All right. Hi, everyone. We are back here, Life Science Tools and Diagnostics. We have BillionToOne, Oguzhan Atay, CEO and Founder. Maybe let us just start, 2Q, revenues grew 64%, volumes 35%, strong gross margins, and you were profitable. What are the most important drivers that you saw in the quarter?
I think we continue to see growth quarter-over-quarter, both in prenatal and oncology, and our ASPs are ticking up in both of those areas as well. I think there are some dynamics with TrOOP that need perhaps more clarification. That was, I think, one of the things that creates a little bit of noise. But in general, we had a, I think, good quarter, both for prenatal and oncology. I think it is also important to understand a little bit of the dynamics around prenatal growth, because it is not a single monolithic market as people tend to think usually. There is health systems and there are independent OBGYN clinics, and the growth that comes from both of those things can be actually different.
Okay. Well, want to go into that then?
Sure.
Since you ended on that, maybe discuss the differences between your local OBGYN and health systems, and you seem to imply that that maybe impacted some of the growth you saw maybe in 2Q or, yeah, maybe expand on that, please.
Certainly. Our growth has been actually very consistent and predictable when it comes from a single specialty, independent OBGYN clinics because these are the clinics where typically even each provider can make their own decision to switch to you. We have previously talked about land and expense strategy, where we can have one provider who starts using us, and then we get the second one, third one, fourth one over time in these clinics. The test volume growth that we have seen in these single specialty independent OBGYN clinics has been very consistent in 2025 and 2026. What creates a little bit of the lumpiness in the test volume growth quarter over quarter is the health system additions. Each health system tends to be a lot more binary.
It is the switch-like transition, and it can be anywhere between 3,000 to 5,000 tests that come from a single health system addition. That can make certain quarters, I think, look significant beats, whereas other quarters might look more in line with expectations with test volume growth. As a reminder, we haven't incorporated any big health system wins into our guidance. The majority of the opportunity that is remaining is in health systems. That is why we have been investing in Epic Aura. That is why we have been investing in the launch of the Excel panel. These things are going to be really the big drivers of our long-term growth in this market. If you think about this market, 40% is independent clinics, 60% is health systems.
Vast majority of our current test volume and test volume growth came from independent clinics, and we can continue to grow there at these levels or even potentially a little faster. But if you want to grow 10,000, 15,000 tests per quarter, that will have to come from health systems. We have certainly seen that back in 2025 when we won one or two health systems in Q2 and Q3, which really increased the quarter-over-quarter growth rate in those quarters. Whereas I think in 2026, again, it is going to be a little bit lumpy in when they are going to come in. But now that we have made these investments, we have so many health systems that are actually already on board clinically, that we need to get the EMR and the legal sign-off and the phlebotomy in place to be able to onboard them.
Got you. No, that's super helpful. You said the customer base is 40/60, but you're much more heavily skewed towards local clinics, which is like 90/10. Is that kind of the or?
Yeah, vast majority. We have about 20% market share.
The vast majority of it is in the independent clinics.
Okay.
Historically, because we didn't invest in Epic Aura and other areas as much, we didn't even have an opportunity to get into the health systems.
That, I think, really opens up a huge market for us now that we have Epic Aura, now we have the Excel panel. I think as we start to onboard some of these health systems, it can significantly accelerate test volume growth, which is, again, what we saw back in 2025.
The single health system in Q2 increased that growth to almost 15,000 tests in Q2 and Q3 last year. That is the difference that we are seeing between 2025 and 2026. It is not really as much the competition. It is really when these health systems can be onboarded.
Got you. No, that's super interesting. Just to kind of recap what you said earlier is that you actually do have health systems that are basically signed up in the pipeline. You just need final sign-off and integration. So the pipeline is there. It's just a function of timing, and it may not slip from 2Q to 3Q, but there's line of sight to them coming on board.
There's certain line of sight, but these processes can take anywhere between six months to even 18 months.
