BillionToOne, Inc. Class A Common Stock 2026 Q2 Earnings Call

Please go ahead. Good afternoon, everyone.

Thank you for participating in today's conference call. Joining me on the call from BillionToOne, we have Oguzhan Atay, Co-founder and Chief Executive Officer, and Ross Taylor, Chief Financial Officer. Earlier today, BillionToOne released financial results for the second quarter ended June 30, 2026. A copy of the press release is available on the company's website. Before we begin, I want to remind you that during this call, we may make forward-looking statements within the meaning of Federal Securities Laws. Such statements about future events may include statements about our financial outlook and performance, market size, our products and services, reimbursement coverage, future clinical performance, and other similar statements. We caution you that such statements reflect our current best judgment, and actual results may differ materially from those expressed or implied in any forward-looking statements.

Risk factors that may cause our results to differ are discussed in our filings with the SEC, including our previously filed annual report on Form 10-K, our quarterly report on Form 10-Q, to be filed following this call, and the current report on Form 8-K filed today. Any forward-looking statement made during this call is made as of today, August 5, 2026. If this call is replayed or reviewed after today, the information made during this call may not contain current or accurate information. BillionToOne disclaims any obligation to publicly update any forward-looking statements, whether because of new information, future events, or otherwise, except as required by law. With that, I will turn the call over to Ozan.

Good afternoon, everyone. Thank you for joining our second quarter 2026 earnings call. I would like to start by thanking our patients and providers who trust us with incredibly important healthcare decisions and our employees who show up every day with tremendous effort to build and deliver superior tests that improve our patients' care and remove the fear of the unknown. Before diving into our quarterly results, I would like to remind you of the four pillars that I believe make us a different category of molecular diagnostics company. The first pillar is our revolutionary technology platform, enabled by our patented QCT, Quantitative Counting Template technology. Our technology achieves single-molecule level sensitivity and precision with next-generation sequencing. This has allowed us to build unique category-defining products in both prenatal and oncology.

In turn, in our second pillar, our products have allowed us to scale rapidly from zero to $438 million in annualized revenue run rate in six years. We believe we are still in the early days, perhaps at less than 1% of what is possible, as we believe prenatal and oncology cell-free DNA testing can exceed an estimated $100 billion in the U.S. alone. Importantly, in our third pillar, with the higher signal-to-noise advantage that our unique technology offers us, and with our relentless focus on COGS reductions and ASP growth, we have been able to couple our rapid growth with a superior gross margin profile. We now have margins above 70%, with still significant room for expansion through ASP growth and COGS per test reductions.

Finally, this superior gross margin, combined with a culture of fiscal discipline and efficient operations incorporating AI, has allowed us to achieve GAAP profitability. We have done this at a much lower scale than our public competitors, with an accumulated deficit that is approximately 10% of theirs. In summary, we continue to track toward our long-term goal, which has remained the same: to build a category-defining generational company, transform molecular diagnostics and the standard of care for millions of patients, and become a member of the S&P 500. Our second quarter performance was strong across all pillars as we delivered another quarter with high growth, excellent margins, and positive operating income and cash flow. I will cover each pillar in more detail, to summarize, we are launching new products both in prenatal and oncology, and we have published data that we believe will support MolDX coverage for Northstar Response.

Our rapid growth continued with test volume up 35% year-over-year and revenue up 64% year-over-year. We maintained our superior gross margin profile, which was 70.5% in the quarter, an expansion of five percentage points year-over-year. Our gross margins stayed remarkably consistent in the past few quarters despite an increase in COGS per test as our mix shifts toward a higher proportion of oncology tests. Lastly, even as we accelerated our investments in commercial scale and R&D, we maintained a strong level of profitability, achieving $5.5 million of GAAP operating income, a 5% operating margin, and a remarkable 15% adjusted EBITDA margin. As a result, we increased our cash position to $549 million at the end of the quarter. Let me take you through the quarter pillar by pillar. Starting with our first pillar, our platform and products.

