SOPHiA GENETICS Reports Third Quarter 2024 Results

PR Newswire

BOSTON and ROLLE, Switzerland, Nov. 5, 2024

Clinical growth reaccelerates with record analysis volume; Cash burn improves 39%

BOSTON and ROLLE, Switzerland, Nov. 5, 2024 /PRNewswire/ -- SOPHiA GENETICS (Nasdaq: SOPH), a cloud-native software company and leader in data-driven medicine, today reported financial results for the third quarter ended September 30, 2024.

Third Quarter 2024 Financial Results

   -- Revenue was $15.9 million, down 2.8% year-over-year 
 
   -- Gross margins were 67.2% on a reported basis and 73.1% on an adjusted 
      basis, compared to 69.1% and 72.5% in the prior year period, respectively 
 
   -- Operating loss was $15.4 million on a reported basis and $10.6 million on 
      an adjusted basis, representing year-over-year improvements of 7.1% and 
      10.4%, respectively 
 
   -- Cash burn was $9.6 million, representing a year-over-year improvement of 
      39.1% 
 
   -- The company reiterates full-year guidance, including revenue between $65 
      million and $67 million, adjusted gross margin of 72.0% to 72.5%, and 
      adjusted operating loss between $45 million and $50 million 

"Record analysis volume drove a reacceleration of Clinical growth across most key geographies in Q3, with volume increasing 16% year-over-year, offset by expected softness in BioPharma," said Jurgi Camblong, PhD., Chief Executive Officer and Co-founder. "We also delivered another quarter of strong forward-looking indicators with 20 new customer signings, including major wins in the U.S., the U.K., and Brazil. I am proud of our ability to deliver strong new business momentum, while also excelling at cost management. In Q3, we expanded adjusted gross margins to 73.1% and improved cash burn significantly by 39% year-over-year to $9.6 million, while also strengthening commercial teams and customer-facing operations."

Camblong added, "Looking ahead, I'm excited by major growth catalysts such as our new Liquid Biopsy application MSK ACCESS$(R)$ powered with SOPHiA DDM$(TM)$ , which has already attracted an impressive 18 new customers since its launch in Q2. I am also excited by the recent launch of the application's Solid Tumor testing counterpart, MSK-IMPACT(R) powered with SOPHiA DDM(TM) . These applications, which enable any institution across the globe to launch best-in-class Liquid Biopsy and Solid Tumor testing, are also igniting strong interest from BioPharma companies who can leverage the decentralized, global network to improve deployment and development of their therapies."

Business Highlights

Expanding usage of SOPHiA DDM(TM) worldwide

   -- Reached 462 core genomics customers as of September 30, 2024, who used 
      SOPHiA DDM(TM) over the past 12 months to analyze patients with cancer or 
      rare diseases, up from 431 customers at the end of Q3 2023 
 
   -- Performed a record 91,000 analyses on SOPHiA DDMTM in Q3 2024, 
      representing 16% year-over-year analysis volume growth or 17% growth when 
      excluding COVID-related analyses 
 
   -- Continued executing our land and expand strategy, including major 
      successes in the U.S. and Canada with Tennessee Oncology adopting 
      numerous additional applications in Hereditary Cancer and Solid Tumors in 
      addition to MSK-ACCESS(R) powered with SOPHiA DDMTM and Trillium Health 
      Partners adopting SOPHiA DDMTM for HRD in addition to Hereditary Cancer 
      and HemOnc applications 

Accelerating adoption of SOPHiA DDM(TM) by landing new Clinical customers

   -- Landed 20 new customers in Q3 2024 who will implement SOPHiA DDMTM and 
      begin generating revenue over the next twelve months, continuing the 
      positive trend of solid bookings momentum year-to-date 
 
   -- Signed major new customers across all key geographies including GeneView 
      in the U.S. who is adopting SOPHiA DDMTM for Rare and Inherited Disorders, 
      the NHS's Birmingham Women's Hospital in the U.K. who is adopting SOPHiA 
      DDMTM for Hereditary Cancer screening, and Hospital 
      Sírio-Libanês, one of the most prestigious hospitals in the 
      world based in Brazil, who is adopting MSK-ACCESS(R) powered with SOPHiA 
      DDMTM 

Building strong new business momentum with new applications

   -- Signed a total of 18 new customers to MSK-ACCESS(R) powered with SOPHiA 
      DDMTM since the Liquid Biopsy application's launch in Q2 2024 
 
