BioNano Genomics, Inc. Aktie

Good day, and welcome to the Bionano First Quarter 2026 Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Webb Campbell from Gilmartin Group. Please go ahead.

Thank you, Liz, and good afternoon, everyone. Welcome to the Bionano First Quarter 2026 Financial Results Conference Call. On the call today is Dr. Al Luderer, Chairman and Interim CEO of Bionano; and Mark Adamchak, Bionano's Vice President of Accounting and Principal Accounting Officer. After market closed today, Bionano issued a press release announcing its financial results for the first quarter 2026. 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's press release and Bionano's reports filed with the SEC. These forward-looking statements are based on information available to Bionano today, May 13, 2026, and the company assumes no obligation to update statements as circumstances change.

During our call, we may refer to certain adjusted financial measures, which we believe provide useful information for investors. Reconciliations 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 Investor Relations page of the company's website.

With that, I will turn the call over to Al.

Thank you, Webb, and good afternoon, everyone. I'm pleased to be here with you all today. Now before I share an update on our first quarter, I want to address the recent leadership transition. As announced last week, I'm stepping in as Interim CEO and will maintain my role as Chairman. I would like to thank Erik for his commitment to Bionano over the last decade, bringing this company and our technology from concept to broad validation. I look forward to working with him as he maintains an advisory role to ensure a seamless transition.

Now as I step into the CEO role, my highest priority is to sustain business continuity to ensure no disruption to our valued customers and shareholders. Simultaneously, I'll be working closely with my fellow Board members to identify the best candidate to lead this organization over the long term, transforming Bionano from a company focused on R&D to one focused on commercialization and broad product adoption over time.

Our focus remains on transforming pathology, the discipline that investigates the causes, developments and effects of disease from tedious, slow, costly and labor-intensive analog workflows in the past towards streamlined workflows of digital future designed by technology and platform consolidation, automation and powerful AI-driven software that make up our products and solutions. Today, I will take some time to touch on the progress we're making against our strategy to transform pathology.

I want to briefly recap the framework that continues to guide our execution. Beginning in September 2024, we deliberately redirected our focus away from aggressive installed base expansion toward driving profitable growth with existing routine users while being selective about new customer acquisition, placing an emphasis on adding new routine users. Four strategic pillars define how we have and how we will continue to execute against that framework.

First, to support and sustain our installed base of routine OGM and VIA software users.

Second, to increase OGM utilization by routine users by supporting menu expansion and improving ease of use with VIA and Ionic adoption.

Third, to build the support needed for OGM reimbursement and inclusion in medical society guidelines and recommendations.

And fourth, to improve profitability, scalability, et cetera, through lower costs, higher volumes and continuous improvement in product quality.

Now turning to our first and second pillars, which are focused on supporting our installed base and driving greater utilization of our products. Q1 2026 flow cells sold were up 17% year-over-year at 8,178 units, which is a record unit sales volume for any Q1 that we have reported. Removing flow cells tied to sales of new OGM systems in both periods, flow cells sold to existing customers were up 21% year-over-year in Q1.

Recall that we entered the first quarter with some constraints on flow cell production, but the supply is starting to catch up. We saw improvement in the first quarter and expect to see continued improvement in flow cell production for the remainder of 2026.

Now breaking down our revenue segments. Consumable revenue was up to $3.9 million in Q1, up 20% year-over-year. Our strong growth in consumables revenue is evidence of our strategy in action as we prioritize routine users and focus on OGM. Software revenue was $1.2 million in quarter 1, down 40% year-over-year as we had a very large software sale in the prior year that is expected to supply the user for their needs in both 2025 and 2026.

Other revenue was $1.6 million in quarter 1, up 36% year-over-year. We believe this ongoing shift towards higher proportion of recurring revenues reflects a healthier, more predictable business mix and is directly aligned with our strategy.

Now regarding our second pillar, increasing OGM utilization by supporting software adoption and menu expansion. We continue to receive very positive feedback on our recent software and compute upgrades. These upgrades focus on enabling customers to expand their menus and increase utilization, in some cases, doubling weekly cancer sample throughput without any hardware change.

VIA's reach extends well beyond OGM. It remains the gold standard for CNV analysis on microarrays and adoption amongst NGS and long-read sequencing labs continues to grow. These non-OGM VIA users represent both a durable software revenue stream and a natural entry point into broader Bionano adoption. We also continued development in support of our Ionic system, which delivers high-purity DNA and RNA for OGM and NGS workflow at scale.

Now regarding our third pillar, building support for OGM reimbursement and inclusion in medical society guidelines. I'm pleased to highlight 2 significant reimbursement milestones that both took effect in the first quarter.

First, the 2026 clinical lab fee schedule reflected a 47% increase in the payment determination for the Category 1 CPT code for OGM and hematologic malignancies. The reconsidered payment determination is now $1,853.22, up from $1,263.53. This increase reflects meaningful advocacy work by our customers and the community, and it substantially improves the reimbursement economics for labs running OGM for cancer research.

Second, a new Category 1 CPT code for OGM in constitutional genetic disorders established by the American Medical Association in 2025, received a final payment determination of $1,263.53, also effective January 1, 2026. This code covers OGM use in evaluation of constitutional chromosome abnormalities, interrogation of structural and copy number variants.

Together, these 2 codes now cover OGM's primary application areas and represent significant reimbursement infrastructure supporting routine adoption. The pricing of the constitutional code at $1,600 -- $2,663.53 (sic) [ $1,263.53 ] higher than what microarray's costs are priced at is consistent with the needs of laboratories seeking to move forward from their legacy methods. We believe these CPT codes reduce barriers to adoption and may pave the way for even more routine use of OGM across oncology and in clinical genetic research communities globally.

On the publications front, momentum continues. We announced that 28 publications describing the utility of OGM for analysis of rare diseases were released in Q1 2026, representing an approximately 56% increase over Q1 2025. The total numbers of samples analyzed in those studies, 78, represents a 225% increase compared to 2025. There were 1,991 genomes published in the first quarter of 2026, representing a 158% year-over-year increase over Q1 2025. These publications span a broad range of conditions, including neurodevelopmental, neuromuscular, neurodegenerative, immunological and malformation syndrome and comes from institutions across Europe, Asia, South America and the United States.

I want to take a few minutes to highlight a few recent publications and presentations that really stand out. First, in April 2026, a landmark study led by scientists from Johns Hopkins University School of Medicine and The University of Texas MD Anderson Cancer Center was published in the American Journal of Hematology, demonstrating that OGM can significantly outperform traditional analytic methods for detection of structural variation and chromosomal abnormalities in multiple myeloma. This was the largest published multiple myeloma cohort to-date with 211 samples.

OGM identified relevant chromosomal abnormalities in 92% of patients previously found to be normal by karyotyping and successfully resolved 82% of multiple myeloma samples that had previously failed in karyotype altogether. OGM also detected additional pathogenic structural abnormalities not identified by karyotyping or FISH in approximately 30% of subjects. The authors recommended revising laboratory workflows to include OGM and NGS, which we believe has the potential to drive growth and adoption and utilization of OGM in this large and very challenging indication.

Second, a publication from the Sanford Burnham Prebys Medical Discovery Institute described the application of OGM to detect genomic alterations introduced by different gene editing technologies, including transposons, lentiviral transduction and CRISPR-Cas9 mediated locus insertion. This study demonstrated that OGM can be a valuable quality control tool for cell line genome integrity in preclinical and clinical development of gene editing therapies, reinforcing OGM's growing role in the pharmaceutical industry and cell and gene therapy development.

Third, at the 2026 American College of Medical Genetics and Genomics, or ACMG, Annual Meeting held this past March in Baltimore, Bionano had 12 studies presented, representing a twofold increase over 2025 and spanning cancer genomics, hematologic malignancies, constitutional genetic disorders, rare diseases and reproductive disorders.

