Prepared remarks
Good day, and thank you for standing by. Welcome to the $1 billion 01/2026 earnings call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To withdraw your question, please press 11 again. Please be advised that this conference is being recorded. I would now like to turn the conference over to your speaker today, David Deichler, Investor Relations. Please go ahead.
Good afternoon, everyone. Thank you for participating in today's conference call. Joining me on the call from BillionToOne we have Oguzhan Atay, cofounder and chief executive officer, and Ross Taylor, chief financial officer. Earlier today, BillionToOne released financial results for the second quarter ended 06/30/2026. A copy of the press release is available on the company's website. Before we begin, I want to remind you that during this call, we may make forward-looking statements within the meaning of federal securities laws. Such statements about future events may include statements about our financial outlook and performance, market size, our products and services, reimbursement coverage, future clinical performance, and other similar statements. We caution you that such statements reflect our current best judgment and actual results may differ materially from those expressed or implied in any forward-looking statements. The risk factors that may cause our results to differ are discussed in our filings with the SEC, including our previously filed annual report on Form 10-K, our quarterly report on Form 10-Q to be filed following this call, and the current report on Form 8-K filed today. Any forward-looking statement made during this call is made as of today, August 5, 2026. If this call is replayed or reviewed after today, the information made during this call may no longer be current or accurate. BillionToOne disclaims any obligation to publicly update any forward-looking statements whether because of new information, future events or otherwise, except as required by law. With that, I will turn the call over to Ozan.
Good afternoon, everyone. Thank you for joining our second quarter 2026 earnings call. I would like to start by thanking our patients and providers who trust us with incredibly important health care decisions and our employees, who show up every day with tremendous effort to build and deliver superior tests that improve our patients' care and remove the fear of the unknown. Before diving into our quarterly results, I would like to remind you of the four pillars that I believe make us a different category of molecular diagnostics company. The first pillar is our revolutionary technology platform, enabled by our patented QCT, quantitative counting template technology. Our technology achieves single-molecule level precision with next-generation sequencing. This has allowed us to build unique category-defining products in both prenatal and oncology. In turn, our second pillar is that our products have allowed us to scale rapidly, from zero to $438 million in annualized revenue run rate in six years. We believe we are still in the early days, perhaps at less than 1% of what is possible. We believe prenatal and oncology cell-free DNA testing can exceed an estimated $100 billion in the United States alone. Importantly, in our third pillar, with the higher signal-to-noise advantage that our unique technology offers and with our relentless focus on COGS reductions and ASP growth, we have been able to couple our rapid growth with a superior gross margin profile. We now have margins above 70%, with still significant room for expansion through ASP growth and COGS per test reductions. Finally, this superior gross margin combined with a culture of fiscal discipline and efficient operations incorporating AI has allowed us to achieve GAAP profitability. We have done this at a much lower scale than our public competitors, with an accumulated deficit that is approximately 10% of theirs. In summary, we continue to track toward our long-term goal, which has remained the same: to build a category-defining generational company, transform molecular diagnostics and the standard of care for millions of patients, and become a member of the S&P 500. Our second quarter performance was strong across all pillars as we delivered another quarter with high growth, excellent margins, and positive operating income and cash flow. I will cover each pillar in more detail. But to summarize, we are launching new products both in prenatal and oncology, and we have published data that we believe will support MolDX coverage for North Star Response. Our rapid growth continued with test volume up 35% year over year and revenue up 64% year over year. We maintained our superior gross margin profile, which was 70.5% in the quarter, an expansion of five percentage points year over year. Our gross margins stayed remarkably consistent in the past few quarters despite an increase in COGS per test as our mix shifts toward a higher proportion