BLLN — Q2 2026 Financial Report Analysis

BillionToOne sells blood tests that read tiny fragments of DNA. Its main product is UNITY, a prenatal screen run on a pregnant patient's blood. The smaller, faster-growing line is Northstar, a set of cancer "liquid biopsy" tests. In the second quarter of 2026, its second full quarter as a public company after the November 2025 IPO, revenue rose 64% to $109.4 million and the company made an operating profit of $5.5 million, against a $1.6 million operating loss a year earlier. Growth came from two sources at once: 35% more tests delivered (196,000) and 21% more revenue per test, because more insurers now pay for UNITY under contract and at a higher, test-specific billing code. Profit fell sharply from Q1's $17.8 million operating income, though. Most of that drop is because Q1 was inflated by one-off back-billing, and the rest is a fast hiring ramp in sales.

At a glance

• $109.4M revenue, +64% year over year. Excluding revenue booked for tests done in earlier periods, growth was about the same, at roughly 65% ($106.6M vs $64.5M). The year-over-year rate is clean.
• 70.4% gross margin, up from 65.3%. The company kept about 70 cents of each sales dollar after the direct cost of running the test. The filing credits all of the improvement to higher prices per test, not lower costs.
• $548.6M in cash against $80M of debt principal. The IPO left the company well funded. Interest on that cash ($4.7M) supplied more than half of the quarter's $8.1M net profit.

The numbers

n/m = not meaningful. A swing from a loss to a profit has no sensible percentage change. The EPS comparison is distorted for a second reason: the per-share figure was computed over about 10.4 million shares in Q2 2025, before the IPO and the conversion of preferred stock, and about 54.5 million diluted shares in Q2 2026. Operating margin is the share of revenue left after running the business, before interest and tax.

What drove it

Volume. The 10-Q attributes higher prenatal volume "primarily" to a larger prenatal sales force. Oncology volume (both Northstar Select, which profiles a tumor's mutations, and Northstar Response, which tracks whether treatment is working) rose for the same reason. Tests accessioned (samples received) rose 33% to 197,000. So intake is growing about as fast as the results going out, and the volume gain is not just a backlog being cleared.

Price. ASP is the average revenue the company collects per test across insurers and patients. It rose 21% from a year earlier. The company cites more contracts with insurers for its prenatal test and continued use of its own PLA code, a billing code specific to the UNITY test that "is typically reimbursed at a higher rate". More than 90% of revenue comes from third-party payors, so these reimbursement wins matter more than list prices.

Mix. Oncology is now 12.5% of revenue, up from 7.4%. That raises the average cost of a test, because Northstar tests cost more to run than prenatal ones. Overall cost per test rose 3% even though the filing says cost per test fell for every individual product line, both year over year and versus Q1. The higher average is a mix effect, not a sign that the lab got less efficient.

Spending. Selling, general and administrative (SG&A) expense rose 63% to $54.3M. That included a $16.9M increase in salaries, commissions and related costs, with average SG&A headcount up by 139 people. Research and development rose 47% to $17.3M on 28 more R&D staff. Stock-based compensation (paying staff in shares, a real cost that doesn't use cash) tripled to $8.2M from $2.7M, which is typical in the first year after an IPO.

