Bionano Genomics achieves 21% revenue growth in Q3 2025 amid strategic shift to routine user utilization and improved profitability.

Good day and welcome to the Bionano Genomics third quarter 2025 earnings conference call. Today's conference is being recorded. At this time. I would like to turn the conference over to Kelly Gura from Investor Relations. Please go ahead. Thank you Dee Dee and good afternoon everyone. Welcome to the Bionano Genomics third quarter 2025 financial results conference call. Leading the call today is Dr. Eric Holmlin, CEO and Principal Financial Officer of Bionano Genomics and he is joined by Mark Adamchak, Bionano Genomics's Vice President of Accounting and Principal Accounting Officer. After market closed today, Bionano Genomics issued a press release announcing its financial results for the third quarter of 2025. A copy of the release can be found on the Investor Relations page of the Company's website. Certain statements made during this conference call may be forward looking statements. Actual results may differ materially from such statements due to several factors and risks, some of which are identified in Bionano Genomics's press release and Bionano Genomics's reports filed with the SEC. These forward looking statements are based on information available to Bionano Genomics today, November 13, 2025 and the Company assumes no obligation to update statements as circumstances change. During our call, we may reference certain non GAAP financial measures which we believe provide useful information for investors. Reconciliation of these measures to GAAP can be found in our press release and Slide deck. An audio recording and webcast replay for today's conference call will also be available online on the Company's Investor Relations page. With that, I will turn the call over to Eric.