of oncology tests. Lastly, even as we accelerated our investments in commercial scale and R&D, we maintained a strong level of profitability, achieving $5.5 million of GAAP operating income, a 5% operating margin, and a 15% adjusted EBITDA margin. As a result, we increased our cash position to $549 million at the end of the quarter. Let me take you through the quarter pillar by pillar, starting with our first pillar, our platform and products. In prenatal, UnityConfirm has seen strong adoption following the launch on May 28. As a reminder, it is the first and only noninvasive confirmation assay for high-risk pregnancies. It captures and sequences intact circulating fetal cells to provide 100% fetal fraction, a fundamentally different category from conventional cell-free DNA tests. We launched it as a specialized follow-on for high-risk pregnancies identified on our UNITY aneuploidy screen. UnityConfirm gives patients who cannot or choose not to proceed to invasive diagnostic testing a noninvasive option they did not have before, at a sensitive time when options may feel limited. The early reception of UnityConfirm has been exceptional. Providers are already ordering UnityConfirm on more than 50% of their eligible high-risk Unity aneuploidy patients. We also continue to enroll patients in what we believe is the largest prospective circulating fetal cell-based study ever conducted. In the meantime, UnityConfirm is opening doors even to health systems that typically do not allow sales representatives. We expect its long-term impact for the Unity franchise to be significant, especially as future readouts from the study mature and it is established as the next paradigm in noninvasive testing. Our prenatal product engine did not stop there. On August 17, we are expanding our UNITY Fetal Antigen Screen to 130 genes, the largest panel on the market that does not rely on partner testing, by far, leapfrogging competitive offerings. Approximately 50% of all providers prefer large panels for these inherited conditions, so we believe this expansion will meaningfully increase our serviceable market. The panel screens for prevalent actionable conditions selected from ACOG, ACMG, and RUSP guidelines and reinforces Unity's position as the leader in cell-free DNA testing for recessive conditions. Turning to oncology, we generated important new clinical evidence this quarter. On June 24, we published a peer-reviewed study in the Journal of Liquid Biopsy validating NorthStar Response for monitoring immunotherapy and immuno-combination therapy. This study included 142 patients and more than 570 samples across two prospective cohorts and 12 tumor types. Molecular progression strongly predicted worse survival, notably a stronger predictor than imaging alone and stronger still when the two are combined. The test also separated radiographically stable patients into true responders and nonresponders, further demonstrating value over standard-of-care imaging. This publication is designed to support our pursuit of MolDX Medicare coverage for NorthStar Response in IO and IO combination therapy settings. Since response accounts for almost two-thirds of our oncology test volume, this coverage remains one of our most meaningful catalysts and is still expected by the end of this year. Speaking of catalysts, we remain on track for our highly sensitive tumor-naive MRD launch by the end of the year as well. It is important to note that our liquid biopsy assays have a QC failure rate below 1%, compared to 15% to 30% typical of assays that require tissue sequencing. We are also updating NorthStar Select on September 1 in two important ways. First, we are expanding the panel to 102 genes to cover recent and upcoming FDA therapy approvals, including the highly sensitive detection of MTAP copy number loss. MTAP loss is present in approximately 15% of all cancer patients and is the target of several promising ongoing clinical trials. As we previously discussed, copy number losses are extremely difficult to detect in liquid biopsy—a problem that our technology resolves. Second, we are launching NorthStar Origin, a tissue-of-origin add-on which we believe will deliver best-in-class performance with higher call rates than any similar offering. Roughly 3% of patients present with cancer of unknown primary, which results in a lack of effective therapy options. Moreover, the percentage of patients with uncertain diagnoses can reach 10% in community oncology settings, especially when they do not have access to detailed pathology workups. NorthStar Origin uses QCT-based molecular counting of methylation to deliver 91% top-3 and 86% top-1 accuracy in identifying the tissue of origin, helping these patients get to a diagnosis and effective therapy. Turning to our second pillar, scalable rapid growth. In the second quarter, total test volume grew 35% year over year to approximately 196 thousand tests, up approximately 8 thousand sequentially. Our