This comprehensive report, last updated on November 4, 2025, provides a thorough analysis of SOPHiA GENETICS SA (SOPH) by examining its business model, financial statements, historical performance, future growth trajectory, and fair value. The evaluation benchmarks SOPH against key competitors like Guardant Health, Inc. (GH), Personalis, Inc. (PSNL), and Tempus AI, Inc. (TEM), framing all insights within the investment principles of Warren Buffett and Charlie Munger.
Negative. SOPHiA GENETICS provides an AI-powered software platform for healthcare institutions to analyze genomic data. Despite growing revenue and healthy gross margins, the company's financial position is poor. It remains deeply unprofitable, burning through significant cash to fund its high operating costs. The company also faces intense competition from larger, better-funded rivals in the health-tech space. Given the severe cash burn and lack of profits, the stock appears overvalued. This is a high-risk investment; investors should await a clear path to profitability.
US: NASDAQ
SOPHiA GENETICS operates on a B2B business model centered around its cloud-based software platform, SOPHiA DDM™. The company does not perform genetic tests itself; instead, it provides the analytical 'brain' for hospitals and laboratories that do. These institutions use hardware, often from companies like Illumina, to generate raw genetic data from patient samples. They then upload this complex data to the SOPHiA DDM™ platform, which uses artificial intelligence and algorithms to analyze it, identify relevant mutations, and generate reports that help clinicians make diagnostic and treatment decisions. The company's primary customers are healthcare institutions, with a growing focus on biopharmaceutical companies for research purposes.
Revenue is generated primarily through recurring subscription fees for access to the platform, often structured based on the number of analyses performed. This SaaS model means revenue can be predictable once a customer is onboarded. The company's main costs are typical for a growing tech company: heavy investment in Research & Development (R&D) to improve its platform and algorithms, and substantial Sales & General Administrative (SG&A) expenses, particularly sales and marketing costs required to convince new hospitals and labs to adopt the platform. This high upfront investment in growth is a primary driver of its current unprofitability.
The company's competitive moat is supposed to be built on two pillars: switching costs and network effects. The switching costs are real; once a hospital integrates the SOPHiA DDM™ platform into its clinical workflow and gets regulatory approval for its use, it is disruptive and expensive to switch to a competitor. The network effect comes from its federated data model: as more institutions use the platform, the collective (anonymized) data makes the AI smarter, theoretically improving the service for all users. However, this moat is still shallow. Competitors like Tempus AI have built a much larger, centralized dataset, which may prove to be a more powerful asset for developing insights, especially for lucrative biopharma partnerships.
Ultimately, SOPHiA's business model is promising in theory but challenged in practice. Its decentralized approach is a key differentiator that appeals to institutions wanting to maintain control over their data. However, the company remains a small fish in a big pond. Its resilience is questionable as it is burning through cash rapidly while trying to compete against giants. Without a clear and near-term path to profitability, its technologically sound model faces significant financial and competitive risks that threaten its long-term viability.
SOPHiA GENETICS' financial statements reveal a company in a high-growth, high-burn phase. On the positive side, revenue is growing at a double-digit pace, with a year-over-year increase of 15.91% in the most recent quarter. The company also maintains strong gross margins, consistently around 67%, which indicates its core data platform services are profitable on their own. This suggests a potentially valuable underlying business model if the company can achieve scale.
The primary concern lies with the company's profitability and cash flow. Operating expenses, particularly for Selling, General & Admin ($22.34 million in Q2 2025) and R&D ($8.49 million), far exceed its gross profit ($12.27 million). This results in substantial operating and net losses, with a net loss of -$22.41 million in the latest quarter. Consequently, the company is burning through cash, reporting negative operating cash flow of -$8.21 million in the same period. This continuous cash drain shows the business is not self-sufficient and relies heavily on external capital to fund its operations.
From a balance sheet perspective, the situation is mixed but increasingly risky. The company holds a solid cash balance of $94.82 million and has a healthy current ratio of 3.39, suggesting it can meet its short-term obligations. However, this cash position was recently boosted by a significant increase in debt, which more than doubled in the latest quarter to $63.81 million. This rising leverage, combined with persistent losses that are eroding shareholder equity (down to $76.69 million from $96.49 million at year-end), points to a weakening financial structure.
Overall, the company's financial foundation is precarious. The strong gross margins and revenue growth are promising, but they are overshadowed by an unsustainable cost structure that leads to significant losses and cash burn. The increasing reliance on debt to fund operations is a major red flag, making the stock a high-risk proposition based on its current financial health.
SOPHiA GENETICS' past performance over the analysis period of fiscal years 2020 through 2024 reveals a classic growth-stage company profile: impressive top-line expansion coupled with substantial financial instability. The company has successfully grown its revenue from $28.4 million in FY2020 to $65.17 million in FY2024. However, this growth has been erratic, with annual growth rates fluctuating wildly from as high as 42.43% to as low as 4.49%. This volatility suggests challenges in maintaining consistent market penetration and execution, a stark contrast to more established peers.
From a profitability standpoint, the historical record is unequivocally poor. The company has failed to generate a profit in any of the last five years, with operating margins remaining deeply negative, bottoming out at a staggering -184.5% in FY2022 before improving to -102.14% in FY2024. This means that for every dollar of revenue, the company was still spending over two dollars on its core operations. This lack of operating leverage indicates that the business model is not yet scaling efficiently, and the path to profitability remains distant and uncertain. This is a major red flag when compared to the profitable models of industry giants like Illumina.
Financially, the company's past performance shows significant dependency on external capital. Free cash flow has been consistently negative, with the company burning through more than $260 million over the five-year period. To fund these losses, SOPHiA GENETICS has significantly increased its shares outstanding, from 42 million in FY2020 to 66 million in FY2024, diluting existing shareholders' ownership stake by 57%. While common for young tech companies, this level of dilution without a clear sightline to self-sufficiency is a major risk. Consequently, long-term shareholder returns have been poor and highly volatile, as reflected by the market capitalization collapsing from a peak of $900 million in 2021.