   -- Saw the first cohort of 5 MSK-ACCESS(R) customers go-live on SOPHiA DDMTM 
      as institutions such as BioReference Health in the U.S., the NHS's 
      Synnovis Services in the U.K., and the world-renowned University of 
      Heidelberg in Germany recently completed implementation; These 
      institutions will ramp up their usage in Q4 2024 and into 2025 
 
   -- Launched MSK-IMPACT(R) powered with SOPHiA DDMTM, the 505-gene Solid 
      Tumor Comprehensive Genomic Profiling counterpart to MSK-ACCESS(R), in 
      October 2024 
 
   -- Continued to drive significant demand for MSK-ACCESS(R) and MSK-IMPACT(R) 
      powered with SOPHiA DDMTM as pipeline of ongoing discussions reached more 
      than 50 opportunities 

Growing sustainably by maintaining an obsession with operational excellence

   -- Remained laser-focused on operational excellence and improved cash burn 
      by 39.1% year-over-year to $9.6 million, while also strengthening 
      commercial teams and customer-facing operations 
 
   -- Expanded adjusted gross margin by 61bps year-over-year to 73.1% as we 
      continue to optimize compute costs and leverage the scale of the 
      cloud-native SOPHiA DDMTM platform 
 
   -- Improved adjusted operating loss by 10.4% year-over-year in Q3 2024 
      through continuous improvement initiatives 
 
   -- Reaffirmed commitment to achieve adjusted operating profitability within 
      the next 2 years; Current cash and existing capital resources are 
      expected to be sufficient to reach adjusted operating profitability 

2024 Financial Outlook

Based on information as of today, SOPHiA GENETICS is reaffirming our previously provided guidance of:

   -- Full-year revenue between $65 million and $67 million, representing 
      growth of 4% to 7% compared to FY 2023 
 
   -- Adjusted gross margin between 72.0% to 72.5%, compared to 72.2% in FY 
      2023 
 
   -- Adjusted operating loss guidance between $45 million and $50 million, 
      compared to $55.9 million in FY 2023 

Earnings Call and Webcast Information

SOPHiA GENETICS will host a conference call and live webcast to discuss the third quarter 2024 results on Tuesday, November 5, 2024, at 8:00 a.m. (08:00) Eastern Time / 2:00 p.m. (14:00) Central European Time. The call will be webcast live on the SOPHiA GENETICS Investor Relations website, ir.sophiagenetics.com. Additionally, an audio replay of the conference call will be available on the SOPHiA GENETICS website after its completion.

Non-IFRS Financial Measures

Other than with respect to revenue, the Company only provides guidance on a non-IFRS basis. The Company does not provide a reconciliation of forward-looking adjusted gross margin (non-IFRS measure) to gross margin (the most comparable IFRS financial measure), due to the inherent difficulty in forecasting and quantifying amortization of capitalized research & development expenses that are necessary for such reconciliation. In addition, the Company does not provide a reconciliation of forward-looking adjusted operating loss (non-IFRS measure) to operating loss (the most comparable IFRS financial measure), due to the inherent difficulty in forecasting and quantifying amortization of capitalized research & development expenses and intangible assets, share-based compensation expenses, and non-cash portion of pensions paid in excess of actual contributions, that are necessary for such reconciliation.

To provide investors with additional information regarding the company's financial results, SOPHiA GENETICS has disclosed here and elsewhere in this earnings release the following non-IFRS measures:

   -- Adjusted gross profit, which the company calculates as revenue minus cost 
      of revenue adjusted to exclude amortization of capitalized research and 
      development expenses; 
 
   -- Adjusted gross profit margin, which the company calculates as adjusted 
      gross profit as a percentage of revenue; 
 
   -- Adjusted operating loss, which the company calculates as operating loss 
      adjusted to exclude amortization of capitalized research and development 
      expenses, amortization of intangible assets, share-based compensation 
      expense, and non-cash portion of pensions expense paid in excess of 
      actual contributions to match the actuarial expense. 

These non-IFRS measures are key measures used by SOPHiA GENETICS management and board of directors to evaluate its operating performance and generate future operating plans. The exclusion of certain expenses facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and certain variable charges. Accordingly, the company believes that these non-IFRS measures provide useful information to investors and others in understanding and evaluating its operating results in the same manner as its management and board of directors.

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