In prenatal, Unity Confirm has seen strong adoption following the launch on May 28th. As a reminder, it is the first and only non-invasive confirmation assay for high-risk pregnancies. It captures and sequences intact circulating fetal cells to provide 100% fetal fraction, a fundamentally different category from conventional cell-free DNA tests. We launched it as a specialized follow-on for high-risk pregnancies identified on our Unity Aneuploidy Screen. Unity Confirm gives patients who cannot or choose not to proceed to invasive diagnostic testing a non-invasive option they didn't have before, at a sensitive time when options may feel limited. The early reception of Unity Confirm has been exceptional. Providers are already ordering Unity Confirm on more than 50% of their eligible high-risk Unity Aneuploidy patients. We also continue to enroll patients in what we believe is the largest prospective circulating fetal cell-based study ever conducted.

In the meantime, Unity Confirm is opening doors even to no-see health systems that typically do not allow any sales reps. We expect its long-term impact for the Unity franchise to be significant, especially as future readouts from the study mature, and it is established as the next paradigm in non-invasive testing. Our prenatal product engine did not stop there. On August 17, we are expanding our UNITY Fetal Risk Screen to 130 genes, the largest panel on the market that doesn't rely on partner testing, by far leapfrogging competitive offerings. Approximately 50% of all providers prefer large panels for these inherited conditions. We believe that this expansion will meaningfully increase our serviceable market. The panel screens for prevalent actionable conditions selected from ACOG, ACMG, and RAST guidelines, and it reinforces Unity's position as the leader in cell-free DNA testing for recessive conditions.

Turning to oncology, we generated important new clinical evidence this quarter. On June 24, we published a peer-reviewed study in the Journal of Liquid Biopsy validating Northstar Response for monitoring immunotherapy and immuno combination therapy. This study included 142 patients and more than 750 samples across two prospective cohorts and 12 tumor types. Molecular progression strongly predicted worse survival, notably a stronger predictor than imaging alone and stronger still when the two were combined. The test also separated radiographically stable patients into true responders and non-responders, further demonstrating value over standard of care imaging. This publication is designed to support our pursuit of MolDX Medicare coverage for Northstar Response in the IO and IO combination therapy settings. Since response accounts for almost two-thirds of our oncology test volume, this coverage remains one of our most meaningful catalysts and is still expected by the end of this year.

Speaking of catalysts, we remain on track for our highly sensitive tumor-naive MRD launch by the end of the year as well. It is important to note that our liquid biopsy assays have a QCT failure rate below 1%, compared to 15%-30% typical of assays that require tissue sequencing. We are also updating Northstar Select on September 1st in two important ways. First, we are expanding the panel to 102 genes to cover recent and upcoming FDA therapy approvals, including the highly sensitive detection of MTAP copy number loss. MTAP loss is present in approximately 15% of all cancer patients and is the target of several promising ongoing clinical trials. As we previously discussed, copy number losses are extremely difficult to detect in liquid biopsy, a problem that our technology resolves.

Second, we are launching Northstar Origin, a tissue of origin add-on, which we believe will deliver best-in-class performance. With higher call rates than any similar offering. Roughly 3% of patients present with cancer of unknown primary, which results in a lack of effective therapy options. Moreover, the percentage of patients with uncertain diagnoses can reach 10% in community oncology settings, especially when they do not have access to detailed pathology workups. Northstar Origin uses QCT-based molecular counting of methylation to deliver 91% top 3 and 86% top 1 accuracy in identifying the tissue of origin, helping these patients get to a diagnosis and effective therapy. Turning to our second pillar, scalable rapid growth. In the second quarter, total test volume grew 35% year-over-year to approximately 196,000 tests, up approximately 8,000 sequentially. Our growth was in line with our expectations for prenatal and above expectations for oncology.

Importantly, we added approximately 70 sales representatives in the first half of the year, ahead of our plan, given the strength of our hiring pipeline. While this rate of hiring did have some impact on our short-term sales productivity, we expect our hiring to translate into faster growth exiting the year and into the early part of the next year, as these representatives become fully productive and penetrate the health systems, especially as these health systems also become EMR-integrated. Speaking of EMR integrations, we launched on Epic Aura platform in under five months, a record speed for any laboratory to launch on Epic Aura, and completed our first Aura health system integration in just two weeks from start to first test order. Epic Aura removes a critical barrier to health system adoption.