You can have full clinical buy-in. IT might still slot you for six months from now.
Okay.
A simple legal sign-off for a phlebotomy agreement can take six months. I think it tends to be a matter of when rather than matter of if. There is also no clear certainty around the time at which that they will actually come, and that is why we don't really include them in any of our guidance.
Okay. That was going to be my next question. You reiterated the guide, so I was going to ask what conservatism remains in the guide, and the biggest variables low end to high end. I feel like maybe you answered most of that, but is there anything else you wanted to add?
I think we can continue to grow without the health systems, without the true-up revenue, without the new coverage decisions. The way that we think about our guide is that things that are completely under our control, things that are very predictable, are included in the guide. We are going to be able to meet and exceed those targets just by the nature of our quarter-to-quarter work. But we are going to significantly exceed our expectations if a large health system is onboarded, if there is significant true-up revenue that comes in, if we get a coverage decision that is not in our plans. Right?
All of those things become the manners by which we can significantly exceed, but we can still meet the expectations without the benefit of any of them.
Got you. That is helpful. You touched on reimbursement. You had $10 million of claims waiting for in-network implementation. On one hand, when I think about it, prenatal, not a particularly new market. So I am just trying to understand why you are having reimbursement issues. Then, on the other hand, obviously, these new in-network payer contracts have been a good driver of ASP growth for you. So really, how much runway remains to close the gap between tests performed and tests paid? Are there any other key milestones from here for you guys? I guess also, what percent of pregnancies, I guess, you talk about covered lives, are you guys at right now, I guess, in terms of prenatal?
Mm-hmm. This is a single payer, a large payer, that we got in network with earlier in the year. Because it is a large payer, we had two additional agreements with them that contractually bind them that they would pay for these tests, but that we would hold these claims. It was not really a reimbursement issue. It was really more like a timing issue as they implement these codes in their systems. In many of these states that they are implementing, and it is state-by-state implementation, many of these states, they previously were not paying for the vast majority of our tests. All of these will be significant incremental revenues and ASPs for us, but we wanted to hold the claims before we bill for them. This is actually a friendly payer where we are having weekly meetings about it.
We are confident that it is going to be resolved. It is really, again, a matter of time, and I think it is being resolved right now as well. In many ways, this was really more of a implementation timing rather than a typical reimbursement issue. Again, it is one of the friendliest payers that we have had to deal with. So, we feel confident.
Don't hear that too often.
Yeah. It is unusual in general for payers to, I think, be very friendly. I think in this particular case, we have a lot of confidence due to these weekly meetings that this is going to get resolved. In terms of how much more room there is for ASP increases in prenatal, we are now in network with close to 300 million lives. But I think there can still be significant ASP lifts because not every test that we provide are covered similarly to some of the other tests. We have done, I think, two things that really position us in a much more advantageous position to other prenatal labs or businesses in this market. I think most businesses in this market are approximately, of course, this is an estimation, is 0%-10% operating margin businesses. Our prenatal business is 30%+ operating margin.
It is a very profitable business because of the way that we approach that market, where we initially declined contracts that would be at very low rates. Even if it were going to increase our rates, we actually declined those contracts. That, I think, allowed us to optimize for the long-term ASPs in a way that I think most other companies have not optimized for. Secondly, the way that we designed our assays ensures both compliance and the maximization of ASP. Because we separate the assays so that each can be built with its own unique code, and even if it is denied, other components can be paid. That really requires a deep understanding of reimbursement rules, billing rules, as well as how you can design assays.
Because of that, for instance, we might get paid 70% of the time for carrier and aneuploidy, for instance, going back to your question, but we might only get paid 20% of the time for our single gene and NIPT, for our 22q microdeletion, for many of these innovations and additional components that we have. As we build more evidence in these areas, ASPs can be significantly higher. Right now, if we are around $500 extra for prenatal ASPs, maybe a little higher, it can substantially increase from that. This is something that we have seen in the past as well. When we were initially modeling this, we thought that the maximum ASPs that we would ever achieve was around $375, $400, because that is what the competitors could achieve after years of being in the market.
