BillionToOne, Inc. (BLLN) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the BillionToOne Second Quarter 2026 Earnings Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to turn the conference over to your speaker today, [ David Deuchler ], Investor Relations. 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. And with that, I will turn the call over to Oguzhan.

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 health care 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 4 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 couting 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 0 to $438 million in annualized revenue run rate in 6 years. But 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 United States 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, but 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 5 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 towards a higher proportion of oncology tests. And 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 28. As a reminder, it is the first and only noninvasive 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 Confirm ] screen. Unity Confirm gives patients who cannot or choose not to proceed to invasive diagnostic testing a noninvasive 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 Niploy ] 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 [ nose ] 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 noninvasive testing. But 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. So we believe that this expansion will meaningfully increase our serviceable market. The panel screens for prevalent actionable conditions selected from ACOG, [ ACMG ] and [ RAS ] 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 2 prospective cohorts and 12 tumor types. Molecular progression strongly predicted worse survival, notably, a stronger predictor than imaging alone and stronger still when the 2 are combined. The test also separated radiographically stable patients into true responders and nonresponders, further demonstrating value over standard of care imaging. This publication is designed to support our pursuit of MolDX Medicare coverage for Northstar Response response in the IO and [ IO ] combination therapy settings. Since response accounts for almost 2/3 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 QC failure rate below 1% compared to 15% to 30% typical of assays that require tissue sequencing. We are also updating Northstar Select on September 1 in 2 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 diagnosis 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's Aura platform in under 5 months, a record speed for any laboratory to launch on Epic Aura and completed our first Aura health system integration in just 2 weeks from start to first test order. Epic Aura removes a critical barrier to health system adoption. It will still take time to convert health systems since each health system's IT team must slot our integration into a road map that is often 2 to 4 quarters out, but we expect the impact to be meaningful as we enter next year. Given how quickly our oncology tests are scaling, we also signed a lease for a dedicated 62,000 square foot oncology production lab directly across from our existing prenatal production lab in Union City, California. Design and build-out are underway with production expected by the end of 2027, and the facility is designed to support oncology capacity of approximately 5,000 tests per day over time. Looking at each product line, both prenatal and oncology contributed meaningfully to our growth. Prenatal revenue in the second quarter was $95.8 million, up 56% year-over-year, driven by strong commercial execution and rising ASPs. Oncology was even faster with its revenue growing 176% year-over-year, nearly 3x to $13.7 million, an annualized revenue run rate of approximately $55 million. Our total revenue performance in the quarter demonstrates the remarkable growth we have delivered in the last 6 years, rising from approximately 0 to $438 million in annualized run rate. Total revenue was $109.4 million in the quarter, representing 64% year-over-year growth, driven by strong year-over-year increases in both tests delivered, up 35% and ASP up 21%. I would note that while reported revenue was only slightly up sequentially, that understates our underlying momentum. Excluding true-up revenue, total revenue grew 8% sequentially quarter-over-quarter. The sustained level of growth continues to be an important part of our pillars. Moving to our third pillar and starting with our ASPs. Overall ASP increased 21% year-over-year to $551 per test. ASP did decline about $20 sequentially, but this is simply a result of true-up timing. True-up was $49 per test in the first quarter versus $14 per test in the second quarter. Importantly, excluding the true-ups impact, ASPs increased $15 quarter-over-quarter. During the quarter, through a mutual agreement, we held more than $10 million of claims while waiting for the in-network implementation of our codes by national payers. This had a temporary impact on cash collections, slightly impacted the ASPs that we could realize and potentially reduced the true-up revenue for the quarter. We expect this to resolve through the second half of the year as these claims are processed and paid. The more important underlying signal is this. Excluding true-up, overall ASP continued to increase sequentially, driven by a record number of payer contracts signed in the quarter. In addition to driving ASP growth, we have remained committed to our operating philosophy of continuous improvements to reduce COGS per test. Overall COGS per test was $161 in the second quarter, up from $152 in the first quarter and $156 a year ago, with the increase driven by the shift in our volume mix towards oncology. Underneath that mix effect, the operational discipline is very much intact. Prenatal COGS was approximately flat sequentially, even with the Unity Confirm launch, and we achieved COGS reductions of more than 10% quarter-over-quarter in oncology. As oncology continues to grow faster than prenatal, we expect overall COGS per test to rise gradually over time. As a result, our gross margin held at 70.5% in the second quarter, approximately 5 percentage points higher year-over-year, driven by higher ASPs even as our earlier-stage lower-margin oncology tests grew more than 100% during this same period. Importantly, small quarter-over-quarter differences in gross margin over the past 4 quarters are almost entirely attributable to quarterly true-up differences. Excluding true-up, our gross margin has been remarkably stable at around 70%, even with the significant mix shift towards oncology. By continuing to drive ASP increases across both prenatal and oncology and by continuing to reduce COGS in oncology, we expect to maintain strong gross margins at or above 70%, even as oncology becomes a much bigger part of our overall business. With that, I will turn the call over to Ross to review our financial results and guidance before I conclude.

