Neogenomics Inc (NEO) 2025 Q4 法說會逐字稿

Good morning, and welcome to the NeoGenomics fourth quarter and full year 2025 financial results call. Please be advised that today's conference is being recorded. I will now turn the call over to Kendra Webster with NeoGenomics. The floor is yours.

Thank you, Kelly, and good morning, everyone. Welcome to the NeoGenomics fourth quarter and full year 2025 financial results call. With me today to discuss the results are Tony Zook, Chief Executive Officer; Jeff Sherman, Chief Financial Officer; and Abhishek Jain, EVP of Finance. Additional members of the management team will be available for the Q&A portion of our call. This call is being simultaneously webcast.

For reference, concurrent with today's call, we posted a short slide presentation to the Investors tab on our website at ir.neogenomics.com.

During this call, we will make forward-looking statements regarding our future financial and business performance, business strategy, the timing and outcome of reimbursement decisions and financial guidance.

We caution you that the actual events or results could differ materially from those expressed or implied by the forward-looking statements. These forward-looking statements made during the call speak only as of the original date of the call, and we undertake no obligation to update or revise any of these statements.

Please refer to the information disclosed on the safe harbor statement slide in the deck posted on our website as well as the information under the heading Risk Factors in our most recent Forms 10-K, 10-Q and 8-K that we filed with the SEC to identify important risks and other factors that may cause our actual results to differ materially from the forward-looking statements.

These documents can be found in the Investors section of our website or on the SEC's website. During this call, we also refer to certain non-GAAP financial measures that include adjustments to GAAP results. The non-GAAP financial measures presented should not be considered an alternative to the financial measures required by GAAP, should not be considered measures of liquidity and are unlikely to be comparable to non-GAAP financial measures provided by other companies.

Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable GAAP financial measures in a table available in the press release we issued this morning and in the slide deck available in the Investors section of our website. I will now turn the call over to Tony.

Thanks, Kendra. Well, good morning, everyone. Thank you for joining us today. As been our practice, I'll begin with a discussion of Q4 highlights and key business growth drivers before turning the call over to Jeff, for a deep dive into our 2025 financial results. Our new EVP and incoming CFO, Abhishek Jain, will then introduce our 2026 guidance. Afterwards, we'll open up the call for your questions.

Our mission and vision guided us through 2025 to deliver improving results throughout the year. Let's get into the recent highlights. As we covered in our preannouncement, during the fourth quarter of 2025, we delivered record revenues while making meaningful progress advancing our NGS and MRD long-term growth initiatives including preparing for a full clinical launch of our RaDaR ST MRD assay this month. I'll cover these initiatives in more detail shortly.

Total revenue for Q4 was $190 million, representing double-digit growth of 11% year-over-year. Our clinical business continued its robust growth with revenue increasing 16% year-over-year. The clinical performance was driven by effective execution of our key commercial strategy. enabling volume and share gains in key segments.

In the fourth quarter, we again saw a sequential improvement in AUP, continued growth in test bonds and NGS revenue growth of 23%, well ahead of NGS market growth rate. The five NGS products launched in 2023 contributed 23% of clinical revenue in the quarter. We continue to see demand for our non-NGS modalities as well with all modalities continuing to grow at above market growth.

Our full year total revenue was $727 million, which represents 10% growth over full year 2024. We ended the year with significant momentum, and I attribute this to several factors. One, we're a pure-play oncology solutions provider driving rapid dissemination and adoption of innovation through our best-in-class commercial organization in the community setting.

Studies have shown that as much as 80% of all cancer care is now delivered in the community setting, which has historically lagged NCI-designated cancer centers when it comes to introducing the latest in cancer testing innovation.

How are we winning in the community? We believe community oncologists are guidelines driven and focused on certainty, not possibility, and they choose partners to remove friction and enable confident treatment decisions under operational, economic and time pressures. Reimbursement coverage also is critical.

The results of several meetings of our scientific advisory board as well as independent market research that we commissioned, revealed several reasons why community oncologists look to us.