In conclusion, the historical record for SOPHiA GENETICS does not support confidence in its execution or financial resilience. While revenue growth is a positive signal of market interest in its platform, the inability to control costs, achieve profitability, or generate cash internally are significant weaknesses. The company's performance history is a cautionary tale of a business that has yet to prove its economic model can be sustainable, placing it in a high-risk category for investors.
The following analysis projects SOPHiA GENETICS' growth potential through fiscal year 2028, providing a medium-term outlook. Projections for the next one to two years are based on Analyst consensus estimates. Projections extending beyond that period, particularly for three- to ten-year scenarios, are based on an Independent model that extrapolates current trends and market assumptions. According to analyst consensus, SOPHiA is expected to achieve revenue growth of ~23% in FY2024 and ~20% in FY2025. The company is not expected to reach profitability within this window, so earnings per share (EPS) growth is not a meaningful metric; the focus remains on revenue growth and cash flow. All financial figures are reported in U.S. dollars.
The primary growth drivers for SOPHiA GENETICS are rooted in the expansion of precision medicine. The company's main opportunity lies in increasing the adoption of its decentralized platform, which allows hospitals and labs to analyze complex genomic and clinical data in-house. Key drivers include: 1) expanding its customer base of hospitals and laboratories globally, 2) increasing the number of analyses performed per customer as they integrate the platform deeper into their workflows, and 3) launching new applications for different disease areas, such as oncology and rare inherited diseases, to create upsell opportunities. A potential long-term driver is the network effect from its aggregated, anonymized dataset, which could be licensed to biopharmaceutical companies for research, creating a high-margin revenue stream.
Compared to its peers, SOPHiA is a small and speculative player. It faces formidable competition from companies like Tempus AI, which operates a centralized model with a massive proprietary dataset, and Guardant Health, a leader in the liquid biopsy market. These competitors are significantly larger, with greater revenue and stronger brand recognition. SOPHiA's key risk is its massive cash burn relative to its revenue; its operating expenses far exceed its sales, creating a persistent need for financing. The primary opportunity is that its capital-light, software-as-a-service (SaaS) model could theoretically scale more efficiently than the lab-based service models of some competitors, if it can achieve widespread adoption before running out of capital.
In the near-term, over the next 1 year (FY2025), revenue growth is expected to be ~+20% (consensus), driven by new customer additions and increased platform usage. Over a 3-year period (FY2025-FY2027), we model a revenue CAGR of ~18% (independent model), assuming continued market penetration but facing tougher competition. The single most sensitive variable is the rate of new customer adoption. A 10% faster adoption rate could push the 3-year CAGR to ~22%, while a 10% slower rate could drop it to ~14%. Our assumptions for this outlook include: 1) the company maintains its technological edge, 2) the sales cycle for new hospital contracts does not lengthen significantly, and 3) pricing remains stable. The likelihood of these assumptions holding is moderate. A bear case sees growth slowing to <10% annually due to competitive pressure, a normal case is 15-20% growth, and a bull case involves growth accelerating to >25% driven by a major partnership.
Over the long-term, SOPHiA's success is highly speculative. In a 5-year scenario (FY2025-FY2029), we project a revenue CAGR of ~15% (independent model), assuming growth moderates as the company scales. Over a 10-year horizon (FY2025-FY2034), the CAGR could slow further to ~12% (independent model). The primary long-term drivers are the potential monetization of its federated data network and expansion into new 'omic' data types. The key long-duration sensitivity is its ability to successfully license its data to biopharma partners. If this data business takes off, the 10-year CAGR could remain elevated at ~18-20%. If it fails to materialize, growth could fall below 10%. Our long-term assumptions are: 1) the company successfully navigates complex data privacy regulations, 2) it reaches operating profitability by FY2028, and 3) it avoids significant dilution from future capital raises. The likelihood of these assumptions is low to moderate. A long-term bear case would see the company failing to reach profitability and being acquired at a low valuation, while a bull case involves it becoming a key data provider for precision medicine with a highly profitable business model. Overall, long-term growth prospects are moderate but carry an exceptionally high degree of risk.
As of November 4, 2025, with SOPHiA GENETICS SA (SOPH) closing at $5.19, a detailed valuation analysis suggests the stock is overvalued. The company operates in the high-growth Healthcare Data, Benefits & Intelligence sub-industry, where valuations are often forward-looking. However, SOPH's current lack of profits and significant cash consumption call for a cautious approach. A triangulated valuation using multiple methods points toward a fair value in the $3.00–$4.00 range, representing a potential downside of over 30% from the current price. This indicates a poor risk/reward balance and no margin of safety for investors at the current price.
For a pre-profitability company like SOPH, the most relevant multiple is Enterprise Value-to-Sales (EV/Sales). The company's TTM EV/Sales ratio is 4.40x. While reports from 2025 show that the average revenue multiple for HealthTech companies is between 4x and 6x, this range is broad and premium valuations are typically reserved for companies with stronger growth or clearer paths to profitability. Given SOPH's negative margins and cash flow, a more conservative multiple is appropriate. Applying a 3.5x multiple to its TTM revenue suggests an enterprise value that translates to a share price of around $3.15, well below its current market price, reinforcing the overvaluation thesis.
The valuation is further weakened by the company's cash flow performance. With a deeply negative free cash flow of -$43.07M for fiscal year 2024 and a Free Cash Flow Yield of -10.95%, the business is consuming significant capital to fund its operations. This is a major red flag, as it makes the company reliant on external financing. Combining the available methods, the valuation is most heavily weighted toward the EV/Sales multiple, as earnings and cash flow metrics are not applicable. The current market price of $5.19 appears to be pricing in a level of future success and profitability that is not yet visible in the company's fundamentals.
