STIFEL 2026 HEALTHCARE CONFERENCE - BILLIONTOONE INC

Explicit Guidance:

• Oncology Revenue: No specific dollar or percentage guidance provided; growth projected to be sustained at a "natural rate" limited by sales force capacity and service quality, with management indicating "100% year-over-year growth" is maintainable for years provided rep headcount increases appropriately.
• Sales Force Expansion: Target to add 5–6 representatives per quarter in 2026; planned increase to 7–8 representatives per quarter in 2027 to maintain the 100% YoY growth rate as the base grows.
• Gross/Operating Margins: Target gross margins of 70–80% (or higher) for every individual product line; target individual product operating margins of 30%+. Management notes company-wide profitability will not significantly increase next year despite product-level margins due to continued investment.
• Capex/Opex: No specific future spend numbers; investment strategy focused on expanding into larger markets which requires increased spending to grow.

Business-Segment Outlook:

• Oncology (Therapy Selection): Anticipated significant advantage in "lower shedding" cancer types where sensitivity differentiation becomes more clinically meaningful; focus on proving tissue-free tests can match or exceed tumor-informed assay performance in these categories.
• Oncology (Response Monitoring): Expected to drive "interplay" with Therapy Selection tests in late-stage cancer; as patients progress, the Response test triggers follow-up Select tests. Longitudinal usage expected to increase as clinicians validate performance in detecting tumor burden evolution earlier than scans.
• Oncology (MRD): Head-to-head comparisons with tumor-informed assays expected to drive adoption; differentiation will become more critical as MRD utilization expands from Colorectal Cancer (CRC) to lower-shedding cancer types.
• Prenatal (Health Systems): 60% of the market resides in health systems; previously unable to penetrate due to lack of in-network status and EMR integration. Expecting "incredible opportunity" for long-term growth as these blocks are now in place.
• Prenatal (Single Specialty): Continued predictable quarter-over-quarter growth driven by expanded panel adoption and ASP increases; growth rate expected to decelerate as market share nears 40%, necessitating the shift to health systems for volume acceleration.
• Backlog/Volume: Health system conversions described as "switch-like" transitions; recent data points suggest 1–5 wins per year, with each adding 3,000–4,000 tests per quarter. Specific volume from health systems not included in current guidance models due to timing uncertainty.

Market and Competitive Outlook:

• Competitive Landscape (Natera): Natera's "Fetal Focus" assay noted but deemed less impactful; Billion to One claims "nine out of ten physicians" still prefer their product due to superior evidence, performance when partner testing is absent, and ease of use.
• Competitive Dynamics: No expected shift in competitor switch rates; top 10 accounts show stable competitor mix over two years. Primary battle described as "against inertia" rather than active competition.
• New Business Wins: Independent clinic growth expected to slow as market share increases (diminishing returns on 100% growth); strategic focus shifting to health systems to sustain long-term volume.
• Coverage (Medicare): Oncology reimbursement driven by Medicare/Medicare Advantage; prenatal growth heavily reliant on in-network status with Managed Medicaid and major insurers.

Macro / Industry Outlook:

• Reimbursement Environment: Managed Medicaid programs and in-network status critical for prenatal volume and ASP protection; out-of-network status identified as a significant headwind for test volume growth in this segment.
• Clinical Adoption: Market view suggests clinicians require "categorical differences" (e.g., 50% higher sensitivity or ease of use) to change behavior; minor performance differences (e.g., 5%) viewed as insufficient to overcome inertia.

Strategic Initiatives:

• EMR Integration: Completed integration with Epic Aura by Q2 2026; expected to begin seeing meaningful volume uplift in Q1/Q2 2027 as new health systems complete cybersecurity and vendor approval phases (6–12 month timeline).
• Product Portfolio Expansion: Launched 130-gene expanded panel in 2026 to serve genetic counselors in health systems; previously focused only on OBGYNs and MFM specialists.
• Sales Force Strategy: Adjusting incentives to balance quarterly growth targets with long-term annual sales cycles required for health system contracts; rep activity shifting focus from independent clinics to health systems in 2027.
• MolDx Coverage: Executing strategy to secure coverage from MolDx for tissue-free response monitoring via head-to-head evidence against widely used tumor-informed assays; decision timeline anticipated for 2027.

Risks and Headwinds to Outlook:

• Operational Constraints: Service quality and turnaround time risks if sales force grows beyond the "sweet spot" (approx. 65–100 reps); oncologists may abandon tests if turnaround time exceeds acceptable limits (e.g., three weeks).
• Sales Cycle Timing: Health system integration delays (6–12 months) create uncertainty for specific volume upside; potential variance between 1 to 5 wins annually impacting immediate revenue vs. long-term models.
• Adoption Inertia: Difficulty persuading providers to switch from established competitors even with superior data; reliance on "inertia" overcoming rather than pure product superiority in large health systems.
• Growth Deceleration: Natural limit to 100% YoY growth rates in the independent clinic segment as market share approaches saturation.

Management Tone on the Future:

• Confidence Level: High confidence in product differentiation (50%+ sensitivity advantage) and execution (fastest Epic Aura integration).
• Cautious Optimism: Confident in long-term margin potential (30%+ product-level op margin) but tempered by the reality of heavy reinvestment in larger markets delaying company-wide profitability jumps.
• Strategic Pivot: Clear shift in narrative from pure "rep count" growth to "quality of penetration" in health systems to sustain long-term growth after the initial high-growth phase in independent clinics.

Miscellaneous:

• Financial Efficiency: Q3 results show $68M annualized revenue (excluding response Medicare coverage), implying >$1M revenue per sales rep on average even during ramp periods.
• Technology Differentiation: Emphasis on epigenetic change detection in response monitoring vs. variant-only detection, claimed to better capture tumor evolution across the epigenome.