NeoGenomics offers ease of ordering, simple to interpret test reports, fast and consistent test turnaround times, access to medical expertise, and most importantly, our comprehensive test menu spanning diagnosis, therapy selection at MRD.

Our Net Promoter Score of 79 reflects strong physician satisfaction among our current customer base with our NPS score continuing to improve in '25 even with record test volumes.

Two, we enjoy a leadership position in the hematology testing market with greater than 25% share across diagnostics and therapy selection. And as pathologists and oncologists consolidate the number of vendors they use, we are successfully leveraging this team leadership position to create enhanced test demand, particularly in high-value areas such as therapy selection and MRD.

In fact, in 2025, we saw 14% growth in the total number of pathologists and oncologists ordering five or more tests from Neo.

On top of that, we estimate that approximately 40% of all active pathologists and oncologists have ordered five or more test of ours during the year. While we're proud of that reach, it also means that over half of practicing providers are still available to us to bring over to Neo.

Three, we built a geographically balanced lab network that allows us to be responsive to customer needs, including offering some of the fastest test turnaround times in the industry. When faster, more accurate treatment decisions can have a material impact on patient outcomes. This network was further strengthened by our acquisition of New Jersey-based cat line last year.

which gives us a meaningful presence in the number three cancer market in the country. We're on track to capture operational efficiencies and synergies from the Path line acquisition that we anticipate will be accretive to profitability beginning this year.

And four, we have one of the broadest cancer test menus in the industry, spanning diagnosis to therapy selection to MRD for both heme and solid tumor cancers including over 300 commercial payer contracts, which enables us to be the partner of choice among community hospitals and community oncologists.

We're highly differentiated from both large reference labs as well as specialty oncology labs. And this optimally positions us to address underpenetrated markets in therapy selection and MRD in excess of $30 billion, while potentially improving outcomes for patients as they advance along the cancer care journey for enabling precision oncology in the community setting.

Turning now to RaDaR ST. In November, we presented new research for the RaDaR ST assay for circulating tumor DNA detection across solid tumor types. The data from this bridging study showed that RaDaR ST demonstrated 97% concordance and maintained equivalent sensitivity with RaDaR 1.0. This bridging study was used to secure multi-X reimbursement in the two previously approved indications, HPV-negative head and neck cancer and a subset of breast cancers. This decision paves the way for us to broadly commercialize RaDaR ST formally RaDaR 1.1.

To that end, we're on track to execute a full clinical launch of RaDaR ST by the end of this month. As part of our go-to-market strategy, we're expanding our sales force to help us penetrate the head and neck market. We believe adding feet on the ground will help us penetrate this market with the only MolDx approved HPV negative test currently available to patients.

To ensure that we're well positioned to capture more of this large and rapidly growing MRD market, we have also submitted two additional solid tumor cancer indications for MolDx for approval. While we're not disclosing these cancer types yet for competitive reasons, we believe that upon securing coverage, we will effectively double the market opportunity of patients eligible for RaDaR ST testing.

To expand our reach, as we secure additional MolDX approvals, we expect to add more than 25 oncology sales specialists for [OSS] by the third quarter. From a financial perspective, we believe 2026 will see modest revenue contributions from RaDaR ST as adoption ramps, and we gained reimbursement approval in the additional indications. We expect revenue growth to accelerate in '27 and beyond.

In parallel with our RaDaR ST launch preparedness activities and efforts to gain coverage for additional indications, we also continue to focus our R&D investment in next-generation MRD. This assay will be an ultrasensitive whole genome solution for lower setting cancer types.

We're working on product development now with data generation and MolDx submissions slated for next year and a potential clinical launch as early as 2028.

Turning now to our PanTracer portfolio of products for solid tumor therapy selection. PanTracer is designed -- is designed for solid and liquid to work together empowering oncologists with actionable genomic insights for component real-time treatment decisions.