Thank you, Oguzhan. As Oguzhan mentioned, in Q2 of 2026, we had a strong performance that combined 64% year-over-year revenue growth with a 5% GAAP operating margin and a 15% adjusted EBITDA margin. Total revenue in the second quarter of 2026 was $109.4 million compared to $66.6 million in the second quarter of 2025, representing an increase of 64%. Both our prenatal and oncology product lines demonstrated strong growth in the quarter. Prenatal revenues consisting of clinical testing revenues and revenues from clinical trial support and other services increased 56% to $95.8 million in Q2. Oncology revenues increased 176% to $13.7 million in Q2 of 2026 versus Q2 of last year. Our total revenue growth was driven primarily by test volume growth across both prenatal and oncology as well as continued expansion of both our prenatal and oncology ASPs year-over-year. True-up revenue was $2.8 million in the second quarter of 2026 compared to $9.2 million in the first quarter of 2026 and $2.1 million in the second quarter last year. Excluding true-up revenue, total revenue grew 8% sequentially versus the first quarter of 2026. Gross profit in the second quarter of 2026 was $77.1 million compared to $43.5 million in the second quarter of 2025, resulting in a gross margin of 70.5% in the second quarter of 2026 versus 65.3% in the second quarter last year. The increase in gross margin was primarily attributable to continued increases in our overall ASP. Total operating expenses were $71.6 million in the second quarter of 2026 compared to $45.1 million in the comparable prior year quarter, representing an increase of 59%. Within total operating expenses, R&D expense was $17.3 million in the second quarter of 2026 compared to $11.8 million in the comparable prior year quarter. SG&A expense was $54.3 million in the second quarter of 2026 compared to $33.3 million in the comparable prior year quarter. Operating income was $5.5 million in the second quarter of 2026 compared to an operating loss of $1.6 million in the second quarter of 2025. Our Q2 operating profit margin was 5% compared to the 16% operating margin we delivered in the first quarter of 2026. Slightly over half of the difference in operating profit compared to Q1 was due to the difference in true-up revenue between the 2 quarters. The remaining portion was driven by continued investment in our commercial and R&D organizations as well as faster growth in oncology. Adjusted EBITDA in Q2 represented a 15% margin. Net income available to common shareholders was $8.1 million or $0.15 per diluted share in the second quarter of 2026 compared to a net loss of $0.2 million for the same period in 2025. Looking at the cash flow statement for the second quarter. The cash flow from operations was $9.1 million, while capital expenditures were $4.0 million. This resulted in free cash flow of $5.1 million in the second quarter of 2026. We are well capitalized with a very healthy balance sheet. We ended the second quarter with $549 million in cash and equivalents. We believe our balance sheet positions us for strong growth moving forward, particularly given our intent to continue to manage the business for profitability and positive cash flow. Finally, I will provide an update on our full year guidance for 2026. We are reiterating our 2026 total revenue outlook of $450 million to $465 million, representing growth of approximately 48% to 52% compared to full year 2025. We also expect to operate the business such that it will continue to generate profitability similar to current levels even with significant continued investments. I will now turn the call back to Oguzhan to conclude.

Thank you, Ross. In summary, we are transforming health care, one molecule at a time, one patient at a time. My confidence, as always, is rooted not in any single element, but in the compounding nature of what we have built. Each product we launch makes our platform more powerful from Unity Confirm to our expanded fetal risk screen to Northstar Origin. And each study we publish further validates the clinical utility of our technology as our Northstar Response publication did this quarter. Our financial profile remains best-in-class for our industry. Once again, this quarter, we demonstrated strong revenue growth to $438 million in annualized run rate. We held gross margins above 70%, and we show that rapid growth does not have to come at the expense of profitability. We are powered by a team of highly motivated, mission-driven individuals who show up every day with a shared purpose to make a meaningful difference in patients' lives. Our ambition remains clear: to transform molecular diagnostics, build a category-defining company and earn a place in the S&P 500. We are pleased with our progress and look forward to updating you as the year progresses. Thank you. Over to the operator.

[Operator Instructions] Our first question comes from Mark Massaro with BTIG.

Maybe the first one, obviously, it looks like the true-up number dropped by approximately $6 million or so in Q2 relative to Q1. I guess, Oguzhan and Ross, I just wanted to check if ex true-ups, just double checking that your prenatal test revenue would have increased sequentially. Is that correct?

