SOPHiA GENETICS SA Q4 FY2024 earnings call

Key Points

• 2024 was a foundational year with 92 new core genomic customers signed, continued U.S. market penetration, and launch of new applications like MSK-ACCESS and MSK-IMPACT.
• BioPharma budgets tightened, but the team responded quickly with cost management initiatives. Adjusted gross margin was 72.8%, up 60 basis points. Adjusted operating loss improved 20% year-over-year.
• Growth drivers for 2025 include expediting implementation of new customers, continuing success in the U.S. market, and growing new applications MSK-ACCESS and MSK-IMPACT. Signed Mount Sinai in the U.S. and had strong new business pipeline in various regions.
• Product roadmap includes launching Enhanced Exomes, improving Liquid Biopsy offering, and upgrading SOPHiA DDM to a new generation with better user experience and scalability.

In 2024, SOPHiA GENETICS generated $65.2 million in revenue. The clinical segment was the majority of revenue, with clinical revenue growing 23% in the U.S. in 2024 and analysis volume growing 26%. The BioPharma business was impacted by budget constraints in the industry. Adjusted gross margin reached 72.8% in 2024, up 60 basis points due to targeted initiatives to expand data compute capability. Adjusted operating loss improved 20% year-over-year. The company analyzed a record 352,000 patients on SOPHiA DDM in 2024, with global reach expanding to nearly 800 healthcare institutions across over 70 countries.

2025 Outlook

• SOPHiA GENETICS expects full year revenue between $72 million and $76 million, representing 10% to 17% growth on a reported basis.
• Adjusted EBITDA loss is expected to be between $35 million and $39 million.
• Growth assumptions include new business from 2024 signings ramping up in the back half of 2025, continued momentum in the U.S. market, and growth from MSK-ACCESS and MSK-IMPACT applications. FX volatility is anticipated to have a moderate negative impact on results.

Risks

• BioPharma budget constraints that impacted the BioPharma business in 2024 could continue to pose challenges.
• Currency exchange rate fluctuations, particularly the strength of the U.S. dollar relative to other currencies, can negatively impact cash balances and results.
• Dependence on successful implementation and ramp-up of new customers and applications, which carries execution risks.

Q: Good morning. Thank you for taking my questions. I know you're not assuming material growth for BioPharma. But what are you seeing in terms of BioPharma funding and any other recovery trends so far, fully realizing that that's not contemplated in the guide? And my second question is regarding the guidance, could you tell us about any metrics, indicators that give you, that gives you some line of sight into customer volumes, please?

A: Good morning, Subbu and thank you for your questions. So, I will start by reminding the obvious Subbu, that the BioPharma environment has not been easy over the last years with important budget constraints. And in our case, we came out of a strong 2023 performance on the BioPharma, which negatively impacted our overall revenue performance in 2024. And just reminding, as you heard about our full year numbers that besides that, the clinical market has been nicely growing in 2024. Speaking about forward-looking BioPharma potential, as you may remember, we had splitted the teams with a team dedicated on Pharma Dx. So, for instance, sponsor testing, eventually CDx deals. and another team focused on BioPharma data. And thanks to that, we've been able to now refill our pipeline, Subbu, with more of a repeatable opportunities. Ross, now you've been leading most of it on the commercial side. I don't know if you want to give more color to Subbu...

Q: In 2024, it looks like you grew volumes by 11% reported and 13% ex COVID. Is that the right way to think about application volumes in 2025? Maybe another way to ask is what's embedded in your ASP assumptions for 2025?

A: Good morning, and thank you, Mark. So first to start, Mark, as you heard about us, we've been signing a record of customers this year, right, 92 new logos. And some of those customers have already been implemented. And so, this is when we start to see volume of analysis in the platform. And so, what is important to follow with our model is a number of implementations. And so, taking a step back in Q4, we had implemented 35 new customers versus an average of 19 in the previous quarters and an average of 16 per quarter in the previous year, right? So, this should give you already a sense, Mark, of how by having more customers move now more quickly because of good bookings into routine implementation, volumes should grow up. On the ASP side, I will start by stating that, in 2024, as you may remember, we had some sponsor testing from BioPharma, in particular for HRD, and that the sponsor testing had terminated. And so, then the healthcare systems, for example, in Spain has to take the reimbursement on their side and which impacted our overall ASP. But Ross, I don't know if you want to give some color first on the ASP side and then on the volume side, how we're thinking about the future...