Executive Summary / Key Takeaways

• Standard BioTools is undergoing a significant transformation, consolidating its position in the life science tools market through strategic M&A, notably the SomaLogic merger, to become a diversified multi-omics company focused on proteomics and genomics.
• The company's core investment thesis is built on leveraging differentiated technologies like the SomaScan aptamer platform and CyTOF mass cytometry to address critical needs in translational and clinical research, offering unique capabilities unmatched by traditional methods or competitors.
• Operational discipline via the Standard BioTools Business System (SBS) has driven substantial cost synergies ($90M operationalized) and efficiency improvements (e.g., 98% on-time delivery), strengthening the financial foundation despite revenue headwinds.
• While facing macro challenges like reduced academic funding and tariff impacts, the company maintains its full-year 2025 revenue guidance of $165M-$175M, anticipating a back-half weighting, and remains committed to achieving adjusted EBITDA breakeven in 2026.
• A healthy balance sheet with over $258M in cash and investments provides runway and firepower for continued strategic consolidation in a fragmented industry, positioning LAB for long-term growth and profitability.

The Crucible of Consolidation: Forging a Multi-Omics Leader

Standard BioTools Inc. is charting an ambitious course in the dynamic life science tools industry, aiming to redefine the landscape through strategic consolidation and operational excellence. Historically rooted in microfluidics and mass cytometry, the company has undergone a significant transformation, culminating in the pivotal merger with SomaLogic in January 2024. This union was not merely an acquisition but a strategic alignment designed to create a diversified multi-omics powerhouse, uniquely positioned at the intersection of proteomics and genomics to accelerate breakthroughs in human health.

The company's vision is clear: to set a new standard by overcoming the scale and profitability bottlenecks that have long characterized the sector. This is being pursued through a two-phased strategy. Phase 1, now largely complete, focused on integrating the acquired businesses and aggressively reducing costs. Phase 2 centers on driving commercial execution, optimizing the product mix towards higher-margin offerings, and expanding market reach both organically and through further strategic M&A. Guiding this transformation is the Standard BioTools Business System (SBS), an operational framework instilling rigor, precision, and a culture of continuous improvement across the organization.

At the heart of Standard BioTools' offering lies a portfolio of differentiated technologies designed to provide deep insights into complex biological systems. The SomaScan platform, acquired through the merger, stands out as a crown jewel. Utilizing proprietary DNA aptamers (SOMAmers), it offers unparalleled scale and precision in plasma proteomics, capable of measuring 11,000 protein measurements simultaneously from sample volumes as low as 55 µl. This provides access to roughly half of the human proteome in a single assay, a capability that legacy antibody-based technologies simply cannot match at scale. Recent studies, including analysis from the multicenter EPIC study, have demonstrated SomaScan's superiority in proteome coverage and lower technical variability compared to competitor platforms. For instance, in a prostate cancer analysis, SomaScan 7K identified over 50 protein markers, including previously unknown ones, while a comparable analysis by a nearest competitor found only one known biomarker, underscoring SomaScan's ability to uncover novel insights.

Complementing SomaScan is the company's mass cytometry technology, including the CyTOF and Hyperion imaging systems. These platforms enable highly multiplexed single-cell and spatial analysis, critical for understanding cellular heterogeneity and tissue microenvironments. The Hyperion XTi spatial proteomics platform, in particular, has seen traction, contributing to the growing spatial proteomics market, which was recognized as the 2024 Nature Method of the Year. The company's microfluidics technology, primarily under the Biomark brand, continues to serve applications in genomics, including OEM partnerships.

These technologies provide Standard BioTools with a competitive moat. The SomaScan platform's unique aptamer chemistry and scale offer a distinct advantage in large-scale population studies and translational research. The ability to measure thousands of proteins with high precision differentiates it from traditional ELISA or less multiplexed antibody arrays. While larger, more diversified competitors like Thermo Fisher Scientific (TMO), Danaher Corporation (DHR), and Agilent Technologies (A) offer broad portfolios of analytical instruments and assays, Standard BioTools focuses on specific niches where its technology provides a tangible edge. For example, CyTOF offers significantly higher multiplexing for immune profiling compared to standard flow cytometry or mass spectrometry systems from competitors. The microfluidics technology provides efficiency benefits in sample processing for certain genomic applications.

