A Storied History of Innovation

Standard BioTools Inc. was founded in 1997 and is headquartered in South San Francisco, California. The company's early years were focused on developing and commercializing its proprietary technologies, facing challenges common to many startups, including securing funding and establishing a customer base. However, Standard BioTools persevered, and by the mid-2000s, it had begun to gain traction in the market, with its instruments being adopted by leading academic, government, pharmaceutical, and biotechnology research laboratories.

In 2011, the company underwent a strategic shift, expanding its focus beyond just instrument sales to also include a growing portfolio of consumables and services. This allowed Standard BioTools to build deeper relationships with customers and create a more recurring revenue model. Despite this positive development, the company continued to face headwinds, including increased competition and pricing pressures.

A significant milestone in the company's history came in 2019 when Standard BioTools acquired SomaLogic, a leading provider of proteomics solutions. This acquisition expanded the company's capabilities and customer reach, positioning it as a leading player in the multi-omics space. The integration of SomaLogic presented its own set of challenges as the company worked to streamline operations and realize synergies. During this time, Standard BioTools also faced broader industry headwinds, including budget constraints and pandemic-related disruptions.

The Transformative Merger with SomaLogic

In 2024, Fluidigm underwent a transformative event with the completion of its merger with SomaLogic, a leading provider of proteomics solutions. This strategic combination brought together Fluidigm's expertise in microfluidics and mass cytometry with SomaLogic's proprietary SomaScan platform, which offers a comprehensive proteomics solution with broad proteome coverage, low limits of detection, and high reproducibility.

The merger, which was finalized in January 2024, created a powerhouse in the life sciences industry, now operating under the name Standard BioTools. The combined entity boasts a diverse portfolio of essential technologies, a global customer base, and a strengthened financial position to drive further innovation and expansion.

Operational Discipline Amidst Market Challenges

The current market environment has presented some challenges for Standard BioTools, as customer budgets for capital equipment have remained tight and purchasing behaviors have been more conservative. However, the company has demonstrated its resilience and operational discipline in navigating these conditions.

In the third quarter of 2024, Standard BioTools reported revenue of $45 million, a 5% year-over-year decline, and $128 million in revenue for the first nine months of the year, down 9% compared to the same period in 2023. This performance reflects the broader industry trends, as well as the continued impact of the merger integration.

Despite the market headwinds, Standard BioTools has made significant progress in realizing the synergies from the SomaLogic acquisition. The company has already operationalized $80 million in expected cost savings, with a 24% year-over-year reduction in non-GAAP operating expenses in the first nine months of 2024. This disciplined approach has enabled the company to accelerate its path to profitability, targeting adjusted EBITDA breakeven by 2026.

Diversifying the Revenue Mix and Expanding Footprint

One of the key focuses for Standard BioTools has been to diversify its revenue streams and customer base. While the company's historical reliance on a few large customers for its SomaScan lab services business has been a challenge, it has seen encouraging signs of broadening its customer base.

Outside of the top five SomaScan customers, the company's lab services revenue grew in double digits year-over-year during the first nine months of 2024. Additionally, Standard BioTools is working to expand its footprint beyond its core lab in Boulder, Colorado, by deepening its network of authorized SomaScan sites globally. This strategy includes the addition of a major U.S.-based biopharmaceutical customer during the third quarter, which should drive further adoption of the SomaScan platform.

The company's consumables business, which includes the sale of Integrated Fluidic Circuits and reagents, has been a bright spot, growing 13% year-over-year in the third quarter and 21% year-to-date. Standard BioTools views this high-margin revenue stream as a strategic priority, both organically and through potential acquisitions, as it aims to shift its overall mix toward more recurring and profitable offerings.

Investing in the Future: Proteomics and Genomics

Standard BioTools' proteomics business, which includes the SomaScan platform, CyTOF, and Imaging Mass Cytometry solutions, accounted for 77% of the company's revenue in the third quarter. Despite the industry-wide headwinds, Standard BioTools remains highly optimistic about the long-term potential of its proteomics offerings, particularly the SomaScan platform.

The company recently announced the launch of a new product offering, the individual SOMAmers, which provides researchers with access to the 11,000 individual protein measurement reagents that make up the SomaScan assay. This move is a testament to Standard BioTools' commitment to expanding the commercial potential of its proprietary proteomics technology.