And finally, last but not least, Bionano Symposium 2026 held in late February brought together over 1,250 registrants from 73 countries and featured 35 outside speakers giving 33 presentations and 50 posters across 4 days. A defining theme was OGM at scale. Dr. Alexander Hoischen from Radboud University Medical Center described plans to reach 3,000 samples per year through full automation, while Dr. Adam Smith of Labcorp demonstrated that a scaled Stratus workflow can process 10,000 cancer samples per year at less than 1/8 the capital investment of a comparable long-read sequencing platform. Symposium 2026 reinforced that OGM is moving from early adoption into scale.

Now regarding our fourth pillar, the numbers speak for themselves on the profitability front. From a high 20% gross margin profile in 2023, we have systematically driven that figure higher over the past several years, reaching 49% in Q1 2026. Operating expenses have followed a similar trajectory of disciplined reduction. As revenue scales and our mix continues to tilt towards higher-margin consumables and software, we expect these trends to eventually carry us towards cash flow breakeven.

I'll now turn the call over to Mark Adamchak, our Principal Accounting Officer, to review our Q1 2026 financial highlights and provide and discuss our expectations for Q2 and the full year 2026. Mark?

Thanks, Al. Revenue for the first quarter of 2026 was $6.7 million, up 4% compared to Q1 2025 and at the high end of our guidance range of $6.5 million to $6.7 million. As we noted on our Q4 2025 call, we expected Q1 to be the lightest quarter of the year, consistent with the typical seasonality of our business. We sold 8,178 nanochannel array flow cells, up 17% compared to Q1 2025. This growth was achieved despite an ongoing supply constraint, which we continue to see ease.

Turning to profitability. Adjusted gross margin for the first quarter of 2026 was 49% compared to 46% in Q1 2025 and reflecting continued operational efficiencies under our strategy. Adjusted operating expense for the first quarter was $9.1 million compared to $8.5 million in Q1 2025. We ended the quarter with $24.7 million in cash, cash equivalents and available-for-sale securities, including $10.3 million subject to certain restrictions. Based on factors described in our 10-K, we expect our cash runway to extend into 2027.

We also expect to fully retire our outstanding senior secured convertible debt this month, which marks a meaningful balance sheet milestone that further simplifies our financial profile.

Building on this progress, we expect revenue to grow throughout the year as we continue executing on our plan. For the full year 2026, we are reaffirming revenue guidance of $30 million to $33 million, representing growth of 5% to 16% over 2025. For Q2 2026, we are initiating guidance of $7.5 million to $7.8 million, representing 12% to 16% growth over Q2 2025. We are very excited about the work and the journey ahead of us at Bionano.

With that, I will turn the call back over to Al for closing remarks.

Thanks, Mark. So Q1 was strong, very strong start to the year, and I'm encouraged by the momentum we're carrying into the rest of 2026. We have a clear strategy, a focused team and the technology the market is increasingly embracing. I look forward to updating you on our continued progress.

And with that, let's open it up for questions.

[Operator Instructions] Our first question comes from Yi Chen with H.C. Wainwright.

Could you provide some comment regarding, if you expect the company to achieve operating cash flow breakeven either late this year or sometime in 2027?

Thanks for the question. Let me ask Mark to comment on that. Mark?

Yes. Thanks Yi. No, we do not expect to reach cash flow breakeven by the end of 2026. And we are taking the necessary steps that we can, to reduce that burn as much as possible by Q4 of 2027, but we're not providing guidance as to whether or not we can achieve that.

Okay. And do you expect any additional catalysts that could potentially occur either later this year or in 2027 that could help the top line growth or improve gross margin or further reduce operating expenses?

Well, I think there are several catalysts this year. The first catalyst, which actually was really planted in the first quarter, which is the CPT code and the strong reimbursement. So I think we are starting to see some impact in our dedicated installed base. It's a little hard to measure right now, but I think that's part of the reason we are experiencing a very, very strong demand. So we're pleased about that.

The second one is, certainly, I think from my point of view, the elimination of our debt is a very strong step forward in terms of controlling our destiny and our future. Now that doesn't mean we wouldn't take other debt for certain applications if it was called for and timely. But -- so I think that's a big deal.

And I think those are the 2 major things that we are pushing. And we have several publications that are coming out that will be highly complementary and also expansive on what's been shown by Hopkins and MD Anderson. So we're getting great adoption out there. So I think we're going to try to make it very public about how people feel about this. And the neatest thing about this -- and I've been a director of this company since 2011. So I have lived through this.

And in the early days, it was our clinical medical executives who were -- who are identifying what could be done and helping people to identify how to do it. Today, it's all of our users that are out there, and they are setting the standard and the path. So they are now leading. And that's a huge transition, transformation for this company.

[Operator Instructions] That will conclude today's question-and-answer session. This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and welcome to the Bionano Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Webb Campbell from Gilmartin Group. Please go ahead.

Thank you, Carmen, and good afternoon, everyone. Welcome to Bionano's Fourth Quarter and Full Year 2025 Financial Results Conference Call. On the call today is Dr. Erik Holmlin, CEO and Principal Financial Officer of Bionano and Mark Adamchak, Bionano's Vice President of Accounting and Principal Accounting Officer.

After market closed today, Bionano issued a press release announcing its financial results for the fourth quarter and full year 2025. A copy of the press release can be found on the Investor Relations page of the company's websites.

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's press release and Bionano's report filed with the SEC.

These forward-looking statements are based on information available to Bionano today, March 23, 2026, 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. Reconciliations of these measures to GAAP can be found in our press release and slide deck. An audio recording and webcast replay of today's conference call will also be available online on the Investor Relations page of the company's website.

With that, I will turn the call over to Erik.

Thank you, Webb, and good afternoon, everyone. I'm excited to share our Fourth Quarter and Full Year 2025 results with you today as well as to provide you with our expectations for 2026.

I want to begin, however, with the context of the broader space we're aiming to impact, namely pathology, which is the discipline that investigates the causes, developments and effects of disease. Our products and solutions are focused on transforming pathology from tedious, slow, costly and labor-intense analog workflows of the past towards streamlined workflows of a digital future defined by technology and platform consolidation, automation and powerful AI-driven software.

Our work in 2025, including the hundreds of publications and presentations by our users demonstrated meaningful progress towards this goal and the significant value represented by this opportunity. As part of today's call, I want to take time to review the strategy we began implementing in September of 2024. Our progress in 2025 and summarize key takeaways from a deep dive into our customer base revealing the composition of our most profitable customer profile. First, however, I want to ask Mark Adamchak our Principal Accounting Officer to review our Q4 and 2025 financial highlights. Mark?

Thanks, Erik. Revenue for the fourth quarter of 2025 was $8 million, which is down 3% from $8.2 million in Q4 2024, but at the high end of our preannounced range of $7.8 million to $8 million. We sold 7,554 nanochannel array Flowcells in Q4, which was down 6% year-over-year, but it's worth noting that late in Q4, our manufacturing partner that makes the silicon wafers for our chip consumables experience delays.

As a result, supply was constrained against higher consumable demand. We entered 2026 with a healthy backlog of consumables demand and that we expect to realize in the coming quarters as these constraints ease. For the full year 2025 revenue was $28.5 million, down 7% from $30.8 million in 2024.

After adjusting for $1.7 million in discontinued clinical services in 2024, core revenue was down 2%. We sold 30,171 Flowcells in 2025, down just 0.4% year-over-year. We also installed 9 OGM systems in Q4 and 32 for full year 2025, exceeding our original guidance of 15 to 20 installations in the year.

Turning to profitability. Non-GAAP gross margin for the fourth quarter of 2025 was 43%, up from 42% a year ago. For the full year, non-GAAP gross margin was 47%, up from 35% in the full year 2024, an improvement of 1,200 basis points year-over-year despite lower revenue. This reflects the efficiencies we are driving in our business under our new strategy.

Fourth quarter 2025 non-GAAP operating expense was $9.7 million, down 9% year-over-year. For the full year, non-GAAP operating expense was $36.6 million, down 47% from $68.9 million in 2024. Importantly, since Q2 2023, we have removed approximately $100 million of annualized non-GAAP operating expense and reduced head count by over 300 people.

