BillionToOne Third Quarter 2025 Earnings Call. [Operator Instructions]. Please be advised that today's call is being recorded. I would now like to hand the call over to your speaker today, David Deichlerm 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 third quarter ended September 30, 2025. 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, products and services, reimbursement coverage, future clinical performance and other 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 registration statement on Form S-1, 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, December 9, 2025. 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'll turn the call over to Oguzhan.

Thank you, David. Good afternoon, everyone. Thank you for joining our third quarter earnings call. Today marks our first earnings call as a public company, and we look forward to continuing a dialogue with the investment community as our business grows in the years ahead. In November, we completed a successful initial public offering on NASDAQ, raising $314 million in gross proceeds for the company. I'd like to start this call by thanking our dedicated and hard-working employees, along with our shareholders, all of whom made this substantial milestone possible. A new chapter for BillionToOne is just beginning, and I am excited for our future as a public company. At BillionToOne, we have 4 pillars of differentiation that we believe makes us a different type of molecular diagnostics company. Everything that we do starts with a revolutionary single molecule next-generation sequencing platform. This is enabled by our patented QCT, quantitative counting template technology, which achieves single molecule level sensitivity and precision. With our technology, we have built unique category-defining products, both in prenatal and oncology. In prenatal, we are redefining what it means to do noninvasive prenatal testing with our UNITY products by enabling a more efficient and more sensitive test to help mothers understand health status of their developing babies. In oncology, we offer Northstar Select to help guide therapy selection across multiple indications and Northstar Response, which helps physicians monitor the patient response to therapies. Both our prenatal and oncology products are highly differentiated and have a direct impact on critical decision-making for patients. Our unique technology and product portfolio have led to exponential growth rates even as we reached $334 million in annualized revenue run rate or ARR in the third quarter. That said, we believe that we are just scratching the surface of what is possible.…

Thank you, Oguzhan. As Oguzhan noted, total revenue in the third quarter of 2025 was $83.5 million compared to $38.4 million in the third quarter of 2024, representing an increase of 117%. Furthermore, revenue growth for both our prenatal and oncology product lines was strong in the quarter. Our prenatal revenues consisting of both our clinical testing revenues of $74.1 million and roughly $800,000 in revenues from clinical trial support and other services increased just over 100% to $74.8 million in Q3. Our oncology revenues increased 7.6x to $8.7 million in Q3 of 2025 compared to the same period last year. And oncology revenues increased 76% sequentially from $4.9 million in Q2 of 2025. Our total revenue growth was driven primarily by test volume growth across both prenatal and oncology as well as expansion of our prenatal and oncology ASPs. Our total revenues included true-up revenue resulting from higher cash collections related to tests delivered in prior periods. True-up revenue was $3.7 million in Q3 of 2025 and $8.7 million for the 9 months ending September 30, 2025. In comparison, true-up revenue was $1.4 million in Q3 of 2024 and $10.2 million for the first 9 months of 2024. Excluding true-up revenue, total revenue growth in Q3 was 116% compared to the same period last year. Gross profit in the third quarter of 2025 was $58.4 million, compared to $20.2 million in the third quarter of 2024, resulting in a gross margin of 70% in the third quarter of 2025 and 53% in the third quarter of 2024. The increase in gross margins was primarily attributable to increases in our overall ASP and a decline in our overall cost per test. I will note that ASPs and cost per test improved in all of our product lines this quarter. Total…

In summary, BillionToOne has made substantial progress this year, including outstanding performance in the third quarter of 2025. Yet we believe our journey is just beginning. We are transforming health care, one molecule at a time, one patient at a time to build a category-defining company and become the first one in our space to enter S&P 500. As a summary, in this quarter, we have had new publications supporting the superiority of our test and technology. Our Q3 outperformance was across all key metrics, leading to the best quarter over last year. And we are continuing to make investments, both in the growth of our sales team and investment in areas such as EMR. This is resulting in a guidance of a year-over-year growth of 10%, both for Q4 and full year 2025. I am very excited for the future of BillionToOne, and I'm confident in our ability to positively change the trajectory of millions of patients' lives. I will now turn the call over to the operator for the Q&A. Operator?