growth was in line with our expectations for prenatal and above expectations for oncology. Importantly, we added approximately 70 sales representatives in the first half of the year, ahead of plan given the strength of our hiring pipeline. While this rate of hiring did have some impact on our short-term sales productivity, we expect our hiring to translate into faster growth exiting the year and into the early part of next year as these representatives become fully productive and penetrate health systems, especially as these health systems also become EMR integrated. Speaking of EMR integrations, we launched on Epic Aura platform in under five months, a record speed for any laboratory, and completed our first Aura health system integration in just two weeks from start to first test order. Epic Aura removes a critical barrier to health system adoption. It will still take time to convert health systems since each health system's IT team must slot our integration into a roadmap that is often two to four quarters out, but we expect the impact to be meaningful as we enter next year. Given how quickly our oncology tests are scaling, we also signed the lease for a dedicated 62,000 square foot oncology production lab directly across from our existing prenatal production lab in Union City, California. Design and build-out are underway, with production expected by the end of 2027, and the facility is designed to support oncology capacity of approximately 5,000 tests per day over time. Looking at each product line, both prenatal and oncology contributed meaningfully to our growth. Prenatal revenue in the second quarter was $95.8 million, up 56% year over year, driven by strong commercial execution and rising ASPs. Oncology was even faster, with revenue growing 176% year over year to $13.7 million, an annualized revenue run rate of approximately $55 million. Our total revenue performance in the quarter demonstrates the remarkable growth we have delivered in the last six years, rising from approximately 0 to $438 million in annualized run rate. Total revenue was $109 million in the quarter, representing 64% year-over-year growth driven by a strong year-over-year increase in both tests delivered, up 35%, and ASP, up 21%. I would note that while reported revenue was only slightly up sequentially, that understates our underlying momentum. Excluding true-up revenue, total revenue grew 8% sequentially quarter over quarter. The sustained level of growth continues to be an important part of our pillars. Moving to our third pillar, and starting with our ASPs: overall ASP increased 21% year over year to $551 per test. ASP did decline about $20 sequentially, but this is simply a result of true-up timing. True-up was $49 per test in the first quarter versus $14 per test in the second quarter. Importantly, excluding the true-ups impact, ASPs increased $15 quarter over quarter. During the quarter, through a mutual agreement, we held more than $10 million of claims while waiting for the in-network implementation of our codes by national payers. This had a temporary impact on cash collections, slightly impacted the ASPs we could realize, and potentially reduced the true-up revenue for the quarter. We expect this to resolve through the second half of the year as these claims are processed and paid. The more important underlying signal is this: excluding true-up, overall ASP continued to increase sequentially, driven by a record number of payer contracts signed in the quarter. In addition to driving ASP growth, we have remained committed to our operating philosophy of continuous improvements to reduce COGS per test. Overall COGS per test was $101 in the second quarter, up from $152 in the first quarter and $156 a year ago, with the increase driven by the shift in our volume mix toward oncology. Underneath that mix effect, the operational discipline is very much intact. We achieved a 10% quarter-over-quarter reduction in oncology COGS per test. As oncology continues to grow faster than prenatal, we expect overall COGS per test to rise gradually over time. As a result, our gross margin held at 70.5% in the second quarter, approximately five percentage points higher year over year driven by higher ASPs even as our earlier-stage lower-margin oncology tests grew more than 100% during this same period. Importantly, small quarter-over-quarter differences in gross margin over the past four quarters are almost entirely attributable to quarterly true-up differences. Excluding true-up, our gross margin has been remarkably stable at around 70% even with the significant mix shift towards oncology. By continuing to drive ASP increases across both prenatal and oncology, and by continuing to reduce COGS in oncology, we expect to maintain strong gross margins at or above 70% even as oncology becomes a much bigger part of our overall business. With that, I will turn the call over to Ross to review our financial results and guidance.