The transformation of our cost structure is clearly evident in these results. We ended the year with $29.6 million in cash, cash equivalents and available for sale securities, including $10.3 million subject to certain restrictions. Based on factors described in our 10-K, we expect our cash run rate to extend into 2027. I'd also note that our senior secured convertible debt is expected to be fully retired in May 2026, which will mark a meaningful balance sheet milestone that will further simplify our financial profile.

With that, I'll turn it back over to Erik to review our strategic progress and achievements in 2025 and finish by providing financial guidance for 2026. Erik?

Thanks, Mark. That was an excellent job in your first time participating in one of our calls here. It's great to have you. In response to the challenging backdrop for tools and diagnostic companies that has persisted for some time now, we made a strategic shift that started in September of 2024 and entailed going away from aggressively expanding our installed base toward focusing on profitable growth from high-volume users and selective customer acquisition. .

We established four strategic pillars to anchor this execution. First is to support and sustain the installed base of routine, OGM and VIA software users. Second, to increase the utilization of optical genome mapping by these routine users by supporting menu expansion and improving ease of use with VIA software and our Ionic system, which automates isolation of nucleic acids.

Third is to build the support needed for optical genome mapping reimbursement and inclusion into medical society guidelines and recommendations. And fourth is to improve profitability and scalability through lower cost, higher volumes and continuous improvement in product quality.

Starting with this first and second pillars, tied to enabling our customers to use products more which will in turn result in higher consumable sales, while fourth quarter Flowcells were down 7% at 7,554 and full year Flowcells sold were essentially flat at 30,171. 2025 was certainly a transitional year where we faced uncertainty as to how stable the customer base would be during this strategic shift.

We're pleased to see stability and consistency in the number of consumables that were purchased. If we remove Flowcells tied to sales of new OGM systems in both periods, existing Flowcell customers -- existing sales of Flowcells to customers declined 4% in the fourth quarter, but grew 5% for the full year.

Keep in mind that the consumable supply was constrained in the fourth quarter, which muted some of that growth. Taken together, consumables and software revenue decreased by 1% to $4.8 million in Q4 driven by a 22% decline in software revenue and that actually offset 8% growth in consumables.

The year-over-year decline in software revenue is a result of a handful of orders that were actually pulled forward into prior quarters. And so if we look and see that software grew 7% for the full year from 19 -- consumables and software together, that is grew for the full year from $19 million to $20.4 million, which represents 7% growth and as a share of total revenue increased from 62% in 2024 to 71% in 2025. And we believe this emphasis on consumables and software is a healthier, more predictable revenue profile that is also more profitable.

Now I want to talk a little bit about the composition of our installed base. And this is something that we brought up on calls over the course of 2025. And I want to focus in on the customer profile that we've identified as the target for future growth. Throughout 2025, we focused on a subset of customers, so-called routine use customers. Those are customers who we believe have the greatest potential to purchase higher average volumes of OGM consumables.

We also maintain a high level of support for our Ionic system users and our VIA software users who use VIA software for non-OGM applications. Now our geographic focus has also narrowed to include the United States, Canada, most of Western Europe and Israel although we have the help of excellent commercial partners who sell and support OGM outside of these regions.

Now looking across the 321 customers that have a total of 387 OGM systems installed as of December 31, 2025. Routine use customers comprise about 130 or 40% of them, and they collectively operate about 175 systems or 45% of the global installed base. Routine use customers, by definition, have well-defined applications for OGM and a steady flow of samples coming into the lab for analysis and tend to have institutionalized funding for OGM, meaning they are not solely dependent upon raising grant funding for each individual project although grants do support these sites.

Despite accounting for less than half of OGM -- total OGM customers, these routine users actually drive the consumables business. In 2025, they accounted for about 83% of OGM consumables revenue. The average revenue per routine use customer in 2025 was about $89,000 or double the average per customer across the entire global installed base.

Currently, there are about 60 routine use customers that have validated their OGM protocol. And in 2025, those customers accounted for about 56% of total consumables revenue and 69% of the consumables revenue coming from routine users. Their average consumables revenue per year is $131,000 per customer.

We also believe that there are about 55 routine use customers who intend to validate an OGM protocol in the future and about 15 who use OGM routinely, but do not intend to validate. Going forward, we see the number of routine use customers increasing as new customer acquisition will focus on this customer type almost exclusively. We also see average consumable revenue per routine use site increasing as they expand their menus to include new applications and as others validate their protocols and begin offering their products commercially.

Regarding our second pillar, we can help routine use customers in a variety of ways by including techniques and tools that enhance their ease of use with products like VIA software and our Ionic system for automated nucleic acid isolation. In 2025, we made great progress to integrate VIA into customer workflows and upgrade our software and compute platforms to make analysis of OGM, microarray and next-generation sequencing data faster, easier and more accurate.

On this front, in 2025, we commenced a broad commercial release of our software and compute upgrades in the fourth quarter VIA 7.2 extends the AI-driven OGM workflow from hematologic malignancies into constitutional genetic disorders, giving labs the same automated curation and report capabilities that have accelerated heme malignancy workflows. Solve 3.8.3 expands the structural variation control database and improves detection accuracy while the Stratys Compute upgrade using advanced GPUs, doubles weekly cancer sample throughput without any hardware change. VIA reach extends beyond OGM, it's the gold standard for a copy number variation analysis in microarrays and is gaining traction with next-generation sequencing and even long read sequencing users.

These non-OGM VIA customers represent a meaningful software revenue stream and a natural on-ramp to broader Bionano adoption at these customer sites. Now the Ionic system continues to expand, delivering high-purity DNA and RNA for both NGS workflows and, of course, high purity ultra-high molecular weight DNA for OGM workflows at scale.

Now to build support for reimbursement and guideline recommendations, we're pleased to see incredible traction across the OGM community with publications that can support reimbursement decisions, professional society guidelines and new customer adoption. The fourth quarter of 2025 was a record quarter for OGM publications, 136 new peer-reviewed publications up from 25% year-over-year, up 25% year-over-year. 2025 also saw approximately 450 publications in total, up from 359 in 2024.

And the total number of publications exhibits a compound annual growth rate of about 28% since 2020. In addition, the community has published roughly 1,190 human clinical research genomes in the fourth quarter of 2025 alone, which brings the cumulative total to nearly 12,700, up from fewer than 500 in 2021 and 4,500 added in 2025 alone.

And that growth reflects a compound annual growth rate of about 30% since 2021. We believe these publications are an excellent leading indicator for the growing acceptance and future adoption and utilization of Bionano products and solutions.

Now thanks to all of this progress. Reimbursement improved significantly in 2025 with the establishment of a second Category 1 CPT code for OGM, this one covering OGM use in constitutional genetic disorders. The final price determination was $1,263.53, and that appears on the 2026 clinical lab fee schedule.

In addition, the 2026 CLFS reflects a 47% increase in the payment determination for the Category 1 CPT code used for OGM in hematologic malignancies. That's now priced at $1,853.22, which is up from $1,263.53. Taken together, these two codes cover OGMs current primary application areas and represent key infrastructure that's now in place. We are also seeing OGM consortia from all over the globe coming together, these regional user groups help with things like access to reimbursement, influencing local guidelines which together facilitate menu expansion and overall support the entire community of OGM users along their journey.

We believe this validation that -- this is a validation that OGM is really taking off, and we are gaining this critical mass that is so important where the community is becoming the advocate versus the company which has historically been the case.

Regarding our final strategic pillar of improving profitability and scalability, we continue to make progress in 2025, highlighted by the non-GAAP gross margin expansion we mentioned earlier. Our non-GAAP gross margins have now expanded from 22% in the first quarter of 2023 to 43% in the fourth quarter of 2025. And while quarterly non-GAAP operating expenses fell from roughly $34 million to now under $10 million over that same period.