[Operator Instructions]. And our first question will come from the line of Mark Massaro from BTIG.

Congrats on your first quarter as a public company and on the IPO. So I wanted to start, it's nice to see the positive GAAP net income come in. I heard you talk about expecting that to continue to be positive in Q4. I am curious, is that also your plan to be positive in 2026? Now I recognize that you're ramping up some investments in the business probably in oncology as well. So how should we think about 2026 GAAP net income or even adjusted?

Thank you, Mark, and thank you for your kind words. While we are going to be leaving the kind of exact guidance for 2026 to JPMorgan Healthcare Conference, I think we have iterated previously that it is our aim to continue to grow our company in a profitable way. That is a goal that I think we will continue to maintain for years to come.

Okay. Great. And then maybe on the oncology side, I recognize it's early days. But I'd be curious, I think you've got your first test reimbursed by Medicare, I think the second test. I would be curious, Oguzhan, how you're thinking about timing there? And then can you just give us a sense for how significant of an investment you're planning to make in 2026? I don't need dollars, but just conceptually from a strategic standpoint.

Yes. Thank you, Mark. We have already invested significantly in clinical studies for our Northstar Response coverage. We believe that we have already completed the studies that we need to be able to get coverage. We will be supplementing it with additional studies in 2026, but we believe that the first Medicare coverage for Northstar Response based on the timing of MolDX discussions and back and forth as well, will come before the end of 2026.

And our next question will come from the line of Andrew Brackmann from William Blair.

Maybe just given this is the first time sending guidance as a public company, can you maybe just sort of talk about the overall process that you had in place for setting guidance? And I guess related to that, just the overall philosophy when it comes to sort of embedding conservatism or sort of [ errand bars ] around the forecast year?

Thank you, Andrew. I think we have been operating close to a public company for the last 2, 3 years now. As you may remember, we had even shared some of our projections back in JPMorgan earlier this year in the conference, both for actually 2025 and 2026. And as you can see from the numbers that we have been able to provide, we have been conservative in those projections. In general, I think our business has been very repeatable and predictable in general, but there are also a lot of tailwinds that we don't put into our models, especially with respect to ASP growth. So a lot of our test volume numbers are still conservative, but predictable, but then ASP increases tend not to be embedded into the guidance as much. So a lot of the tailwinds that we see with respect to increased coverage, increased contracting due to more of our tests getting paid result in outperformance compared to what we project. I would also note, though, we are almost to the end of this year. So the guidance that we are showing at least for Q4 and 2025 is actually relatively accurate.

Yes, I might just add. I think in some ways, the numbers we've put out for the Q4 guidance is somewhat analogous or similar to what we did with the Q3 flash numbers in the S-1. We tried to kind of bracket our expectations. So I think we put out a pretty reasonable guidance range for Q4.

Okay. I appreciate all that color. And then with respect to the investment in the EMR, I recognize that it's going to take several quarters to sort of roll out here. But I guess conceptually, how should we be sort of thinking about the opportunity and sort of the impact that this can have for your business? When you're speaking with customers, how much of this is sort of -- how much of those conversations are driving this decision? And how should we sort of think about the effect and the realization that you might be able to see?

