STANDARD BIOTOOLS INC. Strategic Shift Update

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1. Event Description (what happened)

STANDARD BIOTOOLS INC. has completed a pivotal strategic move, selling its "SomaLogic" business unit to Illumina, Inc. This unit focused on advanced protein analysis technologies, including its KREX and SOMAmer assays.

2. Event Date/Timeline

The deal officially closed on January 30, 2024.

3. Impact Assessment (who/what is affected)

This sale marks a transformative moment for STANDARD BIOTOOLS. The company received an upfront cash payment of $350 million, with potential for an additional $75 million in future earnout payments. This substantial cash infusion, representing a significant portion of the company's prior market capitalization, dramatically improves its financial flexibility.

STANDARD BIOTOOLS is now a more focused entity, concentrating its resources and efforts on its core mass cytometry and microfluidics technologies. While this sharper focus could drive innovation and efficiency, it also means the company's future performance is now more concentrated on fewer business lines.

In addition, STANDARD BIOTOOLS secured new royalty streams and an intellectual property license, which could provide future income. However, the company also divested a significant revenue-generating unit and will no longer receive royalties from a previous collaboration agreement with Illumina related to SomaLogic. This represents a trade-off: immediate cash and a sharper focus in exchange for a diversified revenue stream.

The sale impacts several key groups:

• Employees: SomaLogic unit employees transitioned to Illumina. For remaining STANDARD BIOTOOLS staff, this shift could mean a clearer strategic direction and increased focus on the company's core mass cytometry and microfluidics businesses. A transition services agreement ensures a smooth handover of operations and support to Illumina for a defined period.
• Customers: Customers using SomaLogic's protein analysis products will now receive services and support from Illumina. The transition services agreement aims to minimize disruption. Customers of STANDARD BIOTOOLS' mass cytometry and microfluidics products are not directly impacted; however, the company's increased focus on these areas could accelerate development and improve offerings.
• Investors: This sale fundamentally changes STANDARD BIOTOOLS' business profile. The company now boasts a significant cash reserve and a more defined operational scope. While potential future income from earnouts and new royalty agreements exists, investors must weigh this against the loss of a revenue-generating segment and previous royalty streams. This transaction significantly alters the company's financial structure and future growth trajectory, requiring investors to re-evaluate their investment thesis.

STANDARD BIOTOOLS' immediate focus involves managing the transition period and assisting Illumina in integrating the SomaLogic business. Investors will watch for potential earnout payments of up to $75 million, contingent on the acquired business achieving specific revenue targets in 2025 and 2026. The company will also begin receiving new royalty streams on certain SOMAmer-based products.

Crucially, STANDARD BIOTOOLS will soon file "pro forma financial information," which are hypothetical financial statements showing the company's financial position after the sale. These vital statements will illustrate the company's balance sheet and income statement post-sale, providing a clearer, updated picture of its financial health and operational footprint. The company's strategic plan for deploying the substantial cash proceeds will also be a key focus area.

4. Financial Impact (if applicable)

STANDARD BIOTOOLS received an upfront cash payment of $350 million, significantly boosting its financial flexibility. The deal also includes potential earnout payments of up to $75 million.

The company secured new royalty streams and an intellectual property license, offering future income potential. However, it will no longer receive royalties from its previous collaboration agreement with Illumina for SomaLogic, having divested this significant revenue-generating unit.

To provide a clear financial picture post-sale, STANDARD BIOTOOLS will soon file "pro forma financial information," detailing the transaction's impact on its balance sheet and income statement. The $75 million in earnout payments are contingent on the acquired business meeting specific revenue targets in 2025 and 2026.

5. Key Takeaways for Investors

For investors, this transaction presents several key considerations:

• Significant Cash Infusion: STANDARD BIOTOOLS received $350 million upfront, with potential for more. How the company strategically deploys this cash – for debt reduction, increased R&D in its core mass cytometry and microfluidics businesses, share buybacks, or strategic acquisitions – will be a critical factor for future performance and warrants close monitoring.
• New Revenue Streams & Earnouts: Monitor the potential $75 million in earnout payments and new royalty streams from Illumina, which could contribute to future income.
• Sharper, but Concentrated, Focus: The company now dedicates itself entirely to its mass cytometry and microfluidics businesses. While this focus could foster innovation and growth, it also means the company is more concentrated, increasing its exposure to market fluctuations, competitive pressures, and R&D success within these narrower segments.
• Financial Transformation: The upcoming "pro forma" financial statements are essential. They will provide the first comprehensive look at the "new" STANDARD BIOTOOLS' financial position, including its revised revenue base, profitability, and balance sheet.
• Re-evaluate Your Investment: This sale fundamentally reshapes STANDARD BIOTOOLS. Investors must revisit their investment thesis, assess the company's new risk profile, and determine if the "new" STANDARD BIOTOOLS still aligns with their investment goals and expectations.