Going forward, we expect margin expansion in line with revenue as volumes grow and product mix shifts towards consumables, and this is going to help us manage toward important financial milestones such as EBITDA breakeven.

Finally, I want to highlight the excellent efforts from our team to host Bionano Symposium 2026. This event is held in late February, and this year, we had over 1,250 registrants coming from 73 countries around the world. The content featured 35 outside speakers presenting 33 presentations, and the community contributed 50 posters to our poster hall.

The event itself lasted four days -- and among the many excellent presentations, four reflected key themes that suggest growth opportunities for OGM going forward. Dr. Agnes Dau dig non from CHU de Lille described how the French optical genome mapping group or FrOGG is acting as a network and supportive implementation of OGM across 29 French-speaking laboratories in France, Canada, Switzerland and Belgium.

Dr. Ying Zou from Johns Hopkins University School of Medicine presented the largest OGM data set in sarcomas, revealing complex abnormalities and novel biomarkers in karyotypically normal cases. These sarcomas represent an expansion of sample type from the blood and bone marrow aspirates that are commonly used with OGM today.

There were two speakers who spoke to an incredibly important theme in Symposium 2026, which is OGM at scale. Dr. Alexander Hoischen, from Radboud University Medical Center in the Netherlands, described fully automating ultra-high molecular weight DNA isolation and labeling for OGM and their plans to ramp to processing 3,000 samples per year, up from just 500 in 2025.

Radboud now has three Stratys systems and two Saphyr systems, making them the lab with the most OGM capacity in the world aside from Bionano's of course. And Dr. Adam Smith of Labcorp presented a rigorous comparison showing that a scaled Stratys workflow can process up to 10,000 cancer samples per year versus approximately 240 for a similar high throughput long-read sequencing platform.

And the cost of OGM is less than 1/8 of the initial capital investment for processing 1,000 long-read sequencing samples per year. We believe OGM is moving from early adoption into operation at scale and academic networks like the FrOGG, academic medical centers like Johns Hopkins and Radboud University Medical Center and national reference laboratory institutions like Labcorp are building the operational and use cases for it.

All of this progress and support gives me confidence and a strong outlook for the full year 2026. Therefore, we are initiating revenue guidance of $30 million to $33 million, representing growth of 5% to 16% over 2025 and -- and for this first quarter of 2026, we are initiating revenue guidance of $6.5 million to $6.7 million, representing flat to 3% growth over 2025. As our Q1 expectations imply we do expect revenues to grow throughout the year, consistent with the seasonality common in our business as we continue executing on our mission to increase the use of our differentiated capabilities among our valued customers. We're very excited about this work and the journey ahead of us at Bionano.

And so with that, I would like to open the line now for questions. Carmen?

[Operator Instructions] We have a question from the line of Yi Chen with H.C. Wainwright.

Could you give us any color on what your expectations regarding how many new OGM systems could be installed during 2026?

Hi Yi, thank you for joining and you're asking an important question. I think that we have expectations which are comparable to what we shipped last year, we're not really providing any guidance on the number because as you can see, we significantly actually overperform guidance last year.

And so we want to just stay flexible about the new systems that are being installed, but it's reasonable that we would have comparable year this year to what we did last year.

Got it. And also, the reported number of nanochannels array Flowcells sold in 2025 slightly below that number in 2024, while you restored 32 new OGM systems and brought back 16 during the year. So how should we look at the nano. I mean, how should we expect the number of nanochannel Flowcells to be sold this year. Do you expect that to be relatively flat as well? .

Yes. I mean so no, the answer is no. I would say that when you look at the revenue growth that we're forecasting that revenue growth is going to be driven by new systems, of course, and consumables at existing customers. And so I think I would expect the consumables volume range to likely track with the revenue growth, which is a wide range. But -- that's our expectation. And we were flat year-over-year on total consumables volume.

When we look at what routine users did, we do see that routine users grew 2025 over 2024. And keep in mind that we were constrained with supply at the end of the year. It's nothing that's particularly concerning. It's a supply constraint that will I think work its way out over the course of the next couple of quarters. But if we weren't up against that supply constraint, we would have had additional units growth.

Okay. Okay. And your -- the guidance for 2026, you provided $30 million to $33 million, which translates to approximately 5% to 16% top line growth. Do you need to -- I mean, how many nanochannel or new OGM systems you need to sell to achieve that level of growth? Is that -- is there any catalyst that you expect to occur in 2026 in order to achieve that level of top line growth.

Yes. I mean I think that -- so again, we're not going to put a number out there of systems. And I think really the reason is that we want to keep the focus on the productivity of the the routine users. And we'll be updating on some of the dynamics of that group over the year, right? So if you look at total number of customers at the end of the year, 321, total systems 387, 32 systems shipped in the year. It's really about these 130 or so routine use customers, 60 of which have validated an OGM protocol and roughly 55 are intending to do that at some point in the future.

So how can we take that 55 and convert them over to the validated group and then how can we expand revenues amongst the validated group. But that's where we expect the growth to come from. And as long as we kind of repeat on a year-over-year basis, some of the same dynamics will hit these numbers.

From a catalyst perspective, a big catalyst is the increase in the price determination for the hematologic malignancy CPT code 81195, 47% increase, $1200 to $1,800. That is a big driver. So that becomes -- it became effective January 1, 2026. And so we have seen the positive effects just of the originally priced code, and we expect this higher price to even accelerate adoption and utilization more. That's a major catalyst.

Thank you. And this concludes our Q&A session. I will pass it back to Erik for final comments.

Okay. Well, thank you, Carmen, and thank you, everybody, for joining. And we look forward to updating folks on our progress in the first quarter of 2026 in the not-too-distant future. Thank you very much.

[ Thank you ] for participating, and you may now disconnect.

Good day, and welcome to the Bionano 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, Didi, and good afternoon, everyone. Welcome to the Bionano Third Quarter 2025 Financial Results Conference Call. Leading the call today is Dr. Erik Holmlin, CEO and Principal Financial Officer of Bionano, and he is joined by Mark Adamchak, Bionano's Vice President of Accounting and Principal Accounting Officer. After market closed today, Bionano 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's press release and Bionano's reports filed with the SEC. These forward-looking statements are based on information available to Bionano 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 Erik.

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, 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 4 strategic pillars. First, we're focused on supporting and sustaining our installed base of routine OGM and VIA software users. Second, we are 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, remain 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 the strong growth in flow cells 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 7 new systems and brought 1 back for a net increase of 3 to 384 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 and those sold in this quarter, flow cells sold to the remaining existing customers grew by 6% on a year-over-year basis. Flow cell purchases by existing customers in the first 9 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 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 9 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 9 months of this year, whereas in 2024, it represented 76% in the third quarter, but just 62% in the first 9 months of 2024. 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.

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 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 and presentations over the last few months. First, we had a strong presence at the ASHG Annual Meeting in Boston last month, where there were 9 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, and 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 cytogenetics for us.

Third, multiple studies highlighting the OGM utility for analysis of cancer -- of the cancer biomarker chromoanagenesis were published in a book addition of molecular methods in -- sorry, methods in molecular biology. Chromoanagenesis 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 chromoanasynthesis, 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 4 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. And so, this is one of the first times that we're seeing optical genome mapping being integrated into spatial analysis.

Now on our last call, we shared that the editorial board of the American Medical Association established a second Category I 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 million to $30 million. We expect the fourth quarter of 2025 revenues to be in the range of $7.5 million to $7.9 million. And given that we've reached 23 new OGM system installations in the first 9 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, Didi, please go ahead and open the line for questions.

[Operator Instructions] And our first question comes from Yi Chen of H.C. Wainwright.

My first question is with respect to increasing utilization of 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?

Yes. It's -- I think it's a key question, and important topic. Thank you, Yi, for joining the call and 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 1 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 4 samples per week. But at the highest end of the spectrum, it's as high as 40 samples per week. And so, 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. 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 U.S. market?

