STIFEL 2026 HEALTHCARE CONFERENCE - BILLIONTOONE INC

Explicit Guidance:

• Revenue Growth: Targeting approximately 100% year-over-year (YoY) growth in the oncology business for years to come, provided test volume growth is matched with incremental sales rep additions.
• Sales Force Expansion: Planning to add 5–6 representatives in 2026 and 7–8 representatives per quarter in 2027 to maintain 100% growth rates without compromising service quality (turnaround times). Current oncology headcount is ~65 reps; annualized revenue is $68 million (Q3 run rate).
• Financial Margins: Targeting 70–80% gross margins for individual product lines and 30%+ operating margins on a product-line basis over the long term as the portfolio matures. No specific company-wide EBITDA target provided beyond maintaining the current double-digit margin trajectory while reinvesting for growth.

Business-Segment Outlook:

• Oncology (Select & Response Assays): Anticipating strong interplay between Select and Response tests in late-stage cancers, where Response monitoring triggers follow-up Select tests upon disease progression. Believes sensitivity advantages (50%+ more actionable therapies detected) will drive adoption even in lower-shedding cancer types as MRD utilization expands beyond Colorectal Cancer (CRC).
• Prenatal Business: Expecting predictable quarter-over-quarter growth in independent single-specialty clinics (40% of market).
• Prenatal Health Systems: Targeting the 60% of the market currently dominated by health systems. Anticipating additive volume growth from health system wins, with estimates of 1 to 5 new wins expected (previously 1 in 2026, 3 in 2025). Each win projected to contribute 3,000–4,000 tests per quarter.
• EMR Integration: Expecting meaningful volume uplift from Epic Aura integration starting in Q1/Q2 2027 (following Q2 2026 completion), with most health systems turning both Prenatal and Oncology business "on" simultaneously.

Market and Competitive Outlook:

• Competitive Dynamics: Views competition primarily as "inertia" rather than product performance; notes that competitor share of top accounts has remained static for over two years.
• Prenatal Competition: Dismisses the impact of competitor (Natera) "Fetal Focus" assay, citing superior performance when partner testing is unavailable and lack of competitor awareness in daily sales calls (0 mentions in ~40 calls over 2 months).
• Coverage Trends: Anticipating Moldy-X coverage decision regarding tissue-free tests could shift to 2027, driven by head-to-head data showing parity with tumor-informed assays in pan-cancer analysis.
• Reimbursement/Network: Currently 90% in-network. Significant upside expected in prenatal via Medicaid managed care and health system penetration now that network status is secured.

Macro / Industry Outlook:

• Adoption Rates: Believes the shift from single-specialty clinics to health systems will accelerate as independence clinic market share growth slows (harder to grow 100% from 20% vs. 10% to 20% share).
• Sales Cycle Realities: Acknowledges that while independent clinics yield rapid revenue, health system sales cycles remain 6–12 months due to cybersecurity, phlebotomy, and vendor approval phases.

Strategic Initiatives:

• Product Portfolio Expansion: Launched 130-gene panel and expanded carrier panels in 2026 to fully serve genetic counselors and health system stakeholders, previously a barrier to entry.
• Sales Force Rebalancing: Adjusting incentives and headcount to balance quarterly growth goals (driven by clinics) with annual sales cycles required for health system switches.
• Long-term Portfolio Maturity: Strategy to reinvest profits from high-margin product lines to fund expansion into larger markets, aiming for a portfolio-wide maturity where all products achieve 30%+ operating margins.

Risks and Headwinds to Outlook:

• Service Quality: Risk of turnaround time degradation if sales force grows too rapidly without maintaining service standards (e.g., >3-week turnarounds leading to physician non-reliance).
• Health System Penetration: High variability in timing; outcomes depend on the number of health system wins (1 vs. 4), creating significant uncertainty in volume models for 2027.
• Market Saturation: Slowing organic growth rates as market share increases in the independent clinic sector, necessitating a harder pivot to complex health system deals.
• Regulatory/Coverage Delays: Dependence on Moldy-X coverage decisions for broader oncology adoption of tissue-free response monitoring.

Management Tone on the Future:

• Confidence Level: High confidence in product performance differentiation (sensitivity and ease of use) outweighing competitive product launches.
• Growth Outlook: Confident in sustaining 100% YoY growth in oncology for multiple years if rep additions are calibrated correctly.
• Strategic Caution: Cautious on precise health system volume timing, labeling them as "upside potential" not currently baked into baseline guidance due to long switch-over periods.
• Profitability View: Realistic regarding company-wide margins; expects product-line margins to improve to 30%+ while overall company margin growth is tempered by necessary reinvestment in new market expansion.

Miscellaneous:

• Sales Efficiency: Current oncology reps are generating >$1 million annualized revenue per rep on average, even with new reps ramping up.
• Prenatal Market Structure: 40% of market is in independent clinics, 60% in health systems (previously inaccessible due to network/EMR constraints).
• Differentiation: "Fetal antigen" and "IPT" (Integrated Prenatal Testing) are key differentiators in the prenatal space, with evidence supporting utility across all US populations even without partner testing.