Warren Buffett would likely view SOPHiA GENETICS as a company operating far outside his circle of competence and investment principles in 2025. He seeks simple, predictable businesses with a long history of profitability and a durable competitive moat, none of which SOPH currently possesses. The company's consistent net losses and negative cash flow, with an operating margin often below -50%, are significant red flags, indicating the business consumes far more cash than it generates. Furthermore, its moat is unproven against larger, better-capitalized competitors like Tempus AI. For Buffett, investing in a company that has yet to demonstrate sustainable profitability is speculation, not a value investment. If forced to invest in the broader healthcare data space, he would gravitate towards profitable, dominant 'picks-and-shovels' players like Illumina (ILMN) or established data giants like IQVIA (IQV) due to their clear moats and consistent cash generation. The key takeaway for retail investors is that from a Buffett perspective, SOPH is an uninvestable speculation at this stage; he would avoid it entirely. Buffett's decision would only change after the company achieves several consecutive years of meaningful profitability and demonstrates a clear, defensible market leadership position.
Charlie Munger would likely view SOPHiA GENETICS with extreme skepticism, placing it firmly in his 'too hard' pile. His investment philosophy prioritizes simple, understandable businesses with proven profitability and a durable competitive moat, none of which SOPH demonstrates in 2025. He would be wary of the complex 'AI-driven platform' narrative, seeing it as a story stock in a fiercely competitive industry where larger, better-capitalized players like Tempus AI are building more formidable data moats. The company's persistent unprofitability and negative cash flow would be a cardinal sin, as Munger avoids businesses that require constant infusions of capital just to operate. For retail investors, Munger's takeaway would be clear: avoid confusing a promising technology with a great business, as the former rarely becomes the latter without a clear path to generating and retaining cash. This is a speculative venture, not a high-quality Munger-style investment. A company like this is not a traditional value investment; success is possible but sits outside Munger's framework of avoiding obvious errors. A sustained track record of profitability and positive free cash flow would be the only thing that could begin to change his mind.
In 2025, Bill Ackman would view SOPHiA GENETICS as a company with a potentially interesting platform but one that fails his stringent investment criteria for high-quality, predictable businesses. He seeks dominant platforms that generate significant free cash flow, whereas SOPH remains unprofitable with a substantial cash burn, reflected in its negative operating margins which historically hover around -50%. The intense competition from larger, better-funded players like Tempus AI would represent a significant red flag, questioning SOPH's ability to build a durable moat. Management is currently using its cash reserves to fund growth, primarily through R&D and sales expenses, rather than returning capital to shareholders, a necessary but risky phase for a business that has not yet proven its economic model. For retail investors, Ackman's takeaway would be clear: avoid the stock as it is too speculative and lacks the financial predictability and clear path to value realization he requires. If forced to choose leaders in the broader space, he would gravitate towards a proven, profitable market leader like Illumina for its 'picks and shovels' moat or Schrödinger for its more mature, hybrid business model. Ackman would only consider SOPH after it demonstrates a clear, sustained path to positive free cash flow and operating leverage. This is not a traditional value investment; while its platform could succeed, it sits outside Ackman's usual framework, which demands proven economics, not just a promising story.
SOPHiA GENETICS (SOPH) positions itself as a unique player in the competitive landscape of genomic and clinical data analysis. Its primary differentiator is its decentralized data analytics platform. Unlike competitors that often require physical samples to be sent to a central lab for analysis, SOPH provides software that allows hospitals and labs to analyze their own data on-site. This approach helps institutions retain control over sensitive patient data, addressing key privacy and regulatory concerns. The platform's AI and machine learning algorithms are designed to improve over time as more data is processed across its network, creating a potential network effect that could become a significant competitive advantage.
However, this strategic positioning comes with considerable challenges. The company operates in a capital-intensive industry and faces intense competition from a wide array of companies. These range from established giants like Illumina, which dominates the genetic sequencing hardware market, to specialized diagnostics firms like Guardant Health, which leads in liquid biopsy. Furthermore, many potential customers have developed their own in-house bioinformatics capabilities, creating a "build versus buy" dilemma for SOPH's sales team. The company's financial performance reflects these hurdles; while revenue is growing, it continues to post significant net losses and negative cash flow, a common trait among its growth-stage peers but a critical risk factor for investors.
The company's future success hinges on three key factors: accelerating platform adoption, expanding its menu of applications beyond oncology into areas like rare diseases and cardiology, and demonstrating a clear path to profitability. Achieving scale is crucial for its business model, as a larger network enhances the power of its AI and solidifies its market position. Investors must weigh the potential of its disruptive technology and business model against the substantial execution risks, intense competition, and the ongoing need for capital to fund its growth. Compared to the competition, SOPH is less a story of current financial strength and more a bet on the long-term strategic value of its decentralized, AI-driven approach to healthcare data.
Guardant Health (GH) is a leader in precision oncology, primarily focused on liquid biopsy tests that detect cancer from blood samples. While SOPH offers a broad data analytics platform for various data types, GH is a more focused diagnostics services company. This makes GH a direct competitor in the oncology analytics space but also a different business model. GH's scale in liquid biopsy gives it a massive data advantage in that specific niche, whereas SOPH's advantage lies in its decentralized platform model that empowers individual labs. Overall, GH is a much larger, more established company with a clearer market leadership position in its core market, while SOPH is a smaller, more versatile platform player still fighting for widespread adoption.
Winner: Guardant Health over SOPHiA GENETICS. Guardant Health stands out as the winner due to its commanding leadership in the liquid biopsy market, significantly larger revenue base, and stronger brand recognition within the oncology community. SOPH's decentralized platform is technologically appealing, but it has not yet achieved the commercial scale or clinical validation that Guardant has. Guardant's focused business model has allowed it to build a deeper moat in a high-growth niche, making it a more resilient and established competitor. The key risk for Guardant is increasing competition in the liquid biopsy space, while SOPH's primary risk is its ability to scale and achieve profitability with its platform-based model.
Personalis (PSNL) is a cancer genomics company that provides advanced sequencing and data analysis services, primarily to biopharmaceutical companies for clinical trials and for population sequencing projects. Like SOPH, it operates in the genomics data space, but its business model is more service-oriented and focused on the biopharma customer segment rather than clinical diagnostics in hospitals. Personalis's key product, the NeXT Platform, offers comprehensive analysis of both the tumor and the immune system, giving it a strong position in the immuno-oncology field. In contrast, SOPH's platform is designed for broader clinical use across different institutions. Both companies are in a high-growth phase and are currently unprofitable, burning cash to scale their operations. However, Personalis has a more concentrated customer base, which can be both a strength (deep relationships) and a risk (customer concentration).
