SOPHiA GENETICS (SOPH) Q2 FY26 earnings call: guidance and Q&A

CEO Ross Muken outlined SOPHiA's mission to become the AI platform for precision medicine, building on a decade of network and AI platform development. The strategy focuses on four interconnected pillars: scaling genomic diagnostics globally, evolving applications into regulated companion diagnostics (CDx) and software as a medical device (SaMD), leveraging data for real-world evidence, and pioneering clinical intelligence tools like digital twins. This approach aims to transition the company from foundational build-out to leveraging its established network and data assets.

The US market demonstrated an inflection in demand, contributing significantly to Q2 performance with 64% year-over-year revenue growth and 60% volume growth. This surge is attributed to firming reimbursement rates and hospitals increasingly adopting in-house testing capabilities. Key demand areas include exomes (for rare disease, hereditary cancer, pharmacogenomic, and carrier screening), HemOnc (myeloid, CLL, AML MRD), liquid biopsy, and CGP solid tumor testing. The company expects the US market to remain a substantial growth driver.

Liquid biopsy was a key growth driver, achieving 80% year-over-year revenue growth in Q2. SOPHiA has signed 80 liquid biopsy customers globally, with over half yet to begin generating revenue, indicating significant future growth potential. Recent customer wins include AZ Delta Roeselare in Belgium, Poly Clinical Reunite Hospital in Italy, and Sultan Qaboos Cancer Center in Oman, expanding the company's international footprint.

SOPHiA announced two companion diagnostic (CDx) programs with AstraZeneca, marking its first CDx wins. The first program involves developing a solid tumor application into a decentralized CDx, while the second leverages a hematological oncology application for blood cancer therapy. These multiyear agreements are expected to provide meaningful revenue acceleration from 2027 and establish a foundation for collecting more patient data, building real-world evidence assets, and developing clinical intelligence tools.

An MOU was signed with Memorial Sloan Kettering (MSK) to form a joint venture aimed at accelerating precision oncology. The JV will combine MSK's clinical expertise, testing footprint, and multimodal data assets with SOPHiA's AI platform. The initiative plans to establish an 'AI lab of the future' in New York City, focused on developing and launching new applications, supporting biopharma, and creating multimodal clinical intelligence tools. A definitive agreement is expected in the coming months^⏳.

The company demonstrated strong operating leverage, dropping over 60% of incremental revenue to the bottom line, resulting in a 27% year-over-year improvement in adjusted EBITDA loss. Cost actions implemented in April, including a $1.25 million restructuring charge, are projected to yield material savings in the second half of 2026 and beyond. SOPHiA remains committed to approaching adjusted EBITDA breakeven by the end of 2026 and achieving positive adjusted EBITDA in the second half of 2027, supported by AI adoption and disciplined operating expense management.

The UPC Court of Appeals in Paris rejected Guardant Health's appeal regarding patent infringement claims, confirming no injunction and allowing SOPHiA to commercialize the MSK Access test without restriction. Guardant was ordered to pay an additional $100,000 in interim costs, bringing total interim costs received/ordered to $800,000. Additionally, a public offering raised $57.5 million in gross proceeds, increasing cash and cash equivalents to $107.7 million, providing sufficient capital for future growth and strategic control.