Before I begin, thank you, Ozan. As Ozan mentioned, in Q2 2026 we had a strong performance that combined 64% year-over-year revenue growth with a 5% GAAP operating margin and a 15% adjusted EBITDA margin. Total revenue in the second quarter of 2026 was $109 million compared to $66.6 million in the second quarter of 2025, representing an increase of 64%. Both our prenatal and oncology product lines demonstrated strong growth in the quarter. Prenatal revenues, consisting of clinical testing revenues and revenues from clinical trial support and other services, increased 56% to $95.8 million in Q2. Oncology revenues increased 176% to $13.7 million in Q2 of 2026 versus Q2 of last year. Our total revenue growth was driven primarily by test volume growth across both prenatal and oncology, as well as continued expansion of both our prenatal and oncology ASPs year over year. True-up revenue was $2.8 million in the second quarter of 2026, compared to $9.2 million in the first quarter of 2026 and $2.1 million in the second quarter last year. Excluding true-up revenue, total revenue grew 8% sequentially versus the first quarter of 2026. Gross profit in the second quarter of 2026 was $77.1 million compared to $43.5 million in the second quarter of 2025, resulting in a gross margin of 70.5% in the second quarter of 2026 versus 65.3% in the second quarter last year. The increase in gross margin was primarily attributable to continued increases in our overall ASP. Total operating expenses were $71.6 million in the second quarter of 2026 compared to $45.1 million in the comparable prior year quarter, representing an increase of 59%. Within total operating expenses, R&D expenses were $17.3 million in the second quarter of 2026 compared to $11.8 million in the comparable prior year quarter. SG&A expenses were $54.3 million in the second quarter of 2026 compared to $33.3 million in the comparable prior year quarter. Operating income was $5.5 million in the second quarter of 2026 compared to an operating loss of $1.6 million in the second quarter of 2025. Our Q2 operating profit margin was 5% compared to the 16% operating margin we delivered in the first quarter of 2026. Slightly over half of the difference in operating profit compared to Q1 was due to the difference in true-up revenue between the two quarters. The remaining portion was driven by continued investment in our commercial and R&D organizations, as well as faster growth in oncology. Adjusted EBITDA in Q2 represented a 15% margin. Net income available to common shareholders was $8.1 million or $0.15 per diluted share in the second quarter of 2026 compared to a net loss of $200 thousand for the same period in 2025. Looking at the cash flow statement for the second quarter, cash flow from operations was $9.1 million and capital expenditures were $4 million. This resulted in free cash flow of $5.1 million in the second quarter of 2026. We are well capitalized with a very healthy balance sheet. We ended the second quarter with $549 million in cash and equivalents. We believe our balance sheet positions us for strong growth moving forward, particularly given our intent to continue to manage the business for profitability and positive cash flow. Finally, I will provide an update on our full year guidance for 2026. We are reiterating our 2026 total revenue outlook of $450 million to $465 million, representing growth of approximately 48% to 52% compared to full year 2025. We also expect to operate the business such that it will continue to generate profitability similar to current levels even with significant continued investments. I will now turn the call back to Ozan to conclude.
Thank you, Ross. In summary, we are transforming health care one molecule at a time, one patient at a time. My confidence, as always, is rooted not in any single element but in the compounding nature of what we have built. Each product we launch makes our platform more powerful, from UnityConfirm to our expanded fetal risk screen to NorthStar Origin. Each study we publish further validates the clinical utility of our technology, as our NorthStar Response publication did this quarter. Our financial profile remains best-in-class for our industry. Once again this quarter, we demonstrated strong revenue growth to $438 million in annualized run rate, we held gross margins above 70%, and we show that rapid growth does not have to come at the expense of profitability. We are powered by a team of highly motivated, mission-driven individuals who show up every day with a shared purpose to make a meaningful difference in patients' lives. Our ambition remains clear: to transform molecular diagnostics, build a category-defining company, and earn a place in the S&P 500. We are pleased with our progress and look forward to updating you as the year progresses. Thank you. Over to the operator.
Questions and answers
Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press 11 on your telephone. If your question has been answered and you wish to remove yourself from the queue, press 11 again. Our first question comes from Mark Massaro with BTIG. Your line is open.
Hey, guys. Thank you for taking the questions. Maybe the first one: it looks like the true-up number dropped by approximately $6 million in Q2 relative to Q1. I guess, Ozan and Ross, I just wanted to check if, excluding true-ups, your prenatal test revenue would have increased sequentially. Is that correct? And then, I do understand you operate in a competitive market with many other players. You've been taking share for years now. Can you speak to what you might be seeing in the competitive market? Related to that, you did accelerate hiring of sales reps relative to plan. Just curious if any of those stepped-up hires might have something to do with the competitive environment.