Winner: Personalis, Inc. over SOPHiA GENETICS. Personalis wins this comparison due to its established niche and deeper penetration within the high-value biopharmaceutical market. Its specialized NeXT Platform provides a distinct competitive advantage in immuno-oncology research, a rapidly growing field. While SOPH has a potentially larger addressable market with its decentralized clinical model, Personalis has demonstrated a more effective path to revenue generation from a concentrated, high-spending customer base. SOPH’s broader approach faces more diffuse competitive pressures and a longer sales cycle. Personalis's main risk is its reliance on a few large pharma customers, whereas SOPH's is achieving widespread clinical adoption and profitability.
Tempus AI (TEM) is perhaps one of SOPH's most direct competitors, as both companies leverage AI and massive datasets to advance precision medicine. Tempus operates a more centralized model, offering genomic sequencing services and collecting clinical data to build one of the world's largest libraries of linked clinical and molecular data. This vast, proprietary dataset is a powerful moat, attracting pharmaceutical partners for research and development. While SOPH champions a decentralized model, Tempus's strategy is to aggregate data centrally to power its insights. Tempus is significantly larger than SOPH in terms of revenue and has a broader scope, including image analysis and drug development partnerships. Both are heavily investing in growth and are not yet profitable, but Tempus's scale and data assets place it in a stronger competitive position.
Winner: Tempus AI, Inc. over SOPHiA GENETICS. Tempus AI is the clear winner due to its superior scale, massive proprietary dataset, and deeper integration with both clinical and pharmaceutical partners. Its centralized model, while different from SOPH's, has allowed it to build a formidable data moat that is difficult to replicate. This data asset makes Tempus a more valuable partner for biopharma companies, driving a more diversified and larger revenue stream. Although both companies are unprofitable, Tempus's revenue base (over $500 million TTM) and strategic position are significantly stronger than SOPH's. SOPH's main challenge is proving its decentralized model can compete with the network effects of Tempus's vast, centralized data library.
Illumina (ILMN) is the undisputed giant in the genomics industry, providing the sequencing and array-based technologies that are foundational to the work of companies like SOPH. It is not a direct competitor in data analysis software but rather a critical supplier and potential partner or competitor. Illumina's business model is based on selling sequencing instruments (a razor) and high-margin consumables (the razor blades). Its moat is enormous, built on technological leadership, a massive installed base of sequencers, and high switching costs. SOPH's software runs on data often generated by Illumina machines. The risk for SOPH is that Illumina could further expand its own software and analytics offerings, bundling them with its hardware and squeezing out independent players. Compared to SOPH, Illumina is a mature, profitable, and vastly larger company, operating at a completely different scale.
Winner: Illumina, Inc. over SOPHiA GENETICS. Illumina is unequivocally the winner in this comparison. It is the foundational technology provider for the entire genomics industry, with a dominant market position, a robustly profitable business model, and a market capitalization that is orders of magnitude larger than SOPH's. There is no direct competition on a business level, as one is a platform technology provider and the other is a specialized software application. However, as an investment, Illumina represents a more stable and established way to gain exposure to the genomics revolution, despite its recent growth challenges. SOPH is a small, high-risk company dependent on the ecosystem that Illumina has built, and faces the long-term strategic risk of Illumina encroaching on its turf.
Schrödinger (SDGR) operates at the intersection of software, physics, and life sciences, but with a focus on drug discovery rather than clinical diagnostics. Its physics-based computational platform is used by biopharmaceutical companies to accelerate the discovery of new medicines. While not a direct competitor in the clinical genomics space, Schrödinger is a strong comparable as a specialized, science-driven software platform company selling into the life sciences industry. Like SOPH, its business model involves a mix of software licensing and revenue from its own and partnered drug discovery programs. Schrödinger has a longer operating history, higher revenue, and has successfully demonstrated the power of its platform by advancing its own internal pipeline of drugs. This hybrid model provides multiple shots on goal, a strategic advantage SOPH currently lacks.
Winner: Schrödinger, Inc. over SOPHiA GENETICS. Schrödinger is the winner due to its more mature and validated business model, which combines a successful software platform with a promising drug discovery pipeline. This hybrid approach has allowed it to achieve greater revenue scale and provides a clearer path to substantial value creation through its pipeline assets. While SOPH's platform is promising, its value proposition is currently limited to data analysis, whereas Schrödinger's extends to the creation of new therapeutic assets. Schrödinger’s established leadership in computational drug discovery and its dual revenue streams make it a more robust and de-risked investment compared to SOPH's pure-play data analytics model.
Invitae (formerly traded as NVTA) has been a prominent player in genetic testing, aiming to bring comprehensive genetic information into mainstream medical practice. Its model was centered on providing a wide range of affordable and accessible genetic tests directly to clinicians and patients. At its peak, it was a major competitor due to its large scale and ambition to create a genetic information network. However, Invitae's business model proved to be financially unsustainable, characterized by massive cash burn and an inability to achieve profitability, ultimately leading to its bankruptcy in 2024. The comparison is now a cautionary tale for SOPH and others in the space. It highlights the immense difficulty of building a profitable business in genetic testing and data, even with significant scale. SOPH's capital-light, decentralized software model is fundamentally different from Invitae's lab-based service model, which may offer a more viable path, but the risk of unsustainable cash burn remains a parallel concern.
Winner: SOPHiA GENETICS over Invitae Corporation. SOPHiA GENETICS is the winner by default, as Invitae has filed for bankruptcy and its equity is worthless. This comparison serves as a crucial lesson in the sector: aggressive growth funded by debt and equity without a clear line of sight to profitability is a recipe for disaster. SOPH's more disciplined approach to growth and its software-centric, lower-overhead business model appear more sustainable. However, SOPH must heed the warning of Invitae and manage its cash burn meticulously. The primary risk for SOPH is failing to scale to profitability before exhausting its financial resources, the very trap that led to Invitae's downfall.