We are already way beyond that level with not getting paid fully for many of the components, many of the innovations that we provide. If you assume coverage decisions across all the tests that we provide, even at those 70% numbers, which is usually the maximum that you can get to, this can easily be $800-plus ASP. That is not going to happen in the next 12 months, but even in the next 12 months, we have small drivers that will continue to increase our ASP.
That is great. Thank you. Thanks for that. Let's see. You have kind of dismissed, obviously, there is competition, but you have talked to other reasons for your performance. But there is competition. Competitors have come out with new products that, on its surface, look similar to yours, and at least try to attack similar issues that obviously you saw in the prenatal space. Can you just maybe talk about the competitive landscape and what you are seeing out there?
Of course. Competitive landscape has certainly continued to change. As you said, competitors are launching products that they have previously dismissed to try to catch up to this category that we had created. But we are also not standing still. In the just past year, we expanded our fetal antigen testing, which no other labs provide testing for. We launched Unity Confirm, first and only non-invasive confirmation of high-risk aneuploidies. We expanded Fetal Risk Screen to 130 genes. Our product innovation speed is, I think, really remarkable. So we are continuing to keep that distance compared to the competition. But I would also highlight that it has always been the case that the bigger bottleneck in growth has never really been about your product differentiation. We have better products and better technology, but that is not the main discussion that you have to have to be able to grow.
It is really about the EMR integration and the logistics and the phlebotomy that you have to resolve to be able to onboard these accounts. That becomes the time-limiting step. It is not the clinical discussion with these health systems or with these clinics. Of course, that discussion changed qualitatively as the competitors had these products, but we still have so much more that we can offer that we can win those clinical discussions. When we look at the number of providers that we added every quarter, it is actually very similar to what it was in the past. When we look at where we are getting these providers, it used to be that half of these providers came from one particular competitor in 2024, 2025. That is exactly the case in 2026 as well. That is why I say that the dynamics of the competition did not really change.
What is changing, though, more of our opportunity is in the health systems, and that is a longer sales cycle in general.
Mm-hmm. Great. You mentioned some of the new products. You've expanded the gene panel for UNITY Fetal Risk Screen, Unity Confirm. What do these products do for you in terms of is it getting greater utilization from existing customers? Is it allowing you to get new customers? What are these advancements or expansions allowing you to do?
Mm-hmm. I think Unity Confirm really opens up doors for discussions. For it to be the only reason for people to switch, I think there needs to be more evidence that we will need to generate. We are going to have those interim readouts, for instance, in the first half of next year. I think it is going to continue to make a bigger difference as we have more data in that area. But with respect to Excel panel in particular, that is something that we started working on more than a year ago because we realized that that is a critical component of getting health systems. Again, each health system is 3,000 to 5,000 tests per quarter. So having one health system in a quarter can make your growth increase by almost 50% more to what it would be otherwise.
Once we realized that these health systems, which we had one health system win in last Q2 and Q3 in 2025, once we realized how important they are and how big the impact can be, we realized that we need to invest in Epic and these larger panels. Because if you want to get into a health system, you can't just offer products that serve the OBGYNs and MFMs. You need to have products that will be serving the genetic counselors, too, who take care of the rarer conditions.
Helpful. Maybe moving to oncology. Grew 176% in the quarter. What is driving the acceleration across Northstar Select and Northstar Response? I guess how broad is adoption across community versus academic oncology?
One thing to recognize, I think, between prenatal and oncology is that with prenatal, even if you have absolutely the best products and the best technology, still you are making a difference in a few patients out of 1,000, right? That requires you to truly get a few people to care about a patient that they might not ever see in the five years that they practice. It does require you to create an advocate that will push for a change. In oncology, that is not the case. Every single person who is sitting in front of them, who is looking for the best therapy, who is trying to extend their life even six more months by having a better therapy. Oncologists truly care about the diagnostics that they use, especially if you can prove to them that it is differentiated.