Thank you Kelly and good afternoon everyone. I'm excited to update you all on the third quarter results and key highlights as well as provide an update on our expectations for the remainder of the year. At Bionano Genomics, our focus is on transforming pathology, which is the medical discipline that investigates disease, including its causes, developments and effects. This transformation is from pathology's analog past to a digital future. Our digital pathology solutions include optical genome mapping systems, the Ionic system for nucleic acid isolation, and our VIA software. These solutions address significant unmet needs in cytogenetics and molecular pathology through simplification of workflows. Over the last year, we have taken decisive steps to transform our business model away from one based in aggressively growing the installed base toward a model that's driving utilization of our solutions within a subset of our existing OGM and VIA software user base. We call this subset of users our routine users. These routine users are characterized by having an established flow of samples coming into their labs and therefore we believe they can generate significant consumables and software revenues and will drive most of our revenue growth in the near term. To succeed with this strategy, we're executing against four strategic pillars. First, we're focused on supporting and sustaining our installed base of routine OGM and via software users. Second, we're aiming to drive utilization through the adoption of software across the routine users of OGM and that way we can facilitate their menu expansion. Third, we're building support needed for optical genome mapping reimbursement and inclusion in Medical Society guidelines, recommendations and different schedules for reimbursement. Fourth, we intend to improve profitability and scalability with lower costs and higher volumes. We believe our performance in the third quarter and year to date validates that focusing on these routine users is restoring growth in our core business at a high level. This quarter we achieved solid gross margins, remained disciplined with our operating expenses, and increased the utilization from these routine users. It's increasingly evident that optical genome mapping solutions are providing valuable insights to our customers and that these customers are expanding their utilization. Taking a closer look at this performance, total revenue for the third quarter of 2025 was 7.4 million, reflecting an increase of 21% compared to the third quarter of 2024. When adjusting for a write down of 0.5 million in revenues from discontinued clinical services in 2024, core revenues increased by 12% year over year. In Q3 2025, we sold an all time record 8,390 flow cells in the third quarter of 2025, which reflects a 7% increase compared to the same period last year and we're pleased with this strong growth in flow sales again this quarter. It reflects increased utilization within this routine use customer group. Non GAAP gross margin for the third quarter of 2025 was 46%, which was significantly higher than the 26% non GAAP gross margin reported for the third quarter of 2024. Third quarter 2025 non GAAP operating expense was 9.7 million, which is a 40% reduction compared to the 16.1 million in operating non GAAP operating expense. In the third quarter of 2024 we installed seven new systems and brought one back for a net increase of three to three hundred and eighty four for the installed base. As of the end of the third quarter of 2025 and year to date through September 30, 2025, we have installed 23 new systems. We ended the quarter with $31.8 million in cash, cash equivalents and available for sale securities, of which 10.3 million was subject to certain restrictions. In September we completed a $10 million public offering of common stock, bolstering our balance sheet and extending our cash Runway into the third quarter of 2026 and potentially longer depending on the execution of our growth and cost savings initiatives. Now taking a closer look at our first pillar which is supporting the utilization across our routine user base who repeatedly purchase and use consumables and software at higher rates. Overall flow cells grew to 7% grew 7% in the quarter compared to last year, achieving this new record. After removing the flow cells that were sold to new customers since the third quarter of 2024, those sold in this quarter flow sales sold to the remaining existing customers grew by 6% on a year over year basis. Flow cell purchases by existing customers in the first nine months of 2025 compared to the same customers a year ago grew by 7%. Our year to date performance suggests that our strategy of focusing on driving utilization would within this routine user base is working and customers are using our product at higher volumes now when looking at the revenue contributions from consumables and software together, These sales grew 15% on a year over year basis in the third quarter and 10% year over year for the first nine months of 2025. As a percentage of the total product mix, consumables and software represented 72% in the third quarter of 2025 and 76% in the first nine months of this year, whereas in 2024 it represented 76% in the third quarter but just 62% in the first nine months of 2020. So this shift in product mix is also a result of our change in strategy. Beyond supporting our OGM users, we're also making good progress with our second pillar of integrating via into customer workflows and upgrading our software and software and compute platforms to make analysis of OGM microarray and next generation sequencing data easier, faster and more accurate. Last quarter we announced that upgrades were released in a first wave and that we are pleased to remain on track for the full commercial release of this software in the coming months. Now moving down the P&L to discuss our pillar of improving profitability and scalability, we have made steady progress in reducing our non GAAP operating expenses over the last few years and we have remained disciplined with this approach throughout this year. In the third quarter our non GAAP operating expense was 9.7 million and that represents a 40% year over year reduction. Turning to gross margin cost reduction along with improvements to our product manufacturing costs and volumes have enabled expansion from 22% on the non GAAP core gross margin in the first quarter of 2023 to 46% non GAAP gross margin this quarter. While we expect to see continued margin expansion over time, we believe that the levels that we have seen in the last few quarters is representative of where we will be in the near term. With the shift in product mix towards consumables and software, we see a benefit to gross margin as well. Importantly, these adjustments and improvements in cost and margin are strong indicators that we are meaningfully improving the financial profile of Bionano Genomics. Now. Lastly, turning to our final emphasis on building the support needed for OGM reimbursement, where we believe a growing number of publications illustrate the utility of OGM in cytogenetics and clinical research, as well as the number of clinical research genomes published. Taken together, we see these as positive leading indicators of of future adoption of optical genome mapping. In the third quarter of 2025 there were 97 new publications demonstrating the value of optical genome mapping and this represents a 10% growth over the same period the year before and the OGM community has now published on a cumulative basis nearly 11,500 clinical research genomes. These publications provide the support for new customers to adopt existing customers to expand their applications and third parties to support OGM in reimbursement and consideration for medical society recommendations and guidelines. Now, looking closer at some of the key studies presented presentations over the last few months. First, we had a strong presence at the ASHG Annual Meeting in Boston last month where there were nine studies presented, including oral presentations and posters that demonstrated both growing interest in key in existing geographies for optical genome mapping as well as in new regions. We were impressed to see a strong contribution from Japan. We're excited to see this interest in optical genome mapping continue to grow on a global basis. Second, a new publication from the MD Anderson Cancer center at the University of Texas, which was recently published, shows how optical genome mapping can overcome key limitations of targeted RNA SEQ for cytogenetic investigation in acute leukemias. This paper represented the first benchmark comparison of optical genome mapping directly to RNA SEQ in cancer. It supports our overall digital pathology strategy by tying OGM to methods that are commonly used in molecular pathology and represents an important expansion outside of of cytogenetics for us. Third, multiple studies highlighting the OGM utility for analysis of cancer of the cancer biomarker chromoannogenesis were published in a book edition of Molecular Methods in sorry Methods in Molecular Biology. Chroma antigenesis refers to a catastrophic genomic event frequently associated with complex karyotypes and extensive clonal heterogeneity, treatment resistance, poor prognosis, and it includes events such as chromothripsis, chromoplexy and chromoanosynthesis, all of which play significant roles in cancer development and are hard to sort out using existing tools in cytogenetics. Optical genome mapping provides a genome wide view of structural variations at high resolution, which enables precise identification and characterization of the genome variation underpinning this chromoanagenesis. The four chapters published in this series highlight the use of optical genome mapping and the expansion into new cancer types for ogm, such as multiple myeloma and chronic lymphocytic leukemia, or cll, as well as the proliferation of novel workflows such as something new called DAM assisted Fluorescent Tagging of Chromatin Accessibility, which is a hybrid method for highly detailed spatial analysis of chromatin assemblies. This is one of the first times that we're seeing optical genome mapping being integrated into spatial analysis. Now, in our last call we shared that the editorial Board of the American Medical association established a second category 1 CPT code for optical genome mapping, this one in the evaluation of constitutional genetic disorders, and that represented another incredible milestone for the OGM community. I'm pleased to share that in mid September, CMS posted the preliminary payment determination for this CPT code, which is based on a crosswalk to a previously established OGM code priced at $1,263.53. Pricing at this level, which is higher than what microarray codes are priced at, is consistent with the needs of laboratories today seeking to move forward from the legacy methods. We believe this CPT code builds on the evidence that OGM can outperform these legacy methods across a number of applications and may pave the way for more routine use of OGM across oncology and clinical genetic research communities globally. So to wrap up, I would like to provide our outlook for the remainder of the year. We are reiterating our full year 2025 revenue guidance of 26 to $30 million. We expect the fourth quarter of 2025 revenues to be in the range of 7.5 to $7.9 million. And given that we've reached 23 new OGM system installations in the first nine months of this year, we now expect to exceed the prior range of 20 to 25 systems, likely surpassing the high end of that. So with that Dee, please go ahead and open the line for questions.

Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q and A roster. And our first question comes from Yi Chen of HC Wayne Wright, your line is open.

Hi, good afternoon. Thank you for taking my question. My first question is with respect to a increasing utilization among routine use customers. Can you talk about what is the potential peak level of utilization for these routine use customers? And how soon do you expect to have these customers achieve the peak level based on the current trend? Thanks. Yeah, so I think it's a key question, an important topic. Thank you Yi, for joining the call for the question. What we feel confident about first of all is that in general the labs are not sample limited, so they have an abundance of samples. Those samples are distributed across multiple different indications. And so the sort of process of expanding utilization involves the laboratories developing and validating an assay for one application and then running that for a while and then beginning to grow the menu by developing an assay for another research indication and so on and so forth. That's really the primary mechanism of growth. And what we see across the user landscape is that the average utilization across these routine users that are running on a regular basis is about four samples per week. But at the highest end of the spectrum it's as high as 40 samples per week. Our view is that a reasonable target for us to shoot for is maybe the midpoint between the 4 and the 40, so getting up to in the low 20s on average across all of the routine users. And so that's what we're going to try to make happen. Got it, thank you. And with respect to the Japanese market, can you tell us how many, what is the current installed base in Japan? How do you think the market could ramp up in comparison to the US Market? Yeah, so we have really only one system installed in Japan and it's at a laboratory of a service provider. And so different academic customers, industrial customers can send samples to this laboratory, have them processed and get data. So that's what's going on. And what we see is that the interest in Japan has evolved over time. So initially when this services lab first got going, they were primarily focused on non human applications actually. And now in the last couple of years that has changed. And so the evolution is much more consistent with what we see in other areas. Work in genetic diseases, leukemias and lymphomas. We would expect that market to evolve similar to what we see in the US for those applications. I think that there's also a significant opportunity in Japan around cell and gene therapy development. And so we're seeing some of these pharma companies begin to access this service provider. And so there's tremendous potential in Japan, I do think, for the types of clinical research applications that we're doing in other regions, such as hematologic malignancies and constitutional genetic diseases, that it will take some time. They're going to want to build up a kind of war chest of local data in support of optical genome mapping, but that's ongoing. I think that the pharma can accelerate. And so we're paying attention to all of these. And we're quite happy to see some presentations or posters actually at ASHG last month. Got it. And with respect to operating expenses, do you expect it to remain relatively stable going forward? Yes, yes. I think this is the range that we're intending to be in. You know, we're in the process of putting together our detailed operating plan for next year. And, you know, we see some areas where we might like to invest, but I think that our overall intention is to keep things as flat as we possibly can, except where opportunities justify it. Got it. Thank you, Eric. Yeah, you're welcome.

Thank you. I show no further questions at this time. I'd like to turn it back to Eric Holmlund for closing remarks.

Great. Very good, Dee Dee. Thank you. And thank you to everybody who joined the call. And we look forward to updating you on our full year results next year. Thank you very much.

This concludes today's conference call. Thank you for participating. And you may now disconnect.