However, competing with industry giants presents challenges. TMO and DHR benefit from immense scale, extensive distribution networks, and robust financial health, often exhibiting higher gross and operating margins (TMO ~45-50% gross, DHR ~55-60% gross) compared to LAB's TTM gross margin of 47.04%. Their diversified revenue streams and strong cash flow generation provide greater resilience to market fluctuations. LAB's smaller scale and higher R&D intensity (reflected in operating losses and negative EBITDA margins) make it more vulnerable to economic downturns and require careful management of its cash position. Indirect competitors, such as Next Generation Sequencing (NGS) providers like Illumina (ILMN) or single-cell genomics companies like 10x Genomics (TXG), also present alternatives that can impact market share in certain applications, although LAB is strategically partnering with Illumina to leverage their installed base for SomaScan distribution.

Performance Reflecting Strategy and Headwinds

Standard BioTools' recent financial performance reflects the ongoing integration efforts, the impact of operational improvements, and the persistent macroeconomic headwinds. For the three months ended March 31, 2025, total revenue was $40.8 million, a 10% decrease compared to $45.5 million in the same period of 2024. This decline was primarily driven by a 16% decrease in consumables revenue ($14.5M vs $17.3M), mainly due to lower sales volume, and a 19% decrease in lab services revenue ($12.1M vs $14.9M), attributed partly to elevated backlogs in early 2024 that boosted prior-year figures and ongoing variability from large accounts. Partially offsetting these declines was a bright spot in instruments revenue, which increased by 24% ($7.8M vs $6.3M), primarily driven by higher sales of the Hyperion XTi spatial proteomics platform.

Gross profit for Q1 2025 was $19.7 million, down 18% from $24.2 million in Q1 2024, resulting in a gross margin of 48.4%, down from 53.1%. This margin contraction was primarily a consequence of lower sales volume and lower price realization on services, somewhat masking underlying improvements in operating efficiencies driven by SBS.

Despite the top-line pressure, the company demonstrated significant progress in controlling costs. Total operating expenses decreased substantially to $52.7 million in Q1 2025 from $84.4 million in Q1 2024. This was a result of deliberate actions, including a 29% reduction in R&D expense ($11.3M vs $16.0M) and an 18% reduction in SGA expense ($38.7M vs $46.9M), both benefiting from headcount reductions stemming from restructuring activities completed in 2024. Restructuring charges themselves decreased by 64% ($1.6M vs $4.3M), and transaction and integration expenses plummeted by 93% ($1.1M vs $17.2M) as the bulk of merger-related costs were incurred in the prior year. This operational discipline led to a notable improvement in the loss from operations, which narrowed to $33.0 million in Q1 2025 from $60.2 million in Q1 2024.

Other financial items also impacted the bottom line. The bargain purchase gain of $25.2 million recognized in Q1 2024, resulting from the SomaLogic merger where the fair value of acquired assets exceeded consideration transferred (primarily due to a stock price decline), did not recur in Q1 2025. Interest income decreased by 53% due to lower cash and investment balances, while interest expense decreased by a significant 99% as the company fully repaid its debt in 2024. Other income/expense, net, saw a favorable increase, driven by a $3.4 million gain from the decrease in the fair value of contingent consideration and positive foreign currency impacts. The net loss for Q1 2025 was $26.0 million, an improvement from the $32.2 million net loss in Q1 2024 (excluding the induced conversion impact).

Operationally, the application of SBS is yielding tangible results beyond cost reduction. The company reported achieving an industry-leading 98% on-time delivery in Q4 2024, a significant improvement from 78% in Q4 2022. Customer complaints on the main instrument platform also declined more than fourfold over the same period, indicating improved product quality and customer satisfaction.

Liquidity remains a key strength. As of March 31, 2025, Standard BioTools held $258.1 million in cash, cash equivalents, and short-term investments, down from $292.9 million at the end of 2024. The company has successfully eliminated material traditional debt obligations, providing financial flexibility.

Net cash used in operating activities decreased significantly to $30.3 million in Q1 2025 from $62.5 million in Q1 2024, reflecting the impact of reduced operating expenses. Adjusted cash burn to support ongoing operations also saw a substantial 33% reduction. While the company has an accumulated deficit of $1.21 billion, its current liquidity position is expected to be sufficient to fund operations for at least the next 12 months.