That is correct, Mark. Both test volumes and ASPs for prenatal ex true-up actually increased. So the combination increased significantly as well. Ross, do you want to comment on the actual numbers.

Or the actuals...

On the prenatal revenue?

Yes. Prenatal revenue, honestly, Mark, you can assume that virtually all of the true-up is related to prenatal. We do have a chart, I think it's Slide 14 in the deck, where I think you can make some pretty good estimates as to where the prenatal revenue is ex true-up. So I don't have the actual numbers right in front of me, and we haven't given out those specifics in the past, but it is up more than a couple of million dollars sequentially ex true-up.

Yes. Okay. And then I do understand you guys operate in a competitive market. There are many other players operating in the space. I know you've been taking share for years now. I guess, can you just speak to what you might be seeing in the competitive market? And then related to that, my last question, you did accelerate hiring of sales reps, it sounds like relative to your plan. Just curious if any of those stepped-up hires might have something to do with the competitive environment.

So second quarter volumes were almost entirely as we expected in the quarter, Mark. We did grow as much as we expected in prenatal and slightly above expectations in oncology with respect to test volume. We weren't doing the hiring due to the competitive environment, but actually due to continued opportunity that we have, especially with respect to health systems. We are managing the business for more medium- to long-term growth. And there are maybe about 4 factors that we believe that will come together in the next 2 to 4 quarters that will really drive significant growth in prenatal. The hiring of sales reps is one. But of course, that takes time for them to be onboarded and be productive and start penetrating health systems. Just as we onboard these sales reps, you need Unity Confirm is opening up doors to [ NOS ] health systems. And we believe that will be further accelerated with more data readouts that we'll have in the next 2 to 3 quarters. Third, we completed the onboarding to Epic Aura platform faster than any other lab. And that will take 2 to 4 quarters to see a significant impact, but we are executing extremely well there. And then finally, I want to really underline the importance of the 130 gene fetal screen launch. This is going to be a significant competitive advantage, but it will make an even bigger impact in health systems where they want a portfolio of offerings, including these large panels. So we really believe like these 4 factors are going to come together in the next 2 to 4 quarters to create an engine of health system adoption that can drive substantial volume growth. And what we are really doing in the first half of the year is to -- with the hiring pipeline that we have been able to generate post going public, we have accelerated hiring so that all of these reps are joining and getting onboard at the right time so that as all of these opportunities are coming together, we have a really strong chance of converting these test volumes from health systems.

Yes. Maybe just a quick follow-up, Mark. I did look up some of the numbers to try to answer the earlier part of your question. And I'm not going to get overly specific, but I think quarter-to-quarter, we did see about a $4.5 million increase in prenatal revenues. If you exclude the true-up, it's about 5% growth sequentially. So just to get a little more specific.

Our next question comes from Dan Arias with Stifel.

Oguzhan, I think you alluded a little bit to the volume trend there. Can you maybe just put some additional color to the trend sequentially in oncology, if you strip out the ASP dynamic, to what degree was quarterly volume up as a trajectory? And then how should we think about things for the second half of the year relative to the way that maybe you were thinking about things earlier in the year?

So ASPs for oncology actually did not change in quarter-over-quarter. We are waiting and working on the MolDX coverage of response. So until that happens, ASPs are pretty stable in oncology. And if you look at the chart that Ross referred to true-up for oncology was both quarters was almost very minimal as well. So all of the growth that you are seeing sequentially is coming from the test volume growth in oncology. The oncology test volumes are doing really well, even ahead of our expectations. And that is one of the reasons that we have we have started to build this oncology lab to -- I think we are seeing that we are winning in the market with the products that we have. And as we are adding more competitive components to our oncology products, we are very confident on the trajectory.

Do you think that, that trajectory will lead to sequentially up volumes each quarter? I mean 4Q can be a little bit of a funky quarter, but you do sound like you have good momentum. So not to put too fine of a point on it, but I'm just curious whether 2Q to 3Q can be up and then 3Q to 4Q can be up as well for -- so that we model this thing correctly.

Yes. I think 2Q to 3Q, we certainly see very strong momentum. And as you mentioned, 3Q to 4Q tends to be a little bit of in terms of number of providers that we add, it tends to be a strong quarter. But in terms of the number of accessioning days and how the test volumes and revenues translate, it tends to be a little bit of a shorter quarter. But we are seeing that our oncology is progressing ahead of the plan.

Our next question comes from Subbu Nambi with Guggenheim.

This is [ Ricky ] on for Subbu. So you gave some color on the Unity Confirm launch and adoption and the 50% opt-in for the eligible results. So while it's still early in the launch, do you think that that's already starting to drive share gains in NIPT?