Yes. So we have really only 1 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. And 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 nonhuman 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. And so, we would expect that market to evolve similar to what we see in the U.S. 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. We're in the process of putting together our detailed operating plan for next year. And 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.

I show no further questions at this time. I'd like to turn it back to Erik Holmlin for closing remarks.

Great. Very good, Didi. 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.

Welcome to the H.C. Wainwright 27th Annual Global Investment Conference. I'm Katherine Degen, an associate biotech research analyst at the firm. I'd like to take a moment to welcome Erik Holmlin from Bionano and take it away.

Thank you, Katie. I want to certainly thank everybody at Wainwright for the opportunity to participate here today. This is always a great conference. And we really began a pretty significant transformation of Bionano about a year ago, and I'm happy to report on the progress that we've been making. But before I delve into that, I want to take some time to point out that we're a publicly traded company, and I want to refer everybody to our filings on the SEC website. and certainly take a moment to step back from the sort of day-to-day and quarterly -- quarter-to-quarter operations of Bionano and think about the space that we're operating in.

And when we do that, we see the analog world of pathology. If you look across pathology and patient sample testing, both for diagnostic applications and for cutting-edge research, it's really an array of multiple techniques that have been in operation in many cases for upwards of 50 years. Just take karyotyping as an example. It's a global standard used around the world, a lot in cancer and in genetic diseases, and yet it hasn't changed much in that period of time.

In fact, there are millions and millions of samples that process through these workflows causing a labor-intense workflow that takes a lot of time to go from sample to result and creates a lot of confusion amongst the oncologists or physicians who are managing patients. And that's because it's an analog world. And we recognize at Bionano the opportunity to digitize the whole pathology process.

Now we can't do that alone with our products. Our optical genome mapping is playing a big role in transforming cytogenetics, which is something that I'll talk a lot more about. But we also have our VIA software, which is an AI-driven platform that spans across the optical genome mapping world into sequencing. And we also have our Ionic system for nucleic acid isolation, which fits nicely into sequencing workflows. So we're playing a big role in the transformation of pathology to digital pathology, and that's why we think of ourselves as a digital pathology company.

Now we pioneered optical genome mapping to be something that would really replace the legacy methods across cytogenetics. In fact, we believe we're serving an available market of about $10 billion. It comprises roughly 10,000 labs across the world, processing about 10 million cases per year. Right now, we're focused in key geographies like the United States, Canada, Western European countries and Israel, where optical genome mapping has a really strong foothold. And when we look at the value proposition of optical genome mapping against some of the more traditional methods that are out there, in fact, the global standards like karyotyping, FISH and microarrays, we can see on the one hand, those workflows are outdated, they're antiquated, very labor intense.

And when you talk to laboratories that are offering those workflows, they'll tell you that the people who run karyotyping, for example, are retiring, and it's more of an art than a science. And so it's difficult to replace them. They're looking for digital methods that can do the same thing, but get better results. So if you look at the clinical utility of traditional cytogenetic methods, it's pretty limited. So only about half of karyotypes, for example, come back with useful information that can be used to guide therapy.

In fact, in leukemias, 50% of the time, patients who know -- are known to have leukemia get a normal karyotype. And that really gives the oncologist nothing to work from to manage the patients. Studies have shown that as many as 20% of prognostic scores in myelodysplastic syndrome, for example, may be wrong. And so those are scores that are used to treat patients or make a decision between therapeutic intervention or something like a bone marrow transplant. And if that's wrong 1 out of 5 times, that's not good. So half of the time, you don't get a useful answer at all. And then of the 50% answers that are coming back, 1/5 of those are wrong. And so the clinical utility of these traditional workflows is severely limited. And this is the problem that we're attacking.

Now optical genome mapping, on the other hand, is a faster and simpler workflow. It takes the place of 3 of these traditional methods. So you can imagine just from a technology workflow consolidation standpoint, optical genome mapping offers something that labs are looking for. They're constantly under pressure to reduce costs. workforce shortages are real things across these labs. And so optical genome mapping can replace 3 of these workflows with 1. It consistently finds more actionable variants. And so in an analysis, for example, compared to karyotyping, optical genome mapping will return useful information that researchers or physicians can use in their project much more commonly than the traditional methods.

Importantly, recently, in June of 2024, the American Medical Association established a Category 1 CPT code to cover the use of optical genome mapping in hematologic malignancies. And then this year, in June of 2025, they established a second code. This one, the second code to cover constitutional genetic disorders. So our 2 main application areas are covered by Category 1 CPT codes, which is a very high bar to overcome.

And then lastly, I want to point out that if you think about this whole space of transforming pathologic -- traditional pathologic -- pathology methods into a digital approach, you're going to think that sequencing is going to be there. And you may think, well, is optical genome mapping competing with sequencing? And the answer is they're not competing. In fact, they're highly complementary. And so labs run mapping and sequencing side by side, and that really improves the results that they're seeing.

Now customers adopt what we call the end-to-end solution for optical genome mapping. And in this sense, it's a relatively traditional life sciences instrumentation model. So we have kits, kits for isolating nucleic acids, labeling it before it goes into the imaging chip and into the imaging instrument. We have also been in development of the Ionic system for optical genome mapping. It currently serves nucleic acid isolation markets from formal and fixed paraffin embedded tissues that's useful in advance of next-generation sequencing assays, for example, we're going to release that system for optical genome mapping sometime in 2026.

Customers buy the instrument. We sell the Stratys instrument, which is pictured here as well as the Saphyr. Those are 2 models that customers can adopt depending on their throughput needs. And then we have a high-performance compute server. This is a server we developed in a collaboration with NVIDIA to incorporate their GPU chips into the server.

And lastly, we have the VIA software. So VIA software is a critical component of the overall workflow, and it's really cutting edge compared to what any sequencing analysis platform or genome analysis platform company is selling. VIA, which stands for Variant Intelligence Applications, allows researchers to visualize, interpret, analyze, annotate and report their findings in an incredibly streamlined workflow that's highly automated.

And so in the past, with traditional methods, laboratories would be delivering multiple reports to their end customers at multiple times across the analysis of the sample and VIA really streamlines that in conjunction with optical genome mapping. So there is a single report with all of the information that somebody might be looking for, for example, from WHO or NCCN guidelines in relation to that specific sample. And so the end-to-end workflow is what customers adopt.

And as I point out on this slide, parts of it serve adjacent markets like the sequencing market, the Ionic system for nucleic acid isolation and VIA software is used for analysis, interpretation and reporting from chromosomal microarray analysis as well as NGS. And so we have a product portfolio serving this pathology digitization effort that is pretty broad.

Now optical genome mapping works because it's resolution across the -- resolution sort of continuum of genome variation analysis covers an incredibly large area. So as you can see on this slide, optical genome mapping covers the resolution that has typically required 3 techniques, karyotyping, FISH and microarrays.

Optical genome mapping can pick up all the variants that those pick up and provide a lot more information in many cases. As you can see, it also spans a coverage gap that historically no technique has been able to analyze, and that's why we believe that optical genome mapping consistently finds more information in samples because it's finding variants that are typically not detected. But importantly, there's very little overlap with sequencing, some with long-read sequencing, but it lines up nicely with short-read sequencing.

So for a lab to get comprehensive analysis of genome variation across samples, they really only need to use mapping and sequencing, which is very powerful. And you can see that the VIA software fits in nicely for analysis of large variants and that can be from sequencing or mapping, it doesn't matter. And then the Ionic system marries up nicely with nucleic acid isolation from FFPE in advance of sequencing assays. So that's why optical genome mapping works. And when we think about the application areas that are specifically of interest to us in this cytogenetics market, the 3 of them are listed here. So hematological malignancies, leukemias, lymphomas, myelomas is where we have great support in the literature for the application of optical genome mapping as a faster system with higher success rates in detecting pathologic variants and a higher level of accuracy.