Furthermore, the company's partnership with Illumina to develop and commercialize a co-branded SomaScan solution on Illumina's next-generation sequencing platforms remains on track for a full commercial release in the first half of 2025. This collaboration aims to democratize the SomaScan assay by leveraging Illumina's vast installed base of over 2,000 sequencing instruments worldwide.

In the genomics segment, which includes the Biomark product line, Standard BioTools has adopted a more disciplined approach, managing the business for sustainable profitability. While this part of the company's operations has faced a year-over-year decline, the team has demonstrated the ability to create a lean, contribution margin-positive business unit through the application of the Standard BioTools Business System principles.

Financials

Standard BioTools reported revenue of $45 million in the third quarter of 2024, representing a 5% year-over-year decline. For the first nine months of the year, the company generated $128 million in revenue, down 9% compared to the same period in 2023. Despite these challenges, the company has made significant progress in reducing its operating expenses, with a 24% year-over-year reduction in non-GAAP operating expenses in the first nine months of 2024.

In the most recent fiscal year (2023), Standard BioTools reported revenue of $106.34 million, a net income of -$74.66 million, operating cash flow of -$43.29 million, and free cash flow of -$46.12 million. For the third quarter of 2024, the company reported revenue of $44.97 million, net income of -$26.94 million, operating cash flow of -$27.87 million, and free cash flow of -$30.12 million.

The 5% year-over-year revenue decrease in Q3 2024 was primarily driven by a 42% decline in instrument revenue, partially offset by a 13% increase in consumables revenue. The decrease in revenue was also partially due to unfavorable timing of large customer projects in the SomaScan lab services business.

Standard BioTools operates through two reportable segments: proteomics and genomics. The proteomics segment, which includes instruments, consumables, software, and services based on technologies used in protein identification, has been the primary driver of the company's revenue growth. Proteomics revenue grew 147% for the three months ended September 30, 2024, and 109% for the nine months ended September 30, 2024, compared to the same periods in the prior year. This growth was largely driven by the acquisition of SomaLogic.

The genomics segment, which includes instruments, consumables, software, and services based on technologies used in gene identification and function, experienced a decline. Genomics revenue decreased 8% for the three months ended September 30, 2024, and 7% for the nine months ended September 30, 2024, compared to the same periods in the prior year.

Liquidity

As of September 30, 2024, Standard BioTools maintained a strong financial position with $368 million in cash, cash equivalents, restricted cash, and short-term investments. This robust liquidity provides the company with a solid foundation to support its growth initiatives and navigate any near-term market volatility.

The company's debt-to-equity ratio stood at 0.125 as of September 30, 2024. Standard BioTools had a $10 million term loan facility, which was fully drawn as of December 31, 2023, but was fully repaid and terminated in March 2024. The company's current ratio was 3.76, and its quick ratio was 3.41 as of September 30, 2024, indicating a strong short-term liquidity position.

Looking Ahead: Navigating Challenges, Unlocking Opportunities

As Standard BioTools navigates the current market challenges, the company remains focused on executing its strategic priorities. The successful integration of SomaLogic, the realization of significant cost synergies, and the diversification of its customer base and revenue streams have positioned the company for long-term success.

The company's unwavering commitment to innovation, coupled with its operational discipline, has been a driving force behind its resilience. Standard BioTools is well-capitalized, with $368 million in cash, cash equivalents, restricted cash, and short-term investments as of September 30, 2024, providing a strong foundation to support its growth initiatives and weather any near-term market volatility.

While the external environment remains uncertain, Standard BioTools is confident in its ability to continue navigating these challenges. The company's strategic roadmap, which includes further expanding its proteomics offerings, strengthening its genomics business, and pursuing accretive acquisitions, positions it well to capture the abundant opportunities in the dynamic life sciences industry.

Standard BioTools has reiterated its full-year 2024 revenue guidance of $170 million to $175 million, demonstrating confidence in its ability to execute its strategic plans. Furthermore, the company is targeting to achieve adjusted EBITDA break-even for the full year 2026, highlighting its commitment to improving profitability and operational efficiency.

As Standard BioTools continues its transformation, the company's unwavering focus on operational excellence, customer-centricity, and innovative product development will be key drivers of its long-term success. Investors would be wise to closely monitor the company's progress as it executes its strategic plan and works to solidify its position as a leading player in the life sciences technology landscape.