Yes. Thank you, Andrew. And this is an area that I think many of the analysts also have uncovered in their independent searches as well. This is an area that we haven't invested as heavily compared to other companies because it can be significantly additional cost to be able to do some of these, it can cost millions of dollars. But I think what we are realizing and recognizing is that as we get into more and more health systems, this actually becomes really the only impediment for getting very large volume health system accounts switched to us. So we believe that this is going to essentially accelerate our adoption in these large health systems pretty significantly once it is live. It is also something that we have been probably the only standout company that hasn't done this. So I think it is pretty remarkable that we have been able to grow without the existence of this, but really this opens up almost about half of this prenatal market that has been previously much more difficult for us to penetrate that they really want those EMR integrations to be able to order this. As you know, especially in the prenatal setting, ease of use is critical. In fact, it is one of the value propositions of UNITY Fetal Risk screen. It allows a much easier way to screen for pregnancies for a very comprehensive set of conditions. But of course, not having EMR was essentially contradictory to that ease of use. So by being able to invest in here, I think we are going to get to parity with others, and that will really drive our continued growth at the rates that we have seen in the past.

[Operator Instructions]. Our next question will come from the line of David Westenberg from Piper Sandler.

I echo the response. Congrats on the IPO and coming out of the gate strong here. So your clinical spending annually is somewhere around $50 million versus some of your competitors that are spending 10x that. Do you think you're spending sufficiently? And how are you thinking about design in studies in oncology? We appreciate the data you gave about 51% increases in indels, SMVs and a copy number variation, et cetera, of 100%. But ultimately, your test is about finding more actionable mutations that get patients on the right therapy. Do you think that you could be running bigger studies, which may be say OS and disease-free survival, I would make an argument that you are like your competitors, building markets in this as well. So I know that was one question, but I have one follow-up.

Thank you, Dave, for the question. So I think we recognize that it is important to invest in clinical studies. But when we are investing in clinical studies, we are also really trying to understand what the question that we are answering is and whether that is going to be incremental to what physicians want. So with respect to therapy selection, of course, I think agree with you that we are finding -- and we have shown, I think, pretty conclusively that we are finding more mutations. Does that lead to better outcomes, clinical outcomes for the patients. In our discussions, at least with the physicians, that is not a question or a concern that they have. So we could run those studies, but I don't think it would change essentially the adoption curve that we are seeing in this very established area of therapy selection. On the other hand, though, as we go into more new areas like response monitoring and MRD, I believe that larger studies and more investment is certainly needed because those are the areas that physicians are maybe a little less comfortable, right? If they see essentially an EGFR mutation or a KRAS mutation that we detect, I think the physicians, I think, intrinsically understand and know that, that is going to lead to a better outcome for the patient. But it is not, I think, as clearly demonstrated in the response and MRD areas, not just by us, but broadly by all of the different diagnostics companies that especially outside of the adjuvant setting, if you detect progression early, if you are doing surveillance with MRD, is that leading to better clinical outcomes. And in those areas, I think it is important to continue to invest, but we are always going to be very thoughtful about what studies that we are running. So we will continue our investments. We will increase our investments as we go into -- especially into MRD. But I would also think that there are a lot of investments that happen in this field that might not really move the needle. So we really want to work on studies that actually make -- that answer the questions that oncologists have and that is, I think, really important and different in different areas. For therapy selection, I don't think that is OS, but in response monitoring and MRD, it may very well be.

And then sticking with oncology, how do you see the mix between monitoring and therapy selection in terms of test numbers per patient? And can you discuss how -- if a doc might ever use just one of your tests and use a competitor for maybe the other? I wouldn't think that would be that common, but can you talk about circumstances what it is? I'm just trying to think about that mix on a go-forward basis and any kind of variables that would change that?

Really good question. Because Response is a monitoring test, we see roughly a 2:1 ratio for Response test to Select tests. So 95% of our providers, as we also discussed in the roadshow, actually use Select and Response together. So it is very rare for a physician to only use Select or only use Response. But what we see after they use Select and Response together, some physicians would actually repeat both Select and Response, whereas other physicians might do more Response test until they see progression and then they use another Select test. So on a per patient basis, we are actually seeing certainly more than one Select usage, and then we see 2:1 ratio of Response to Select, but this is kind of a more blended basis just because different physicians use this differently. Some of them only -- along with Select, some of them use Response to follow-up and then they see progression and then they use Select.