What the headline numbers hide

• Q1 was flattered by catch-up billing, and Q2 mostly wasn't. New insurer agreements signed in Q1 let the company reprocess old claims. Revenue for tests performed in earlier periods was $12.0M in the first half, of which $9.2M fell in Q1 and $2.8M in Q2 (Q2 2025: $2.1M). That explains most of the drop in operating income from $17.8M to $5.5M: about $6.4M less catch-up revenue, which falls almost straight to profit, plus SG&A up $7.7M quarter on quarter while revenue rose only 1%. Without the catch-up, revenue grew about 7.5% sequentially ($99.2M to $106.6M), so the underlying business accelerated even though the headline was flat.
• Q2's ASP of $551 is below Q1's (about $570), for the same reason. Q1 included more back-billing. Watch Q3 ASP for the clean trend.
• Receivables are growing much faster than sales. Accounts receivable (money billed but not yet collected) rose 80% in six months, from $41.6M to $74.9M. That equals about 68% of a quarter's revenue, versus 43% at December. Part of this is expected: revenue from reprocessed claims is recorded based on expected insurer payments before the cash comes in. But it is why operating cash flow lagged profit. First-half operating cash flow was $24.6M against $26.0M of net income, and that was after adding back $14.7M of non-cash stock compensation. The $33.3M increase in receivables absorbed most of the difference. Q2 alone was cleaner: $9.1M of operating cash flow against $8.1M of net income.
• Below operating profit, the cash pile does the work. Pre-tax income of $7.5M includes $4.7M of interest income on IPO cash, partly offset by a $3.0M charge for the Oberland Capital term loan. The company records that loan at fair value and books its interest and value changes on a single line. It drew a third $30M tranche on March 31, so principal is now $80M at 8%, due 2031. The quarter also had a $0.5M tax benefit and a $0.6M insurance recovery. Operating profit, not net income, is the better gauge of the core business.
• Adjusted vs GAAP. Adjusted EBITDA of $16.1M is roughly three times GAAP operating income. The gap is mostly the $8.2M of stock compensation and the $3.0M loan fair-value charge, which the company excludes. Stock compensation is a recurring cost of paying employees, so the GAAP 5.0% operating margin is the more honest measure.
• A possible GAAP one-off ahead. The company still holds a full valuation allowance against its tax losses, meaning it books no value for future tax savings. The 10-Q says there is a "reasonable possibility" that a significant portion could be released in the near term. That would create a large, non-cash, one-time jump in reported net income and should not be read as operating improvement.

Takeaway: Q2 is the cleaner read on BillionToOne. Q1's headline profit leaned on $9.2M of back-billing. Underlying revenue still grew about 65% on more tests and better insurer pricing. But the company is reinvesting nearly all of the gross profit gain into a larger sales force, so the GAAP operating margin is now about 5%. The next few quarters depend on whether that hiring drives volume and whether the growing receivables turn into cash.

Outlook

Management kept its 2026 revenue guidance at $450–465M (48–52% growth). The guide had been raised twice before: from $415–430M to $430–445M with Q4 results in March, then to the current range with Q1 in May. It also said it expects to operate at profitability "similar to current levels, even with significant continued investments", which signals that margin expansion is not the near-term priority. With $217.8M booked in the first half, the range implies $232–247M in the second half, or about $116–124M a quarter. That would need another 6–13% step up from Q2's $109.4M, a pace in line with the underlying sequential growth this quarter.

Product launches support that: an expanded UNITY Fetal Risk Screen with a 130-gene panel went on sale August 17, and Northstar Origin, a tissue-of-origin add-on for Northstar Select, launched September 1. Both arrived after the quarter closed, so neither is in these numbers. Capacity is being built ahead of demand. The company signed a June lease for a third Union City lab dedicated to oncology, which will more than triple its oncology lab space and should be occupied in 2027, and it has a 220,000 sq ft Austin lab due to process samples in 2028. The company said in the lease 8-K that total test volumes "have exceeded the Company's plan over the last year."

Our read: demand looks strong. Test growth of 35% with a 21% price gain is unusual in diagnostics, where price usually erodes as volume scales. The main risks are reimbursement-driven. ASP gains depend on payor contracts and a favorable billing code that insurers could revisit, and receivables are building. In Q3, three things will show whether this quarter's pattern holds: ASP without catch-up revenue, whether receivables stop outgrowing revenue, and whether SG&A growth slows now that the sales force has been built out.

This is the first BillionToOne report we have published, so there is no earlier outlook to check against.

Source: BillionToOne Form 10-Q for the quarter ended June 30, 2026 (filed August 5, 2026), plus the Q2, Q1 2026 and Q4 2025 earnings releases (Form 8-K, Exhibit 99.1) and the June 23, 2026 Form 8-K for the Union City lease.