Based on industry classification and performance score:
SOPHiA GENETICS has a technologically interesting business model, offering a software platform that helps hospitals analyze genomic data. Its key strengths are high customer switching costs and a scalable software-as-a-service (SaaS) structure. However, these are overshadowed by significant weaknesses, including its small size, massive cash burn, and intense competition from larger, better-funded rivals like Tempus AI. The company's data assets and network effects are not yet strong enough to build a protective moat. The overall takeaway is negative, as the company's path to profitability and long-term competitive survival is highly uncertain.
The company meets essential regulatory and data security standards for the healthcare industry, which is a necessary barrier to entry but not a unique competitive advantage over other established players.
Operating in the healthcare data space requires strict adherence to regulations like HIPAA in the U.S. and GDPR in Europe. SOPHiA's platform is built to comply with these standards, and its federated model is designed to enhance data privacy and trust, which is a key selling point for hospitals. The company has no history of major data breaches, indicating a strong focus on security.
This robust compliance framework acts as a significant barrier to entry for new, inexperienced startups. However, it is not a competitive differentiator against other serious players in the field, such as Guardant Health or Tempus AI, who also maintain high standards of regulatory compliance and data security. Therefore, while SOPHiA performs well on this factor, it's considered 'meeting expectations' rather than outperforming. This foundational strength is enough to warrant a pass, as a failure here would be disqualifying for any company in this sector.
SOPHiA is building a valuable federated dataset, but it is dwarfed by the massive, centrally-owned data libraries of key competitors like Tempus AI, putting it at a significant competitive disadvantage.
SOPHiA's platform has analyzed a large number of genomic profiles, creating a growing distributed dataset. This data is used to train its AI models. However, the scale is a critical weakness when compared to direct competitors. For example, Tempus AI has built one of the world's largest libraries of linked clinical and molecular data, which is more attractive to large pharmaceutical companies for research and drug development. SOPHiA's federated model, where data remains with the customer, is good for privacy but is a handicap for building the most powerful, comprehensive dataset.
The company is investing heavily to compete, with R&D expenses at a very high 48% of revenue in 2023. This level of spending highlights the immense cost of trying to catch up on data and technology, but it also drains cash and contributes to massive operating losses. Until SOPHiA's data assets can rival the scale and utility of its larger peers, it remains a significant weakness.
The platform's deep integration into clinical workflows creates high switching costs, but its gross margins are not yet at the level of elite software companies, indicating profitability challenges.
Once a hospital or lab adopts the SOPHiA DDM™ platform and validates it for clinical use, it becomes deeply embedded in their standard operating procedures. Changing platforms would require significant time, cost for re-validation and retraining, and introduces risk to patient care, creating very high switching costs. This 'stickiness' is a major strength of the business model.
However, this strength is not fully reflected in its financial profile. The company's gross margin was 67.2% for the full year 2023. While decent, this is below top-tier SaaS companies which often operate with margins above 80%. This suggests there are significant costs tied to delivering the service, potentially for cloud computing or customer support, which limits the profitability of each customer. This prevents the company from fully capitalizing on its sticky customer base and is a key reason it fails this factor despite the strong qualitative argument.
The platform's value theoretically increases as more hospitals join, but these network effects are currently too weak to create a meaningful competitive advantage against larger, more entrenched ecosystems.
A network effect should mean that each new customer on the SOPHiA DDM™ platform makes it more valuable for all other customers because their anonymized data helps refine the platform's analytical capabilities. While this is true in theory, the practical impact is limited by SOPHiA's current scale. The ecosystem of several hundred institutions is not yet large enough to create the 'winner-take-most' dynamic seen in other platform businesses.
In contrast, competitors like Tempus AI have built a much stronger network that includes thousands of oncologists, major hospital systems, and deep partnerships with top pharmaceutical companies. This creates a powerful feedback loop where more clinical activity generates more data, which attracts more pharma partners, funding more research and development. SOPHiA's network is nascent and not yet a strong enough moat to lock out these larger competitors.
Despite having a theoretically scalable SaaS model, the company's extremely high cash burn and deeply negative operating margins demonstrate it is very far from achieving profitable scale.
A key appeal of a SaaS business is scalability: the ability to add new customers at a very low incremental cost, leading to expanding profit margins. While SOPHiA's gross margin of 67.2% is respectable, its operating performance tells a different story. The company's operating margin for 2023 was approximately -90%, indicating that for every dollar of revenue, it spent ~$1.90 to run the business.
This massive loss is driven by extremely high operating expenses, particularly Sales and Marketing, which consumed 52% of revenue in 2023. This shows that acquiring new customers is incredibly expensive, and the business is not yet demonstrating operating leverage (where revenues grow faster than costs). The current model is one of growth-at-all-costs, fueled by burning cash. Until the company can drastically reduce its customer acquisition costs and overall spending relative to revenue, the scalability of the model remains purely theoretical.
SOPHiA GENETICS shows a conflicting financial picture, marked by growing revenue but severe unprofitability. While its gross margin is healthy at around 67%, this is completely erased by high operating costs, leading to a significant annual net loss of -$62.5 million and consistent cash burn from operations, totaling -$42.8 million last year. The company recently took on more debt to bolster its cash position, increasing financial risk. The takeaway for investors is negative, as the company's financial foundation appears risky and unsustainable without a clear path to profitability.
While specific recurring revenue data is not provided, the company is showing consistent double-digit year-over-year revenue growth, suggesting growing adoption of its platform.
Direct metrics on the quality of recurring revenue, such as the percentage of total revenue that is recurring or Remaining Performance Obligation (RPO), are not available. However, we can use other indicators to gauge performance. The company has posted solid revenue growth, with a year-over-year increase of 15.91% in Q2 2025. This steady growth suggests increasing demand and adoption of its services, which for a data platform company, likely translates to a growing base of recurring revenue.