Outlook and Strategic Trajectory

Looking ahead, Standard BioTools is focused on executing Phase 2 of its strategy to drive growth and achieve profitability. The company reiterated its full-year 2025 revenue guidance in the range of $165 million to $175 million. This outlook is characterized as measured, reflecting persistent macroeconomic headwinds, particularly in the Americas academic market, where a mid-teens percentage decline is anticipated, equating to a high single-digit million dollar revenue impact. The guidance assumes the year will be back half-weighted, driven by the timing of larger projects in the internal funnel rather than an expectation of broad market recovery.

Growth drivers in 2025 are expected to include continued traction in instrument sales, particularly the Hyperion XTi, as pharma activity and global capital spending slowly return. Growth is also anticipated from SomaScan services outside the historical top customers, expanding the customer base, and from increased sales of SomaScan kits to authorized sites. A significant catalyst is the planned full commercial release of the distributed SomaScan solution on Illumina's NovaSeq platform in the first half of 2025. This partnership is expected to democratize access to the SomaScan assay, leveraging Illumina's extensive installed base and opening up a potentially large market opportunity, though management cautions that adoption and revenue ramp will take time. The recent launch of single SOMAmer reagents as a minimal viable product also represents a new revenue vector targeting the broader protein reagent market.

Despite the revenue headwinds, the company remains firmly committed to its target of achieving adjusted EBITDA breakeven for the full year 2026. This objective is underpinned by the significant cost synergies already operationalized ($90 million annualized) and the ongoing application of SBS to drive further efficiencies across manufacturing, R&D, and G&A. Management believes they have the operational levers to pull to reach this profitability target, irrespective of the exact top-line trajectory within their guided range.

Strategic M&A remains a core pillar of the long-term strategy. The current market environment, with valuations under pressure and funding tight for many smaller companies, is seen as presenting compelling opportunities for Standard BioTools to accelerate its consolidation thesis. The company is actively evaluating a robust pipeline, targeting 4 to 6 strategic transactions over the next two years. The focus is on acquiring derisked technologies with clear paths to commercialization, strong gross margin potential, and exposure to attractive end markets, integrating them swiftly using the SBS playbook. The recent acquisition of Sengenics, enhancing SomaScan services with antibody profiling, is an example of this bolt-on approach.

Key risks to the outlook include the potential for further deterioration in the macroeconomic environment, particularly impacting academic and biopharma spending. Funding pressures from institutions like the NIH could continue to delay capital purchases and project starts. While the company has assessed the impact of U.S. export controls and tariffs, potential future regulatory changes or reciprocal measures could introduce new complexities or costs. The concentration of SomaScan service revenue, while decreasing, still presents a risk of quarterly variability based on the timing of large projects. Litigation related to the SomaLogic merger and other matters could result in unforeseen costs or diversion of management attention. Furthermore, the company's stock price performance relative to its net book value will be closely monitored, as a sustained decline could necessitate a non-cash goodwill impairment charge.

Conclusion

Standard BioTools is navigating a critical phase of its transformation, leveraging strategic consolidation and operational discipline to build a diversified multi-omics platform. The integration of SomaLogic has significantly enhanced its position in the burgeoning proteomics market, providing differentiated technologies like SomaScan that offer unique scale and precision. While the company faces a challenging macroeconomic backdrop and competitive pressures from larger, more established players, its focus on cost reduction, operational efficiency via SBS, and strategic partnerships like the one with Illumina are strengthening its foundation.

The reiterated 2025 guidance reflects a measured outlook in a volatile environment, but the commitment to adjusted EBITDA breakeven in 2026 underscores management's confidence in their ability to control costs and drive operational leverage. With a healthy balance sheet providing both stability and the capacity for further strategic M&A, Standard BioTools is positioning itself to capitalize on consolidation opportunities and shift its revenue mix towards higher-margin consumables. The success of this transformation hinges on continued disciplined execution, effective integration of future acquisitions, and the ability to drive broader adoption of its differentiated multi-omics solutions in key translational and clinical research markets. Investors will be closely watching for progress on revenue diversification, margin expansion, and the path to profitability as the company executes Phase 2 of its strategic vision.