And our next question will come from the line of Casey Woodring from JPMorgan.

Congrats on the IPO. I guess the first one, just curious on sales force expansion. Curious what the expectation is in terms of how many reps do you expect to hire in 4Q? And then any thoughts on how you expect to expand the sales force in 2026, both in prenatal and oncology?

Thank you, Casey. I think we have been very consistent in the way that we have been growing our sales team. We grow our prenatal sales team with 8 to 10 net rep addition per quarter and around 4 to 6 or 7 on the oncologist side per quarter. Of course, it changes from quarter-to-quarter, but we have been very consistent about how we are adding these reps. It allows us to grow in a way that our service level remains excellent. Our turnaround time remains great. Are -- all the support functions are growing similarly at same rates. It also really allows us to hire best of the best, really the top 1% of the candidates. So we have been -- I think looking at our sales efficiency numbers, it might look like it would make sense to really accelerate this growth because our sales teams are very efficient and very effective. But we believe that doing this in a kind of methodical, deliberate way has served us really well until now. So we want to keep using the same strategy on a go-forward basis as well.

Got it. That's helpful. And then maybe my follow-up, you mentioned better traction with Medicaid for the UNITY Carrier panel -- so UNITY Carrier Panel code, I should say. I guess how much did this contribute to ASP growth in the quarter? And how should we think of that contribution in 4Q and beyond?

It is difficult to prescribe essentially one change to specific dollar amounts of ASP. But just to give you a sense of how important this can be, the carrier code, standard carrier panels versus our PLA code is almost a 2x difference in where the ASPs are. So from that perspective, essentially, even a single Medicaid incorporating our PLA code into their coverage policy, can be significant. And it is not just significant with respect to the state Medicaid lives that allows us to go then to manage Medicaid in that state and be able to add our PLA code to those contracts as well. So it does take a while for its full impact to be embedded into our ASPs, but it really sets a different, I think, long-term ASP goal for us as we essentially get more Medicaid covering our PLA code.

And our next question will come from the line of Brandon Couillard from Wells Fargo.

Ross, the 70% gross margin in the quarter, pretty strong performance. Do you expect that to be the new baseline as we look out exiting the year and into '26? And just talk about what additional areas you still see room to lower the COGS per test over the next year or 2?

Yes. I don't think we're quite ready to talk about 2026 and gross margins, Brandon. But I think that you have an expectation that we remain somewhere in the high 60s is probably a pretty reasonable expectation for at least the next several quarters. I think you know that we do have a negative mix shift that we're confronting as the oncology products are lower gross margin, but growing much faster. So that does create a kind of negative mix shift versus prenatal. So we had really nice gross margins in Q3, but I don't think our expectations have really changed for gross margin versus what we've talked about recently.

Yes. As a minor addition to that, Brandon, I think it really depends on the rate at which our ASPs grow, rate at which our COGS decrease and in comparison to the mix shift. Our prenatal ASPs are growing, I think, quite nicely. Our COGS continue to decrease as we are using more of our lab capacity. And that is particularly true on the oncology side as well. So if you look at each of these products, ASPs are growing, COGS are decreasing. Each gross margin is expanding over time. But given that our oncology revenue is growing faster, it essentially you have those opposing forces. So it really depends on exactly essentially how fast the gross margin of each product continues to expand versus the growth rate of each of those products. But as Ross said, we expect to essentially maintain high 60s, low 70s as we continue to grow.

Okay. That makes sense. And then one clarification, Ross. Is there any true-up revenue that's embedded in the fourth quarter revenue guide? And then Oguzhan, as we just think about '26, can you just talk about the major data readouts or clinical or reimbursement milestones we should keep on the radar for next year?

Sure. Just on the revenue question, Brandon. During this year, the first 9 months, our true-up revenues range between 3% and 5% of revenues. And I think our expectation would be that it's probably somewhere in that range in Q4 as well. So a small amount of true-up, I think, consistent with what we've seen this year.