Further evidence can be seen in the growth of unearned revenue on the balance sheet, which typically represents cash collected from customers for services to be delivered in the future (like subscriptions). Current unearned revenue grew from $5.73 million at the end of FY 2024 to $9.65 million in Q2 2025. This growth supports the idea of a healthy, growing subscription base. Despite the lack of specific disclosures, the positive trends in overall revenue and deferred revenue are encouraging.
The company consistently fails to generate positive cash flow from its operations, instead burning a significant amount of cash each quarter to fund its business.
The company's ability to generate cash from its core business operations is very weak. For FY 2024, operating cash flow was a negative -$42.82 million. This trend has continued, with negative operating cash flows of -$10.75 million in Q1 2025 and -$8.21 million in Q2 2025. This persistent cash burn demonstrates that the company's day-to-day operations are not self-sustaining and require external funding to continue.
Free cash flow (FCF), which accounts for capital expenditures, is also deeply negative, coming in at -$8.34 million in the last quarter. The free cash flow margin of '-45.54%' is particularly alarming, as it means the company burned over 45 cents for every dollar of revenue it generated. This high rate of cash consumption is a major financial risk and highlights the urgent need for the company to find a path toward profitability or secure additional financing.
SOPHiA GENETICS maintains a strong and stable gross margin, indicating healthy profitability from its core services before accounting for high operating expenses.
One of the key strengths in the company's financial profile is its gross profit margin. In the most recent quarter (Q2 2025), the gross margin was 66.97%, consistent with prior periods (68.66% in Q1 2025 and 67.42% for FY 2024). A gross margin in this range is strong and suggests the company has solid pricing power for its data platform and an efficient cost structure for delivering its services.
This high margin means the core business is fundamentally profitable. However, this strength is currently obscured by the company's massive operating expenses. For example, in Q2 2025, the company's gross profit of $12.27 million was completely consumed by operating expenses of $30.76 million. While the overall business is unprofitable, the healthy gross margin is a positive sign that if the company can control its spending and scale its revenue, it has the potential to become profitable in the future.
The company is highly inefficient with its capital, generating substantial negative returns on equity, assets, and invested capital due to its ongoing unprofitability.
SOPHiA GENETICS demonstrates very poor capital efficiency, as it is not generating profits from its asset and equity base. Key metrics are all deeply negative: the Return on Equity (ROE) was '-76.37%' in the most recent quarter, and Return on Assets (ROA) was '-26.55%'. This means the company is losing a substantial amount of money relative to its shareholder equity and asset base. Similarly, its Return on Invested Capital (ROIC) was '-33.1%', highlighting that capital invested in operations is not yielding positive returns.
The company's Asset Turnover of 0.47 is also low, indicating it generates less than 50 cents in revenue for every dollar of assets it holds. For a growth-stage tech company, some inefficiency is expected, but these figures reflect a business that is far from achieving a profitable operating model. Until the company can translate its investments into profits, its capital efficiency will remain a significant weakness.
The company's leverage has more than doubled recently after taking on new debt, and while short-term liquidity appears adequate, persistent losses are eroding its equity base and increasing financial risk.
SOPHiA GENETICS' balance sheet shows signs of increasing strain. Total debt jumped significantly from $30.03 million at the end of FY 2024 to $63.81 million by the end of Q2 2025. This caused the debt-to-equity ratio to rise sharply from 0.31 to 0.83, indicating a much higher reliance on borrowing. While the company's current ratio of 3.39 is strong, suggesting it has enough current assets to cover short-term liabilities, this is a snapshot in time for a company that is actively burning cash.
The core issue is that the company is taking on debt while it is unprofitable. With negative EBITDA (-$17.48 million in Q2 2025), traditional leverage metrics like Net Debt/EBITDA are not meaningful, and an interest coverage ratio would be negative, which is a major red flag. The company's cash and equivalents of $94.82 million provide a buffer, but this was largely funded by the new debt issuance. The combination of rising debt and a shrinking equity base due to ongoing losses points to a weakening financial position.
SOPHiA GENETICS has a troubled performance history characterized by growing revenues but severe and persistent unprofitability. Over the last five years (FY2020-FY2024), revenue more than doubled from $28.4 million to $65.17 million, but the company has never reported a profit, with net losses totaling over $340 million during this period. The company consistently burns through cash and has diluted shareholders by increasing its share count by 57% to fund its operations. This track record of high growth paired with deep losses and shareholder dilution presents a negative takeaway for investors looking for a stable performance history.
Operating margins have been extremely negative throughout the last five years, indicating the company's core business operations are fundamentally unprofitable and not scaling efficiently.
A healthy company's operating margin should improve as it grows, a concept known as operating leverage. SOPHiA GENETICS has not demonstrated this. Its operating margins were -130.85% in 2020, -176.61% in 2021, -184.5% in 2022, -119.92% in 2023, and -102.14% in 2024. Although the margin has improved from its 2022 low, it remains disastrously negative. A margin of -102.14% means the company's operating expenses were more than double its revenue. This signals a business model that is burning through cash to support its basic operations, with no historical evidence of a clear path to profitability.
The stock has performed very poorly since its public offering, characterized by extreme volatility and a substantial loss in market value, reflecting its weak financial results.
While specific total return data is not provided, the company's market capitalization history tells a clear story of poor performance for shareholders. After reaching a market cap of $900 million at the end of FY2021, it plummeted by over 85% to $132 million by the end of FY2022. The stock has remained volatile since, with a market cap of $204 million at the end of FY2024. This dramatic and sustained loss of value, coupled with high volatility, indicates that the market has not been confident in the company's ability to execute its strategy and achieve profitability. This performance stands in stark contrast to more stable, established players in the healthcare technology sector.
While revenue has more than doubled over five years, growth has been inconsistent and slowed dramatically in the most recent year, raising concerns about sustained momentum.
SOPHiA GENETICS' revenue grew from $28.4 million in FY2020 to $65.17 million in FY2024, representing a compound annual growth rate (CAGR) of approximately 23%. This top-line growth is a key part of the company's investment thesis. However, the growth has been erratic and unreliable. Annual growth rates have been volatile: 42.43% in 2021, 17.58% in 2022, 31.14% in 2023, and a sharp deceleration to just 4.49% in FY2024. Such inconsistent performance makes it difficult to predict future expansion and may signal challenges in market adoption or competitive pressures. A strong past performance should show more stable and predictable growth.