The oncology, really the only bottleneck is access, and it can sometimes take, in a new territory where you put a rep for the first time in a territory, it can take three months before they see their first oncologist. But once they see their oncologist, once they can prove to them that this is the better test, right? We have done head-to-head studies here as well. Once you can prove to them that, not only they are going to use the test, but they are going to refer you to all of their colleagues as well.
What we see here is in each territory, we see initially a slow ramp-up, right? They are taking time even getting into their first meetings. But then once they are in, it becomes faster and faster and faster. There is this flywheel effect in each of these territories. I do not want to call commercial execution effortless, but compared to everything else that we have done, it does feel a lot more effortless in the sense that there is a lot more word of mouth. They care about the quality of the tests that they offer, and they refer you to their colleagues. You have almost this virality associated with the oncology test that we did not have with prenatal.
In prenatal, we have 20% market share, when you do an awareness survey, half of the providers do not even know about us. We have been in prenatal six, seven plus years. Still the awareness is not really there, right? Half of the providers do not know about UNITY or BillionToOne. That means opportunity.
But that also means that this execution requires that push.
In oncology, I think there is a lot more referrals, there is a lot more talk among the oncologists. Once we get a few providers who are using us who are happy, it makes it easier to get more providers in those clinics.
No, that is super interesting. Maybe that was lost on me a little bit, the difference between just how you go to market and how products get accepted in the two different markets. That actually is really interesting. In terms of reimbursement, can you just give a state of the union on reimbursement for Northstar Select? Remaining steps and timing for Northstar Response Medicare coverage, how should we think about ASP evolution going forward?
There is tremendous opportunity in oncology for our ASP increases. If you think about ASP, there are three pillars. There is the coding, there is the coverage, and there is the contracting. We are contracted with most payers right now, so we have taken care of that. When you look at coding and coverage, with our Northstar Select test, we have 60%-70% gross margins, despite the fact that our Northstar Select test doesn't have an ADLT price, which takes about 12 to 18 month process once we decide to go through an FDA approval or clearance process. But that can literally triple the ASP for a Northstar Select test, and we already have 60%-70% gross margin without the benefit of that 3X increase that can come in from the coding side.
On the coverage side, we have recently received additional coverage decisions from Lab Benefit Managers for our Northstar Select test. That will continue to tick up as we continue to get more coverages in the commercial payers in addition to the Medicare coverage. But then when you look at the Northstar Response, Northstar Response turned gross margin positive despite the fact that we don't have coverage. That truly speaks to the differentiation of our technology, our methodology, how we approach this market. Without Medicare coverage, we can make an oncology test gross margin positive, which is, I think, truly remarkable. Of course, with coverage decision around Northstar Response, we are going to get both a much higher ASP, but we are also going to get much higher utilization.
Mm-hmm. So are you looking to bring Northstar Select and get FDA approval? Is that something that you've talked about?
I think in the medium term, medium to long term-
absolutely. Why not? That increases our-
Right.
ASP by 3X.
It is not something that we want to do immediately because it does lock the assay in. It does make the iteration speed a little bit slower. We want to make sure that we are at a place where we feel comfortable before we go through that.
Okay. From what I understand, would you necessarily be able to get ADLT status? I thought it was pretty limited, like only one kind of test per area of oncology is able to get ADLT status, and I feel like you already have a treatment selection test that has ADLT status.
It-
How exactly would that work?
It's very interesting. This is a very commonly misunderstood area even though-
Yeah.
the criteria is published and very clear.
Okay.
For therapy selection test, you need to be either an FDA cleared or approved test, and that is the only requirement.
Okay, that's the only requirement.
There is another way to get ADLT.