That is correct, Mark. Both test volumes and ASPs for prenatal excluding true-up actually increased, so the combination increased significantly as well. Regarding the competitive environment, second quarter volumes were almost entirely as we expected in the quarter. We grew as expected in prenatal and slightly above expectations in oncology with respect to test volume. We did not accelerate hiring due to competitive pressure, but because of continued opportunity, especially with respect to health systems. We are managing the business for medium- to long-term growth. There are four factors we believe will come together in the next two to four quarters to drive significant growth in prenatal: the hiring of sales representatives, which takes time for them to become fully productive and penetrate health systems; UnityConfirm opening doors to health systems; the Epic Aura integration, which will take two to four quarters to show a significant impact but is executing extremely well; and the 130-gene UNITY Fetal Antigen Screen launch, which will be a significant competitive advantage and will have greater impact in health systems that prefer large panels. We accelerated hiring so that these representatives are joining and onboarding at the right time to take advantage of these combined opportunities.
Mark, on the prenatal revenue actuals, you can assume that virtually all of the true-up is related to prenatal. We have a chart in slide 14 of the deck where you can make estimates as to prenatal revenue excluding true-up. I do not have the exact numbers in front of me, and we have not provided those specifics historically, but prenatal revenue excluding true-up is up more than a couple million dollars sequentially. To give a bit more color, quarter to quarter we saw about a $4.5 million increase in prenatal revenues. Excluding true-up, that's roughly 5% sequential growth.
One moment for our next question. Our next question comes from Daniel Arias with Stifel. Your line is open.
Oguzhan, I think you alluded a bit to the volume trend. Can you put additional color on the sequential trend in oncology if you strip out the ASP dynamic? To what degree was quarterly volume up as a trajectory, and how should we think about the second half of the year relative to earlier expectations?
Oncology ASPs did not change quarter over quarter. We are waiting and working on the MolDX coverage of Response, so until that happens, oncology ASPs are pretty stable. True-up for oncology in both quarters was minimal. All of the sequential growth you see in oncology is coming from test volume growth. Oncology test volumes are performing ahead of expectations, which is one reason we started to build the dedicated oncology lab. We are winning in the market with the products we have, and as we add more competitive components to our oncology products, we are confident in the trajectory.
Do you think that trajectory will lead to sequentially up volumes each quarter? I know Q2 can be a bit of a funky quarter seasonally, but you sound like you have good momentum. Specifically, can 2Q to 3Q be up and 3Q to 4Q be up as well?
We see very strong momentum. April tends to be a stronger quarter for provider additions, but accessioning days and how volumes translate can make it feel shorter. Still, our oncology progress is ahead of plan, and we expect continued sequential volume growth as momentum and integrations progress.
One moment for our next question. Our next question comes from Guggenheim, on for Subhalaxmi Nambi. Your line is open.
Thanks for taking our questions. You gave some color on the UnityConfirm launch and the roughly 50% opt-in for eligible results. While still early, do you think that is already starting to drive share gains in NIPT? Also, you announced the expanded 130-gene fetal risk screen panel—any change to how you are thinking about the economics per test, either in terms of reimbursement or COGS?
UnityConfirm is certainly opening up doors and is reducing the tendency for some accounts to split volumes across labs. It is likely a long-term driver rather than a near-term step change, particularly because many remaining opportunities are health systems that require EMR and other work to onboard. UnityConfirm launched on May 28 and is already seeing strong adoption and opening doors in those health systems. The 130-gene panel is not expected to materially change immediate per-test economics. It will not be immediately a large portion of our volume, but it will enable entry into health systems and other accounts that prefer large panels. Because this will be the only large panel with a cell-free DNA offering, we expect it to be a meaningful competitive advantage.
One moment for our next question. Our next question comes from Jefferies. Your line is open.