Existing shareholders have faced significant dilution as the company has repeatedly issued new stock to fund its heavy cash burn, increasing the share count by `57%` since 2020.
To cover its persistent losses and negative cash flow, SOPHiA GENETICS has relied on raising capital by selling new shares. The number of shares outstanding increased from 42 million at the end of fiscal 2020 to 66 million at the end of fiscal 2024. This 57% increase means that an investor's ownership stake from 2020 has been significantly diluted. While issuing shares is common for growth companies, this high level of dilution without achieving profitability erodes shareholder value over time. This practice cannot continue indefinitely and poses a significant risk to long-term investors.
The company has never been profitable, reporting consistent and significant negative earnings per share over the past five years with no clear improvement trend.
SOPHiA GENETICS has a history of substantial losses, which is reflected in its consistently negative Earnings Per Share (EPS). Over the last five fiscal years, the company has not had a single profitable year. The EPS figures were -$0.93 in 2020, -$1.33 in 2021, -$1.36 in 2022, -$1.22 in 2023, and -$0.95 in 2024. While the loss per share narrowed slightly in the most recent year, the overall trend does not show a sustained path toward profitability. The underlying net income has remained deeply negative, totaling over -$340 million from FY2020 to FY2024. For a company to create shareholder value, it must eventually generate profits, and SOPH's track record shows it is very far from this goal.
SOPHiA GENETICS presents a high-risk, high-reward growth profile, driven by its innovative AI-powered data platform for healthcare institutions. The company is posting solid double-digit revenue growth, fueled by the increasing adoption of genomic medicine and a global customer base. However, this growth comes at a steep cost, with massive cash burn from extremely high R&D and sales expenses, raising serious questions about its path to profitability. When compared to larger, better-funded competitors like Tempus AI and Guardant Health, SOPHiA's smaller scale and unproven decentralized model represent significant headwinds. The investor takeaway is decidedly mixed; while the technology is promising, the financial unsustainability and intense competition make this a speculative investment suitable only for those with a very high tolerance for risk.
Management projects solid top-line growth for the upcoming year, but the guidance completely omits any timeline for achieving profitability, failing to address the core investor concern.
For fiscal year 2024, SOPHiA's management has guided for total revenue in the range of $65 million to $70 million. This represents year-over-year growth of approximately 19% to 28%, which aligns with analyst consensus estimates. This guidance indicates continued momentum in platform adoption and customer usage. However, the outlook is critically incomplete because it provides no indication of when the company expects to reach profitability or even cash flow breakeven. The company's net loss continues to be larger than its total revenue.
While revenue growth is a positive sign, it is overshadowed by the magnitude of the losses. Competitors, though also largely unprofitable, are operating at a much greater scale, making their losses more manageable relative to their revenue base and market opportunity. An outlook focused solely on revenue growth without a credible plan to manage expenses and achieve profitability is a significant red flag for investors. The lack of a clear path to a sustainable financial model makes the guidance weak from an investment perspective.
SOPHiA has a strong global footprint and is actively expanding into new clinical areas, but it faces intense competition in every target market from larger, better-funded rivals.
A key strength for SOPHiA is its global diversification. In 2023, approximately 61% of its revenue came from outside the United States, with a significant presence in Europe. This reduces geographic concentration risk and demonstrates the global appeal of its platform. The company is also expanding its Total Addressable Market (TAM) by moving beyond hereditary diseases into high-growth areas like oncology, where it competes with giants like Tempus AI and Guardant Health. This expansion is critical for its long-term growth narrative.
However, the potential for expansion is tempered by the harsh competitive reality. In every market and clinical vertical it enters, SOPHiA is an underdog. Its decentralized platform model is a key differentiator, but it must prove its superiority against the network effects and massive data moats of centralized players. While the opportunities are significant, the company's ability to successfully execute and capture meaningful market share remains unproven. The established global presence provides a foundation to build upon, which is a tangible asset and warrants a passing grade, albeit with the strong caution that success is far from guaranteed.
Leading indicators like growth in analyses performed are positive, but the company's incredibly high customer acquisition costs and lack of standard pipeline metrics suggest inefficient and unsustainable sales growth.
SOPHiA does not disclose standard SaaS metrics like Remaining Performance Obligation (RPO) or a book-to-bill ratio, making it difficult to assess its future revenue pipeline with confidence. Instead, investors must rely on proxy metrics. The total number of analyses performed on the platform grew 30% in 2023, a positive leading indicator of platform utility and future revenue. The number of recurring revenue customers also grew, albeit at a slower pace from 411 to 444. This indicates some success in converting sales prospects.
The primary concern is the efficiency of this growth. In 2023, Sales and Marketing (S&M) expenses were $35.2 million, or 65% of revenue. This means the company spent 65 cents on sales for every dollar of revenue it generated, a very high and unsustainable Customer Acquisition Cost (CAC). This level of spending suggests the company is struggling to scale efficiently and may be 'buying' its growth. Without clear pipeline metrics and with such high S&M burn, the quality and profitability of its future revenue are highly questionable.
The company has secured some valuable partnerships for validation and distribution, but these have yet to materially alter its growth trajectory or financial performance.
SOPHiA GENETICS has focused its strategy on organic growth supplemented by strategic partnerships rather than acquisitions. This is appropriate given its limited capital. The company has announced collaborations with notable entities like GE HealthCare and Microsoft, which lend credibility to its platform and could potentially open new sales channels. These partnerships are important for a small company trying to establish itself against industry giants. Goodwill on the balance sheet is minimal, confirming the absence of a significant M&A strategy.
While these partnerships are positive developments, their tangible impact on revenue growth remains limited so far. They have not yet proven to be a game-changer that significantly accelerates customer acquisition or revenue. Compared to larger competitors that can acquire technologies or entire companies to fuel growth, SOPHiA's reliance on partnerships is a slower, more uncertain path. Because the current partnerships have not demonstrated a significant financial impact, and the company lacks the resources for transformative M&A, this factor cannot be considered a strong driver of future growth at this time.