That way requires you to provide a test that no other tests or no combination of other tests can provide the information that you are providing.
Okay. FDA approval kind of is the other-
Route. Yes.
Route. Once you get FDA approval, it does not Okay.
It doesn't matter that there are other tests.
Got you.
Yeah.
Very helpful. Okay. That's my fault.
It's okay. I get this question all the time, even though it is such an-
Yeah.
important part of-
Yeah.
reimbursement.
Maybe on response, I feel like people, or competitors have tried a similar idea to response in the past. It didn't really work, and they eventually transitioned over to MRD. I think they called it response. Is this kind of the same idea for you, or do you ultimately expect to have kind of You're also working on MRD. Where do you see the portfolio once you have all three? Is it still going to be all three, or do you feel like it's MRD and Select?
This is, I think, another interesting thing. One of the competitors in this area solved the need because they realized that oncologists were even using repeat therapy selection tests to look at a single variant and how that is changing over time. In many ways, response monitoring has higher unmet need than many of the MRD areas like surveillance testing. There is clearly clinical need that the oncologists were trying to fill the gap in. The other response test that was in this field was actually not really a response test, but it was a therapy selection test that was reporting that one or two variants that you find.
Of course, that is not a very accurate way of measuring response. That is why others actually are using their MRD tests in this market now for response monitoring. There is, I think, increasing awareness that response monitoring can be almost as large of a market as MRD market. The testing is actually more frequent than the MRD market because these patients can progress relatively quickly. It is a true clinical need to be able to detect these progression events early. What we are finding is that- The response monitoring market is a little bit distinct from the MRD market. It is an area for late-stage cancers where you are tracking the level of tumor burden so that you know when the patient is responding to therapy or not.
Whereas MRD is for early-stage cancers, where you are trying to find whether there is any tumor remaining after curative intent surgery. It is a much more of a qualitative question, is there tumor left or not? So it is a detection problem, whereas response monitoring is a quantitative measurement problem. That is why we believe that our Northstar Response is an incredible product for response monitoring because of our technology, is such a quantitative measurement of that tumor burden in a way that we don't think our competitors can replicate. MRD is a sensitivity question, right? You are trying to figure out whether there is any tumor left.
In that problem, our differentiation, I think, is really going to be around the fact that we are going to have a tumor-naive test that is on par with performance of the, or potentially better than, some of the tumor-informed tests.
That is very important because today, most of the MRD utilization is in the academic groups, which is about 20% of the overall market. But 80% of the market is community oncologists, where the ease of use is so critical. If we can offer an MRD that is easy to use, that is as sensitive as the tumor-informed assays that they are familiar with, I think we are going to have fast adoption cycle in the community oncology settings.
Interesting. Okay, so we have about two minutes left. Gross margins, profitability, still, like you talked about, 70%. I think oncology is positive, but probably not anywhere near the 70%, so really strong. We've talked about significant potential for ASPs, COGS per test, product mix. How should we think about the trajectory of gross margins from here?
I think for gross margins, we think of each product as being designed so that at scale, it is going to reach close to 80% gross margin. That is how we design them. What we do is that the earlier products that have reached that level end up paying for the commercialization and growth of the products that are more innovative, that don't have coverage yet. That allows us to balance growth with profitability, because then we don't have to throttle the growth.
We can let the growth happen, because the earlier products with very high gross margins and very high profitability are paying for the growth of the lower gross margin products. Once those get coverage, we launch even more innovative products the next line, and that allows us to maintain profitability while having very strong growth.
Great. We got about 20 seconds left. I don't know. I'm not going to ask another question. Is there anything you want to leave the group with, just about BillionToOne, and that you think people might be missing?
I think our growth profile and profitability profile are both quite differentiated from others. We have always optimized for long-term success here, and we believe that that is going to serve us well as these are extremely large markets.
Great.
Great.
Thank you so much.
Thank you.