Hi. This is Noah Kava on for Tycho. Thanks for taking our questions. I want to ask about the NorthStar Origin announcement. What percentage of your patient base do you think is relevant for potential attach? Are you assuming that the economics will pad over the next couple of quarters?
NorthStar Origin will not necessarily change product economics materially, but it will drive incremental adoption. It has become an important discussion point with providers, especially in community oncology settings where the percentage of cancer of unknown primary is higher than the 3% seen in academic settings. In communities without detailed pathology workups, up to 10% of patients may have an uncertain diagnosis, which makes next steps difficult. NorthStar Origin will be another driver of adoption similar to other product enhancements we launched.
One follow-up: one competitor noted incremental payer friction in prenatal testing, more so on carrier screening. Are you seeing any friction there?
We are not seeing that friction because we have been intentional about coding in this field. We bill the vast majority of our tests using PLA codes we obtained rather than relying on bundled or stacked billing. Some national payers require panels not be unbundled, but our PLA code has been effective since January 2025, so we have not experienced the same friction some other prenatal companies have faced.
One moment for our next question. Our next question comes from David Westenberg with Piper Sandler. Your line is open.
Thanks. On Slide 14, Ross mentioned about $4.5 million sequential revenue increase. If you look year over year, it looks similar. I am curious if you think you might have additional seasonality in Q2 for non-cfDNA testing that follows the same trends, and whether you might see Q3 and Q4 doing better. Also, regarding the disclosed $10 million of claims pending as in-network by national payers that suppressed true-ups in Q2: once those claims are processed, how does that $10 million flow through? And just to confirm, you are not modeling true-ups in the back half with your guidance, correct?
There are fewer patients getting tested in some accounts in Q2, so a small seasonality effect exists. We do not model seasonality explicitly, and we were ahead of plan even with that effect. As we grow larger, seasonality can have a bigger impact, but the effect tends to be relatively small. Regarding the $10 million of held claims, while a portion is embedded in realized revenue under ASC 606, we have been conservative in our approach. There is meaningful upside if these back claims are processed and paid, but we do not yet know the full timing or amount that will ultimately be collected, which is why we are maintaining guidance until clarity improves.
David, to confirm regarding true-ups and our guidance: we are not including any true-ups in our forward-looking guidance beyond what we have already reported.
One moment for our next question. Our next question comes from JPMorgan. Your line is open.
Maybe one question: you talked about launching on Epic Aura in the quarter and integrating faster than any other lab. Is there a scenario where you can be fully integrated with a meaningful number of health systems by 2027? Any way to quantify the impact in a base case from full integration? Also, on gross margin: you delivered 70.5% in Q2. How should we think about that progression once Response is reimbursed?
We are fully integrated with Epic Aura at the platform level. The remaining work is each health system turning on the integration and validating orders and results. Individual health system integrations typically take many labs six months or more, but our integrations have been lightning fast in comparison; our first integrations were two to four weeks from start to first test. We are using that speed to encourage health systems to prioritize our integration, but many will still schedule their work two to four quarters out. Once a health system is onboarded, it can drive meaningful volume—each system can add anywhere from 1,000 to 3,000 tests per quarter. The funnel began in May and June, and we expect slow initial progress that accelerates over time as more health systems prioritize our integration. On gross margin progression: we manage the business to balance growth with gross margin and profitability. Even when Response receives MolDX coverage and we launch MRD, we will not throttle MRD volume. As response ASPs rise and oncology gross margins increase, new products like MRD may be dilutive temporarily. Historically, excluding true-ups, our gross margin has been stable around 70% across the last four quarters despite a significant oncology mix shift. We expect to maintain gross margins at or above 70% by increasing ASPs and reducing oncology COGS. That said, an unexpected acceleration in oncology far beyond our model could temporarily push gross margins below 70%. Each product is designed to generate 70% to 80% gross margin in the long term with scale and appropriate coverage; the overall balance is expected to be around 70% gross margin.
I am not showing any further questions at this time. This concludes today's presentation. Thank you for your participation. You may now disconnect, and have a wonderful day.