Constitutional genetic diseases. So here, you should be thinking about intellectual disability, autism spectrum disorder, other forms of developmental delays that cause for analysis in a genetics lab, optical genome mapping can perform those. And now those 2 applications are covered by Category 1 CPT codes in the United States and reimbursement is in place in many countries throughout Europe, where we're active, other places such as Israel. And the Turkish Health Ministry just introduced optical genome mapping into its systems. And so physicians can order it as a clinical test there.

The third area is in cell and gene therapy. So when you think about stem cell therapies or CAR-T therapies or other gene therapies, it's important to monitor the genome integrity of the samples that you're dealing with. That may be in the case of editing cells where you want to make sure that you don't have off-target effects or you want to confirm on-target delivery of the therapeutic payload. Optical genome mapping can play a role in that determination. And in stem cell therapy, where you're growing successive generations of cells, you want to make sure that the starting material looks like the final material.

And so it's possible to verify that using optical genome mapping. And so these are the 3 areas that are driving adoption and utilization of optical genome mapping in our target geographies. As I mentioned a year ago, we really undertook a large transformation of the company to focus -- kind of take the focus away from aggressive growth of the installed base, which is, let's face it, not the most capital-efficient approach to proliferating our platform to something that's much more capital efficient and focuses on the existing users that we had developed at that time.

We call them our routine use customers. These are customers who are buying consumables consistently on a periodic basis, repeatedly and generating useful results, publishing their results from optical genome mapping data. And these are the profitable customers. And so our strategy is focused on them. We want to, of course, support and sustain them. We want to drive their utilization up. So we have a number of training programs and our VIA software is something that really enhances their workflow and speeds it up. So it makes it possible for them to process more samples.

And so we have teams that are dedicated to training labs and using VIA software and increasing their capacity, expecting them to then utilize more consumables. We're very focused on continuously building support needed for reimbursement of optical genome mapping as well as the eventual inclusion of OGM into medical society recommendations and other guidelines.

And then lastly, we're focused on driving margins up, reducing costs and through higher volumes driven by sales and improving profitability. And so this is the strategy we've been executing on. You can see here is your quarterly top line revenues over an extended period of time. And you can look at this chart and you can feel the turbulence that the company has gone through. But I want to focus in really on the first and second quarter of 2025. These were solid quarters, well within our guided ranges for each quarter.

And we're starting to see, hopefully, a return to revenue growth. You'll notice some gray bars in some of the earlier years. Those are products that we no longer sell. We discontinued a handful of products that were just not profitable at the scale that we were providing them. And so that left behind our blue, what we call the core revenues, really the optical genome mapping software and Ionic revenues. And so we're pleased with the progress that we've seen so far in 2025.

And when we look a little bit deeper into these numbers, specifically at consumables and software revenue, we see importantly that it's growing, especially with our existing customers. And so the second quarter, we had mid-double-digit teens growth here of the combination of consumables and software selling into our existing customer base. And on the half year, some growth, so getting close to double-digit growth. And we expect this to continue to evolve and accelerate.

There are many catalysts in the market such as the CPT codes, such as new versions of the software that we've introduced and other efforts that we believe will drive this growth going forward. So we're happy to see that growth. One of the leading indicators of future growth are the publications. And so in the second quarter of 2025, we had a record number of publications for a single quarter. And so we've seen this trajectory continuously over the past several years, and we expect it to continue. But this means customers are using the product, writing up their papers, publishing them, which means that new potential customers can see those publications and take the lead from it.

Importantly, on the right-hand side, that tracks the number of published human clinical research genomes. You can think of that as individual samples or clinical research samples. It's doubled year-over-year in the second quarter. But importantly, we surpassed this 10,000 genomes published mark, and it's a substantial mark for us. And you can see that we've done that largely in just about 4 years -- 4 to 5 years as this -- that curve really starts to ramp up in 2021.

And so these are the kinds of proof sources that enable folks to have the confidence to adopt the product and utilize it. I mentioned these CPT codes, but this is the one that was established in June of this year, covering constitutional genetic disorders. And we believe that, that will reduce barriers to adoption and enable folks to utilize optical genome mapping more consistently in the field.

Then getting to the cost structure. And so on the left-hand side of this slide, you can see our non-GAAP operating expenses quarterly for the past several quarters. And I guess we woke up in 2023, and we said that the cost structure that was in place at that time was not going to be sustainable. And it took us some time, but we reduced costs drastically over the period of time that you see outlined here. Importantly, now because 2 points to fine align, we have a nice flat structure over the last couple of quarters.

And I think that, that's a very positive development. Over that same period of time, our gross margin has expanded significantly. So we printed 52% in the second quarter. And so these are the types of trends that make us believe that we have a sustainable business that's growing. We know how to invest in and drive that growth. And so we need to see these trends to continue, but we're very encouraged with the progress that we've been making.

Now lastly, for the remainder of 2025, we have reiterated our annual guidance of $26 million to $30 million on the top line. We raised our guidance of new systems installation. Previously, we had guided to 15 to 20 systems, but we've raised that to 20 to 25. And our Q3 revenue guidance that we gave on August 14, the Q2 call was $6.7 million to $7.2 million. So that would be another quarter of sequential quarterly growth if we're able to come in within that guidance range.

And so we're happy with the progress that we've made so far this year, and we think that this really provides a solid endorsement for the strategic adjustments that we've made and for the stability of Bionano going forward in this significant opportunity.

So with that, I want to thank everybody for attending and those of you in person as well as those of you on the webcast. Thank you very much.

I think we're out of time. So we'll wrap it up there.

Great, thank you.

Good day, and welcome to the Bionano Second 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.

Thank you, and good afternoon, everyone. Welcome to the Bionano Second Quarter 2025 Financial Results Conference Call. Leading the call today is Dr. Erik Holmlin, CEO and Principal Financial Officer of Bionano. And he is joined by Mark Adamchak, Bionano's Vice President of Accounting and Principal Accounting Officer.

After market closed today, Bionano issued a press release announcing its financial results for the second 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's press release and Bionano's reports filed with the SEC. These forward-looking statements are based on information available to Bionano today, August 14, 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 call will also be available online on the company's Investor Relations page.

With that, I will turn the call over to Erik.

Thank you, Kelly, and good afternoon, everyone. The second quarter of 2025 was solid. Today, in addition to discussing our quarterly results, we want to highlight several signs that we believe indicate the strategic shift we implemented in September of 2024, moving our focus from heavy spending on customer acquisition associated with new instrument placements toward those customers who use our optical genome mapping or OGM products and our VIA software, routinely insider genetics, is having a positive impact on our business.

I would like to start off by discussing the broader markets where our opportunities lie. In general, our focus is on bringing solutions to pathology, which is the broad field that investigates disease, including its causes, developments and effects. In fact, Bionano has become a digital pathology company. While there are many branches and subspecialties of pathology, our solutions concentrate primarily on cytogenetics and molecular pathology, we can see an opportunity to expand into clinical and anatomic pathology over time.

Clinically, these branches of pathology -- globally, these branches of pathology currently rely on multiple technology platforms to function. The mainstay in cytogenetics, for example, is karyotyping. It's the standard for first-line analysis in hematologic cancers in nearly every country around the world, and it hasn't changed in the past 50 years. Other techniques such as FISH and microarrays are similarly antiquated and limited.

Optical genome mapping consolidates these workflows and the fusion analysis from molecular pathology into one digital workflow. Sequencing is also impacting pathology with multiple workflows already adapted to sequencing, and techniques like single cell spatial and protein analysis showing promise for standardized sequencing readout that may eventually reach clinical scale. It's possible to imagine a large consolidation across molecular, anatomic and clinical pathology into sequencing as well.

One critical component that will underpin this transformation and consolidation in the future is AI-driven software, such as our VIA software. VIA streamlines the visualization interpretation, annotation or reporting of variance in a format that is easy for clinical researchers to use. VIA is best-in-class for OGM analysis and widely accepted as a gold standard for CNV analysis for microarrays and sequencing. Some labs running long-read sequencing have shared their excitement about using VIA for their data analysis as well, which is particularly encouraging.

