the ones doing hematologic malignancy research to adopt our VIA software. and become proficient. And the reason that we have this focus is that via software. is armed with all sorts of. Artificial Intelligence. and other automated steps for reporting and annotation of samples.
Joanne Lee: Hi, This is Joanne Lee on the call for Jason Mccarthy. Thanks for taking our question just one from us.
Joanne Lee: Can you just talk a little bit about what steps, you're taking to increase sapphire.
Joanne Lee: Inflation among existing routine users. Thank you.
Joanne Lee: Yes.
It's.
Joanne Lee: A handful of.
Joanne Lee: Interactions but.
Joanne Lee: I would really cite three things number one.
Joanne Lee: Is.
Joanne Lee: Working with those customers, especially the ones doing hematologic malignancy research to become to adopt our via software and.
Joanne Lee: And become proficient in it.
And the reason that we have this focus is that via software.
Joanne Lee: As armed with all sorts of.
Joanne Lee: Artificial intelligence.
Joanne Lee: And other automated steps for.
Joanne Lee: Reporting.
Joanne Lee: And annotation of samples.
Eric Holmlin: this combination of AI and automation. really speeds up. the process of analyzing and reporting a sample. And so. In our view, it increases. the capacity of each system, of each lab, using optical genome mapping, whether it's the SAFIRE system or the Stratus system. So adoption of VIA, not just adoption, though, we need to work with them to become proficient, will increase their capacity and at least create the potential for them to utilize.
Joanne Lee: This combination of.
Joanne Lee: And automation.
Really speeds up the process of analyzing and reporting a sample and so.
Joanne Lee: In our view it increases.
Joanne Lee: The capacity of each.
System of each lab using optical genome mapping, whether it's the sapphire system or the stratus system. So.
Joanne Lee: Adoption of via not just adoption, though we need to work with them to become proficient will increase their capacity and at least create the potential for them to utilize more.
Eric Holmlin: In addition to this via adoption and proficiency, we are eager to support labs in expanding their menus, so they may adopt for one particular indication in hematologic malignancies, let's say acute myeloid leukemia or AML, Great. So they adopt for AML, and that's what their principal use case is, but now there's been this publication around multiple myeloma. It's clear that they can adopt for other indications, and in doing so, they expand their menu and start to run more samples. We believe overall that these labs doing hematologic malignancy research have a lot more samples to run on the system, and so it's really giving them the use cases to be doing that menu expansion.
Joanne Lee: In addition to this via adoption and proficiency.
Joanne Lee: We are eager to support labs in expanding their menu. So they may adopt for one particular indication in hematologic malignancies, let's say.
Joanne Lee: Acute myeloid leukemia or AML.
Joanne Lee: Great. So they adopt for AML and Thats, what Theyre principal use cases, but now there's been this publication around multiple myeloma.
Joanne Lee: It's clear that they can adopt for other indications and in doing so they expand their menu and start to run more samples. We believe overall that these labs doing hematologic malignancy research.
Joanne Lee: Have a lot more samples to run on the system and so it's really.
Joanne Lee: Giving them the use cases to be doing that.
Eric Holmlin: And then third is just overall proficiency with the workflow. Optical genome mapping is a unique workflow. One of the reasons it is so complementary to next-generation sequencing, just as an example, is that it's completely different. The DNA isolation step is unique, uses different chemistry, different workflow, different steps, and enables the access to completely different information. It's why it's so incredibly useful, but it is a unique process and so our team, and really the And really the largest organization in the company is the organization that's dedicated to supporting these customers and making them as proficient as they can be in the workforce.
Joanne Lee: Menu expansion and then third is just overall proficiency with the workflow optical genome mapping is a unique workflow one of the reasons it.
Joanne Lee: It's so complementary to next generation sequencing just as an example is that it's completely different.
Joanne Lee: DNA isolation step is unique uses different chemistry different workflow different steps and enables the access to completely different information and that's why it's so incredibly useful but.
Joanne Lee: It is a unique process and so our team and really the largest organization in the company as the organization is dedicated to supporting these customers and making them as proficient as they can be in the workflow so software proficiency to increase capacity.
Joanne Lee: So, software proficiency to increase capacity. support around menu expansion, and then overall proficiency with the workflow to make sure that they can process the samples that are in their lab. Those are the things that we believe will drive. The Expansion and Utilization on a Per-Customer Basis. Got it. I appreciate all the insight. Thanks so much. Thank you, and there are no more.
Joanne Lee: Support around menu expansion and then overall proficiency with the workflow to make sure that they can process. The samples that are in their lap those are the things that we believe will drive.
Joanne Lee: The expansion in utilization on a per customer basis.
Joanne Lee: Got it I appreciate all the insight thank so much.
Joanne Lee: Thank you.
And there are no more.
Eric Holmlin: More questions in the queue, I would like to turn the call over to Eric for closing remarks. Please go ahead. Okay, well, thank you, Lisa.
Joanne Lee: More questions in the queue I would like to turn the call over to Eric for closing remarks. Please go ahead.
Eric: Okay, well. Thank you Lisa Thank you everybody for joining and we look forward to updating you on our second quarter 2025 results in a <unk>.
Eric Holmlin: Thank you, everybody, for joining, and we look forward to updating you on our second quarter 2025 results in a few weeks. Thank you very much.
Joanne Lee: Few weeks, thank you very much.
Operator: Thank you for participating in today's conference call. You may now disconnect.
Joanne Lee: Thank you for participating in today's conference call you may now disconnect.
Joanne Lee: Okay.
Joanne Lee: [music].
Joanne Lee: Okay.
Operator: Thank you for watching!
Joanne Lee: Okay.
[music].
Joanne Lee: Okay.
Joanne Lee: [music].