And the question in terms of the readout, we are continuing to do our clinical studies, especially on Northstar Response. And in support of getting coverage for Northstar Response, I think the biggest milestone would be getting our first Medicare MolDX coverage for Northstar Response. So this is one of our big initiatives and big goals for 2026. And given that we have this 2 Response to 1 Select ratio, any increase in Response ASPs would be significant for both our oncology gross margins as well as our oncology revenues.

Our next question will come from the line of Tycho Peterson from Jefferies.

One of the common questions we've gotten post IPO was just on MRD and any time lines you can provide on when we can start expecting data, what indications you may prioritize and pursue and what gives you kind of the right to win there? Can you maybe just touch on that as we think about the pipeline?

Certainly. I think the way that we think about MRD is that MRD is going to be split into 2 areas, especially over time, especially as we get out of the colorectal cancer to other cancer types, tumor-informed and tumor naive. And as you are seeing, I think, more and more, tumor-informed essentially is going to get very competitive. Essentially achieving a 1 to 10 PPM clinical LODs is going to be possible with many different methodologies and these ultrasensitive tests are going to be really competing with each other with good clinical data over time as well on the tumor-informed side. Our goal is to focus on the tumor-naive MRD. And there, actually, our technology solves the fundamental problem that forces all these different companies to actually focus on tumor-informed MRD, right? Why does anyone develop a tumor-informed MRD? Certainly, it is not the cheapest, and it is not something that the physicians want. It is more difficult to use. They do tumor-informed MRDs because if you know where to look at in cell-free DNA, you are going to be able to achieve these ultrasensitive levels. Our technology, our smNGS, QCT quantitative counting template technology solve exactly this noise problem. Right? Essentially, what we are doing is we are removing this noise that they are trying to remove by having a tumor-informed MRD. So from that perspective, we believe that we can achieve ultrasensitive levels of sensitivity with a tumor-naive test that no other company has been able to get anywhere near until now. So that is, I think, on the technology side, why we believe that we have a right to win in tumor-naive MRD and why we can solve a problem that really stump lot of different methodologies that it is really a technology question, and our technology is very uniquely positioned for that noise problem that the fact that people are doing tumor-informed MRD solves. In terms of our data readout and approach there, which is going to be a pan-cancer assay, similar to our response monitoring approach that we have taken there. But of course, we will want to launch with data. So we are expecting the launch to be towards the end of 2026, essentially at around the similar times that we expect to get coverage for our response test. From our growth perspective, we have always had this philosophy of having only one test that doesn't have broad coverage and high gross margins. So once we have our response monitoring covered by Medicare, we want to launch MRD for a pan-cancer indication, but we, of course, know that we are not going to have coverage for our MRD at least for the first year of commercialization.

Okay. That's very helpful. And then on UNITY, I think you said certain parts could see expanded coverage. I assume that's on the carrier screening side. And any change on the competitive front? Obviously, we saw your competitor introduced the Fetal Focus assay. Any change you're seeing in the market today?

As I sit here in December 9, I see no impact in our business from competitive launches. In some ways, it is as if it didn't happen. So from that perspective, we continue to grow as expected. I think it is a good thing. In some ways, it can lead to guideline changes, more awareness, but we also have a significant, I think, lead in our approach here, in our ease of use, in the way that we are approaching this particular market. So, so far, no impact, as you have seen in the Q3 numbers and I think as embedded into our Q4 guidance.

I'm not showing any further questions in the queue. I would like to turn the call back over to Oguzhan Atay for any closing remarks.

Thank you, and thank you for all the questions. This was our first earnings as a public company. We are very excited about the future of our company and how we can continue to grow, continue to change standard of care, continue to create a different type of molecular diagnostics company that can combine hyper growth with profitability. We believe that we have shown how this is possible, and we are on a 20-mile march to show that a company in this space can even enter S&P 500. So thank you for all the questions and listening to us today, and we look forward to seeing you in future earnings calls.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.