Our mission is to make our technology and workflows easy for customers to use. While we still have a lot of work to do, we have made tremendous progress and see substantial opportunity to advance this area of digital pathology, both now and in the future.

With that overview, I'd like to shift gears and talk about our current strategy where we are concentrated on driving utilization of our solution within a subset of our OGM and VIA user base. We call these users routine users. These customers tend to have an established flow of samples to run on our systems, and we believe this group will drive most of our revenue and profit growth in the near term.

Our strategy to address them has 4 pillars, which form the basis of how we execute. First, we support and sustain the installed base of routine OGM and VIA software users. Second, we drive utilization through adoption of VIA software across the routine OGM user base and facilitate their menu expansion. Third, we build support needed for optical genome mapping reimbursement and inclusion in medical society guidelines and recommendations. And fourth, we are focused on improving profitability and scalability with lowering costs and driving higher volumes.

Now taking a closer look at our results in the second quarter, where we have made excellent progress against this new strategy. Total revenue for the second quarter was $6.7 million, a decrease of 13% when compared to the second quarter of 2024, which included $700,000 in revenues from discontinued services, which do not contribute to our second quarter 2025 revenues. When adjusting for these discontinued clinical services, the revenue decrease was 5% year-over-year.

Now we sold 7,233 flowcells in the second quarter of 2025. This amount reflects a 17% increase compared to the same period last year. We're extremely pleased to see this double-digit growth in flowcell sales year-over-year, and we believe it's a result -- it's a strong indicator for our efforts towards driving utilization within this routine customer group -- routine-use customer group.

Now non-GAAP gross margin for the second quarter of 2025 was 52%, which is significantly higher than the 35% non-GAAP gross margin reported a year ago. Second quarter 2025 non-GAAP operating expenses were $8.8 million compared to $18.8 million in the second quarter of 2024, which reflects a 53% reduction year-over-year. And we installed 7 new optical genome mapping systems in the quarter and brought back 8 for a net decrease of 1 in the installed base to 378 systems installed. That reflects an increase of 4% over the 363 systems installed as of June 30, 2024.

In the first half of 2025 through June 30, we have installed 16 new systems. And we ended the quarter with $27.4 million in cash, cash equivalents and available for securities -- available-for-sale securities of which $11 million was subject to certain restrictions.

Now the fundamental thesis of our current strategy is that we can support a committed group of routine users who repeatedly purchase and use our consumables and software at higher rates overall. We're taking a closer look at 2 metrics: the number of flowcells sold and revenues for consumables and software combined, we can see support for this idea.

Flowcells, as we reported, grew 17% in the quarter compared to last year. And we can look deeper into that number by removing the number of flowcells sold to new customers in the second quarter of 2024 and 2025. And in so doing, the number of flowcells sold to the remaining existing customers grew by 14%. So growth for flowcells sold to the existing customers in the first half of 2025 compared to the first half of 2024, overall, has grown by 7%. We believe these data suggest that existing customers are using the product and repurchasing it at higher volumes. We intend to continue our efforts to expand this growth.

For recurring routine-use revenue, we looked at the combination of consumables and software sales, which grew 16% year-over-year in the second quarter of 2025 and 8% year-over-year for the first half of 2025. As a percentage of the total product mix, consumables and software revenue increased from 55% in the second quarter of 2024 to 73% in the second quarter of this year, and for 57% in the first half of 2024 to 77% in the first half of 2025. We believe this shift is growth -- is driven by growth in utilization as well as a reduction in new instrument sales, which -- both of which are key elements to our strategy.

Moving down the P&L, we are also focused on operating efficiently to reduce costs and improve our gross margins to make the business more profitable. We have made noticeable progress reducing our non-GAAP operating expenses really since the first half of 2023. In fact, we have taken out over $100 million of annual non-GAAP operating expense and materially reduced headcount over that period by more than 300 people since the second quarter of 2023. In the first half of this year, non-GAAP operating expense was roughly flat at $8.5 million for Q1 and $8.8 million for Q2, with Q2 representing a 53% year-over-year reduction.

Turning to non-GAAP gross margin. Cost reduction, along with improvements to our product manufacturing costs have enabled margin expansion from 23% back in the first quarter of 2023, steadily to 52% this quarter. It's the first time that we're reporting a margin in this range for this product mix. We expect to see continued margin expansion over time but expect to remain around the current levels for the near term. Importantly, these improvements in cost and margin are strong indicators that we are improving our financial profile.

Turning now to a few key milestones in the quarter, which we believe are tied to our strategy and will enable our customers to more easily adopt and increase their use of OGM. We released an incredibly powerful update to our software suite and compute solutions with VIA 7.2, Solve 3.8.3 and updates to the software that enable our GPU-based Stratys Compute platform. They have all been released in a first wave to select customers, and we expect a broad commercial release later this year. In fact, installations have begun. Amongst key features, VIA 7.2 now offers the same transformative, AI-driven workflow users have adopted for hematologic malignancies to the workflow for analysis of constitutional genetic disorders, which we believe can be a game changer for analysis of these conditions.

Solve updates, it expands its database substantially and improved the accuracy of structural variant detection, while updates to the Stratys Compute are expected to double its capacity for weekly analysis of cancer samples. We are making the OGM workflow easier with these advancements.

Now in building the support needed for OGM reimbursement, we believe a growing number of publications illustrating the utility of optical genome mapping in cytogenetics and the number of clinical research genomes published are positive, leading indicators. The second quarter of 2025 had the highest number of publications in any quarter in the history of optical genome mapping. And the optical genome mapping community has now surpassed 10,000 published clinical research genomes, which is an incredible milestone. These publications provide the support for new customers to adopt existing customers to expand applications and for third parties to support OGM in reimbursement.

This June, in fact, the Editorial Board of the American Medical Association established a second Category I CPT code for OGM. This one for use of OGM in evaluation of constitutional genetic disorders, which is yet another incredible milestone for our community. We believe this CPT code may pave the way for even more routine use of optical genome mapping and cytogenetics as part of this digital pathology strategy.

To wrap up, I would like to provide our outlook for the remainder of the year. We are reiterating our full year revenue guidance of $26 million to $30 million. We expect Q3 revenues to be in the range of $6.7 million to $7.2 million. And given the 16 new OGM systems installed already in the first half of the year, we are raising our expectations for new OGM installations in 2025 to be in the range of 20 to 25 compared to the prior range of 15 to 20.

So with that, Deedee, please go ahead and open the line for questions.

[Operator Instructions] Our first question comes from Jason McCarthy of the Maxim Group.

This is Michael Okunewitch on the line for Jason. Congrats on the great progress. So I guess I wanted to ask with regards to VIA, how universal is the use of VIA software among the OGM users? Is it fairly one-to-one over there? Or are there some opportunities to expand VIA use among your existing OGM base?

So the answer is, when we look at -- across the whole installed base of OGM systems, VIA is probably installed in less than -- maybe around 1/3 of them. But when we look at our routine-use customers, that adoption rate is much higher. There still remains the opportunity to drive that adoption. And so that is something that we see can enable us to expand utilization. And even amongst the sites that have adopted it, they haven't all put it into their own routine use. And so that's a big focus for us from a training perspective, and we think that these new updates are going to help by introducing this workflow for constitutional genetic disorders.

So I think the answer is that adoption is plentiful amongst the customers that we're really focused on right now in this routine-use regime, but there remains a significant opportunity to install it at more sites and to increase the utilization amongst all of those sites.

Are you putting any effort towards marketing VIA in non-OGM users? You mentioned there are a couple of people out there using VIA for applications like long-read sequencing. And do those customers represent an opportunity for cross-selling to place OGM units without the high acquisition cost of going out and finding completely new users?

I think the answer is yes. And let me just be clear, in the quarter and over the course of the year, we do sell a substantial amount of software for non-OGM applications, structural variation, detection, analysis, reporting off of NGS and microarrays. And so that's a significant portion of the business. And we do believe that those customers who are using VIA for non-OGM applications can expand their relationship with the company and become OGM users. And so yes, maybe you could say it's a little bit of a Trojan horse.