Based on its fundamentals as of November 4, 2025, SOPHiA GENETICS SA (SOPH) appears to be overvalued. The stock, priced at $5.19, is trading near the top of its 52-week range, suggesting potentially limited near-term upside. The company is unprofitable with negative cash flow, making its key valuation metric, Enterprise Value-to-Sales (EV/Sales) of 4.40, seem stretched given its significant cash burn compared to peers. The negative Free Cash Flow Yield of -10.95% is a significant concern, highlighting the company's reliance on external capital. The overall takeaway for an investor is negative, as the current price is not supported by the company's financial health, indicating a high-risk profile.
This metric is not meaningful for SOPHiA GENETICS as the company's EBITDA is currently negative, indicating it is not generating profit from its core operations.
Enterprise Value to EBITDA (EV/EBITDA) is a ratio used to determine the value of a company. It is often preferred over the P/E ratio because it is not affected by a company's capital structure. For SOPHiA GENETICS, the EBITDA was -$17.48 million in the most recent quarter (Q2 2025) and -$64.63 million for the full fiscal year 2024. A negative EBITDA makes the EV/EBITDA ratio impossible to calculate meaningfully. For a company in a high-growth phase, negative earnings and EBITDA are not uncommon, but it signals that the business has not yet achieved operational profitability. Therefore, investors cannot use this metric to assess if the stock is cheap or expensive compared to profitable peers.
The company's EV/Sales ratio of 4.40x is within the typical range for the HealthTech industry, but appears high given its lack of profitability and significant cash burn.
The EV/Sales ratio compares a company's total value to its sales, and it's a critical metric for valuing growth companies that are not yet profitable. SOPH's TTM EV/Sales is 4.40x. Industry reports for 2025 indicate that average revenue multiples for HealthTech firms range from 4x to 6x. While SOPH falls within this band, companies commanding multiples at the higher end (6x to 8x) typically demonstrate stronger growth profiles or a clearer path to profitability. Considering SOPH's negative profit margins and cash flow, its valuation sits at a point that seems to price in future success without a solid fundamental underpinning, making it appear stretched.
The PEG ratio cannot be calculated because the company is currently unprofitable, with a negative Earnings Per Share (EPS).
The Price-to-Earnings-to-Growth (PEG) ratio is used to value a stock while taking into account its future earnings growth. It is calculated by dividing the P/E ratio by the earnings growth rate. SOPHiA GENETICS has a TTM EPS of -$1.10, which means it has no P/E ratio. Without a positive P/E ratio, the PEG ratio is not a usable metric. This highlights a key risk for investors: the company's valuation is not based on current earnings, but on the speculation of future profits that have yet to materialize.
The company has a negative Free Cash Flow Yield of -10.95%, which is a significant concern as it indicates the company is burning cash rather than generating it for shareholders.
Free Cash Flow (FCF) Yield shows how much cash the company generates per share, relative to the share's price. A positive yield is desirable. SOPHiA GENETICS has a negative FCF, reporting -$43.07 million in FCF for the 2024 fiscal year and continuing this trend with -$8.34 million in Q2 2025. This results in a highly negative FCF Yield of -10.95%. This means the company is heavily reliant on its cash reserves or external financing to fund its operations and investments. For investors, this is a major risk, as it raises questions about the company's long-term financial sustainability without achieving profitability.
Compared to the broader HealthTech industry, SOPH's valuation appears stretched, as its key EV/Sales multiple is not discounted to reflect its negative profitability and cash flow.
When comparing SOPH to its peers, we must look beyond earnings-based multiples due to its unprofitability. The primary comparable metric is EV/Sales. SOPH's EV/Sales ratio of 4.40x falls within the general HealthTech sector average of 4x to 6x. However, a peer median EV/Sales for comparable, yet unprofitable, genomics and health data companies is often more volatile. For instance, some peers with higher growth or more promising pipelines trade at higher multiples, while others trade at a discount. Given SOPH's cash burn and lack of profits, a valuation that is not at a significant discount to the profitable peer average is a sign of overvaluation. A healthy, profitable peer would be expected to trade at such a multiple, but for a company with SOPH's risk profile, the current valuation seems aggressive.
The most significant risk for SOPHiA GENETICS is its financial sustainability. The company is not yet profitable and consistently reports net losses and negative cash flow from operations as it invests heavily in research, development, and sales. While it held a cash position of approximately $143.9 million as of early 2024, its ongoing cash burn means it will likely need to raise additional capital in the coming years. In a macroeconomic environment of higher interest rates, securing funding can be more expensive and difficult, and raising capital by issuing new stock could dilute the value for existing shareholders. Furthermore, an economic downturn could pressure healthcare budgets, causing potential customers to delay or cancel subscriptions to advanced analytics platforms like SOPHiA's.
The genomic and health data analytics industry is crowded and fiercely competitive. SOPHiA competes not only with other specialized software firms but also with the in-house analytics capabilities of large diagnostic and life sciences companies like Roche and Illumina. These larger competitors have substantially greater financial resources, established customer relationships, and broader distribution networks. The field is also subject to rapid technological disruption. If a competitor develops a more accurate, faster, or cheaper platform, or if new AI advancements emerge that SOPHiA is slow to adopt, the company could quickly lose its market position. This forces the company to maintain high levels of R&D spending, further straining its finances.
Finally, the company's business model is entirely dependent on its ability to acquire new customers and retain existing ones within the complex healthcare ecosystem. The sales cycle for institutional clients like hospitals and large laboratories can be long and expensive, with no guarantee of success. Beyond commercial risks, SOPHiA operates in a highly regulated environment, handling sensitive patient data that is subject to strict rules like GDPR in Europe and HIPAA in the U.S. A significant data breach could lead to severe financial penalties, reputational damage, and a loss of customer trust that would be difficult to recover from. The evolving landscape for AI in healthcare also presents regulatory uncertainty, which could introduce new compliance costs or operational limitations in the future.
Click a section to jump