Standard BioTools Inc. (NASDAQ:LAB) has emerged as a leading provider of differentiated multi-omics tools for research following its transformative merger with SomaLogic in January 2024. The combined entity has established a robust portfolio of essential, standardized next-generation technologies that assist biomedical researchers in developing medicines faster and better.

Business Overview

The company's strategic priorities are centered around revenue growth, improving operating discipline, and strategic capital allocation. In the first quarter of 2024, Standard BioTools reported revenue of $45.5 million, up 81% year-over-year, driven by the integration of SomaLogic's business. On a pro forma combined basis, revenue grew 2% year-over-year, largely in line with expectations amid ongoing macroeconomic challenges impacting the life science industry.

Standard BioTools' expanded portfolio offers products across multiple distinct categories, including instruments, consumables, field-based service, and the SomaScan service. Notably, the combined recurring sources of consumable and instrument support services revenue, bolstered by the extensive service and kit offerings, represented about 90% of total revenue in the first quarter, serving as a strong offset to softer capital equipment purchases.

Product Performance

Proteomics accounted for approximately 80% of total revenue in the first quarter, representing a 3% increase year-over-year. Standard BioTools continues to lead with the industry's most comprehensive and differentiated proteomics platform, comprising high-plex plasma proteomics, flow cytometry, and spatial biology. Despite the modest year-over-year growth, the company has a high conviction that these technologies represent exciting near- and long-term growth opportunities due to innovative applications and strong end-market demand.

On the genomics side, revenue declined 6% year-over-year as Standard BioTools manages this business for profitability, not growth. However, the company's strategic transition to use this technology as an OEM provider and strategic enabler to a core set of customers, including a leading proteomics company with approximately 200 OEM instruments in the field, represents a bright spot.

Financials

Standard BioTools' financial performance in the first quarter was marked by significant progress on the cost optimization front. On a pro forma combined basis, non-GAAP gross margin expanded by 300 basis points to 56%, driven by product mix and pricing. Additionally, non-GAAP operating expenses decreased by 26%, reflecting early traction on expense reduction initiatives that began in the second half of 2023.

The company is ahead of plan on its operating expense reduction target, expecting to achieve $50 million in annual savings by 2025, with $40-$45 million coming from SG&A and $5-$10 million from R&D. These savings are in addition to the reclassification of $7-$8 million in annual operating expenses into cost of goods sold, further enhancing the company's profitability profile.

Liquidity

Standard BioTools ended the first quarter with $464 million in cash, cash equivalents, restricted cash, and short-term investments. While cash burn was elevated in the quarter due to merger-related and other non-operating expenses, the company expects its operating cash burn to reduce significantly in the coming quarters. Standard BioTools remains well-positioned to fund both its non-operating cash needs and support the combined business to cash flow breakeven, which it targets to achieve in 2026.

Recent Developments

In addition to its operational and financial progress, Standard BioTools has also taken steps to streamline its capital structure. In March 2024, the company announced an agreement with its two largest shareholders, Viking Global and Casdin Capital, to exchange all outstanding shares of the company's convertible preferred stock for common stock, eliminating the associated preferred rights and privileges. This, coupled with the company's share buyback program, represents major steps forward in simplifying the capital structure, which management believes will make the company more attractive to new long-term investors and potential M&A partners.

Outlook

Looking ahead, Standard BioTools is reaffirming its full-year 2024 revenue guidance of $200 million to $205 million and expects to achieve approximately $300 million in revenue in 2026. The company remains committed to targeted investment in its existing technologies and platforms, as well as strategic M&A, while preserving shareholder value through share buybacks and capital structure optimization.

Conclusion

Standard BioTools has emerged as a growing leader in the life science tools sector, with a fortified balance sheet, diverse product mix, and a scaled platform that integrates critical life science solutions under one roof. The successful integration of SomaLogic has unlocked significant synergies and diversified the company's revenue streams, positioning it for sustained long-term growth and profitability.