There are some intricacies about how labs within the pathology universe are constructed and how samples flow. And so it's not a one-for-one where you would expect to see direct adoption, but it certainly is an opportunity. And I think, really, VIA performs incredibly well for these applications. And so it's a way for the Bionano name to be present at institutions.

All right. And then just one last one for me, and I'll hop back into the queue. You did mention that the newest iteration of VIA does include an AI component. So what role does AI play in the VIA software?

When you think about what happens in this workflow, and I think you have probably worked on some of these projects, when variants are identified, it's possible that they have been seen before and so that there are publications associated with them. Similarly, there may be other labs that are looking for variants of this type. And then there are a variety of databases that exist that can score and categorize these variants and help researchers to determine ways in which they want to report these variants. And so this type of analysis of these databases is an example where the computational power that AI brings can accelerate and improve the results that are generated through this analysis.

All right. Thank you for the insightful answers and congrats on the great progress this quarter.

And our next question comes from Yi Chen of H.C. Wainwright & Company.

So your press release mentioned that you brought back 8 systems during the quarter and placed, installed 7 new systems. So I assume the 8 systems you brought back are users that are not routine users, correct?

Yes. We have a reagent rental program, and so labs can bring a system on and test it out and evaluate it. And in the cases of these examples, they went through their rental contract. And at the end, decided that they were not going to move forward. I think that one common theme amongst the majority of the systems that are returned is that they -- the initial application is much more of a research-oriented application. And so I think in the current environment where there are a lot of constraints around funding, I think that, that may be one of the effects, but we shouldn't think of that as a reduction to the routine-use customer pool.

So the new systems you placed in -- as the second quarter or the coming quarters, they have all gone through the -- they have to go through the evaluation period, too. And at the end, they have to determine whether they want to keep the system, or they want to return the system. Is that the right idea?

Well, it depends a little bit on the way in which the customer contracts with the company. So if they rent the instrument, which means they commit to a consumables volume over time, a certain number of consumables purchased per year, they can have it for -- the minimum would be 1 year now, these deals that we're doing. And there is the potential that they could return it after that year. But if they buy the system from us, then they own the system and it's theirs, the question is, whether they choose to utilize it going forward or not.

And we have a mixture of these rentals and purchases. And since we're doing fewer deals now, it's kind of interesting, it's about 50-50 purchase versus rental. But it is true that somebody who rents the system does have the option to basically discontinue their rental at the end of the contract period, which I think is quite common in the industry.

Got it. So at this point, I don't know if you can provide a rough estimate as to the return rate among the new systems placed or attrition rate. Like what percentage of new systems placed will eventually be returned?

Yes. I mean I think it's a very good question. And when we look at the new systems that are going in, it's kind of -- it's a little bit premature to talk about the return rate amongst these current adopters because they really reflect this shift in strategy. And so we're not selling the system to a lab that's going to be doing speculative research, and so our expectation is that these systems are not coming back. I mean I'm sure that it will happen potentially, but it's a little bit premature for us to give a return rate amongst this segment of customers. It's not 0. We have taken some back, but it's very close to 0.

I see. And with respect to the second Category I CPT code from AMA, could you tell us, how is it different from the first code? And how is it going to facilitate the reimbursement going forward?

Yes, it's an excellent question. So -- I mean, if you think about the sort of digital pathology campaign that we are on to really consolidate cytogenetics onto optical genome mapping, within that effort, you've got 2 very distinct applications, analysis of samples for hematologic malignancies and analysis of samples for constitutional genetic disorders.

And the way that the CPT codes work is that even though the methodology itself is fairly similar, there are differences in the workflows such that it's appropriate to have different codes. And I think that there is a chance for there to be differences in pricing. We don't know what the constitutional genetic condition code will be priced at. We would expect to see the draft pricing probably sometime in September.

The hematologic malignancy code was priced at $1,263. We understand that some of our customers have petitioned CMS to increase that price, and so I think that while we would have liked for one code to exist from the very start, now that we've gone through the process, I think it's beneficial to have a code dedicated to each of these major applications because for the reason that somebody might be doing that analysis, it's fairly unique and different. It's a different body of literature that supports it and hopefully, let's just say, could potentially drive differences in pricing. So we'll want to pay attention to that in the next weeks.

Our next question comes from Mark Massaro of BTIG.

This is Vidyun on for Mark. So I think the instrument placing guidance assumes a slight detail in the back half. Should we just think of that as conservatism? I would think that there might be a slight budget flush dynamic in Q4. So just how should we be thinking about that?

I think that, probably, yes, conservatism, right? If you double the first half, you would get 32%. On the other hand, it's probably appropriate to be conservative because even if you get a budget flush and there are orders and so forth, you're actually getting them installed, could spill over into the first quarter of 2026, for example. So I think I would say that I feel very confident that we'll sort of meet this new raised guidance.

Okay. That's perfect. And then just a follow-up on the flowcells. I think you beat us there. I think you alluded to it in the prepared remarks, but could you just discuss one more time what you think drove that? And do you have a sense on how long it takes the newer customer group to reach maturity and kind of ramp their utilization there?

Yes. Really good questions. I mean I think that to be fair to you and to us and to everybody who's following the trajectory here, we expect there to be lumpiness. And the sort of routine-use user base is sizable, but it's not so big that it's not -- it will be just smooth, so we expect there to be some lumpiness.

Having said that, we have really focused on supporting customers to make sure that they're up and running and addressing those customers with the highest potential for utilization. Our trading programs on the VIA software and other aspects of the workflow in key applications like hematologic malignancies are underway, and this is a big concentration for us. And so I think that there have been a lot of good execution-oriented actions that we've taken and that those are paying off, and that's why we're seeing that growth.

In addition, and sort of transitioning to your question a little bit about the time to get up to speed, we had a pretty substantial number of systems get installed and people get trained towards the end of last year. And so we're probably starting to see that utilization.

And I think that the time to a lab getting into a routine-use situation with OGM, it's going to be variable. It's without a doubt a minimum of 3 months, but I think 6 to 9 months is a healthy time frame to be thinking about. There's just a lot of stuff that needs to happen after install that is related to requirements that the lab needs to follow depending on what their desired application is. And so it takes some time.

Having said that, almost every system that goes out buys consumables upfront, and so they're churning through a wave of consumables to begin with. And it's like, when do we get them to that point of their first repurchase? Again, I think that, that's likely in that 6-month time frame. Maybe 6 to 9 months is a good way to think about it.

Okay. That's very helpful. If I could just squeeze in one last one, just maybe a higher-level question. There has been some pickup of dealmaking in our space a little more recently. Just how are you thinking about strategics or partnerships here?

Well, look, I mean, I think that there's the cliche answer, every day between the hours of 9:30 and 4 Eastern Time, the company is definitively for sale. And we're a well-known entity out there. And so I would expect that Bionano is certainly on the radar screen of strategics. And we have a variety of discussions that are ongoing all the time. And I think what's unique about Bionano across the space of companies, let's say, that are similarly situated to us. Early commercial stage, maybe feeling some of the constraints and difficulties of the current equity capital markets. I think Bionano is pretty far advanced. So even with everything that we've gone through, we're printing a $6.7 million quarter and guiding $6.7 million to $7.2 million for the next quarter. I think $26 million to $30 million on the top line, 52% gross margin with expenses that are no longer so significant that folks can't see a way to folding Bionano in.

Having said that, I think we're very committed to our strategy of this digital pathology transformation. We know it's going to be incredibly valuable and that there's so much upside for our business, so we sort of stick to our knitting, if you will.

Thank you. This concludes our question-and-answer session. I'd like to pass it back to Erik Holmlin for closing remarks.

Okay. Thank you, Deedee, and thank you to everyone who joined. We're very happy with this quarter, and we look forward to updating you on our Q3 conference call. Thank you very much.

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