Oxford Nanopore Technologies (ONT) Morgan Stanley 24th Annual Global Healthcare Conference summary

Business performance and market dynamics

• First half of the year saw strong device sales but headwinds in China and the Middle East, impacting revenue; full-year guidance remains on track.

• Gross margin improved to 62.2%, with adjusted EBITDA loss narrowing to GBP 22 million, reflecting progress toward breakeven.

• Clinical business grew 35% year-over-year, driven by rare disease and oncology adoption, with biopharma up 25% and expected to be a major contributor by 2030.

• Research markets remain important but are expected to decline from two-thirds of revenue today to about 40% by 2030 as applied and clinical markets accelerate.

• Export control restrictions and commercial restructuring in China led to a 16% decline, but stabilization is expected in the second half.

Strategic focus and operational changes

• New CEO implemented a strategy to focus on fewer, higher-value applications, aiming for accelerated scaling and clearer direction through 2030.

• R&D investment will be sustained at current levels for the next 2–3 years, with reprioritization to align with target product profiles and operational discipline.

• Product roadmap and go-to-market structure are being refined based on gap analysis of customer needs in prioritized end markets.

• Shift away from lower-growth industrial and food safety testing markets to focus on 20 high-value application areas.

• AI and machine learning are core to technology, with new leadership to further exploit data quality and operational insights.

Revenue growth, margin outlook, and future opportunities

• 2026 guidance targets 16–20% constant currency revenue growth, with visibility supported by a robust opportunity pipeline.

• Consumables gross margin is 75% today, with potential to exceed 80% as recycling of PromethION flow cells scales up.

• Device and services margins are harder to improve due to rising compute and memory costs, but service scaling is expected to drive margin gains.

• Path to adjusted EBITDA breakeven in 2027 depends on sustained mid-teens revenue growth, gross margin expansion, and disciplined cost management.

• Bioinformatics and software are seen as future revenue drivers, especially in biopharma, with AI and rich data generation offering long-term tailwinds.