The test can be ordered independently or with complementary tests depending on the patient's individual needs. PanTracer LBx is a noninvasive blood-based test that analyzes a circulating tumor DNA to identify key genomic alterations that inform treatment decisions in patients with advanced-stage solid tumors.

Importantly, PanTracer LBx fills a gap in our portfolio that providers have been asking for, allowing them to further consolidate the number of labs they use. We have submitted to MolDx for clinical reimbursement coverage to the LBx test and are awaiting a decision.

Assuming a favorable decision, we anticipate that LBx will contribute modestly to revenue in 2026 as adoption ramps throughout the year. Another product on the PanTracer family, PanTracer tissue had strong growth throughout 2025. We doubled the volume of tests ordered from '23 to '24 and then nearly doubled again from '24 to '25 while continuing to grow AUPs.

This represents another proof point of our ability to pull higher value tests through our community channel, leveraging our team leadership position. 75% of community oncologists who were new to Neo in 2025 ordered five or more tests, a strong leading indicator of our continued growth and success penetrating the community channel.

I'm pleased to share today that PanTracer portfolio is growing. Last week, we launched PanTracer Pro as part of the expanded solid tumor therapy selection portfolio. The test integrates broad genomic profiling with diagnosis directed IHC and ancillary testing, intelligently selected based on tumor type and clinical context to provide oncologists with actionable insights for therapy selection in a single order.

PanTracer Pro rounds out the portfolio, and it will help streamline the ordering and testing process, delivering timely, relevant results, helping clinicians personalize treatment strategies and improved patient outcomes.

At the end of 2024 and moving into 2025, we invested in our commercial organization, specifically our oncology sales specialists. We added 35 people to this group who target community oncologists. And as these individuals mature in their roles, we're seeing a continued uptake in NGS testing accounting for a larger portion of our total clinical revenue as we increase our reach and frequency. This penetration speaks to the strength of our commercial channel as well.

We have launched five [NTS] products since March of 2023. And even though we were later to market than some of our peers with these products, we are still seeing very good uptake. PanTracer tissue highlighted earlier was one of the five products, which reflects the breadth and strength of our menu and our ability to capture market share when we introduce new products.

With the success of our NGS products, we now have the opportunity to be more selective with the volumes that we prioritized. We are intentionally shifting testing capacity towards more therapy guided and higher-value testing which is expected to make AUP expansion a more significant driver of revenue growth relative to volume.

And with that, I'll hand it over to Jeff to further discuss our results for the quarter and full year.

Thanks, Tony, and good morning. Fourth quarter total revenue increased by 11% over prior year to $190 million. Total clinical revenue continued with strong double-digit growth and increased 16% from prior year. As expected, nonclinical revenue declined by over 25% in the fourth quarter. Adjusted gross profit improved by $5.8 million or 7% over prior year, and adjusted EBITDA was $13.4 million, up 10%.

Q4 was the 10th consecutive quarter of positive earnings with adjusted EBITDA and margins improving sequentially each quarter in 2025. Clinical volumes and revenues continued with robust growth in the quarter. Public test volumes increased by 11% in the fourth quarter with AUP growth of 5%.

The Same-store revenue without pipeline was $170 million, representing growth of 14% driven by a 6% increase in test volumes and a 7% increase in AUP. Volumes were negatively impacted in the fourth quarter as we intentionally rationalized our exposure to higher volume, lower value test clients.

We are continuing to see strength across our portfolio with above-market growth rates across modalities we offer. NGS revenues grew by 23% over prior year in the quarter and accounted for around one-third of total clinical revenue. Average revenue per clinical test increased sequentially from Q3 by $12 or 3% and was up 5% from prior year.

Excluding pipeline, AUP increased by $15 or 3% from Q3 and was up 7% over prior year. A larger percentage of higher value tests, including NGS as well as recent managed care pricing increases and RCM initiatives are helping to drive higher AUP.

Total operating expenses in the quarter were $97 million, an increase of $1 million or 1% over prior year. Cash flow from operations was a positive $1 million in the quarter and we ended the quarter with total cash of $160 million, down slightly from Q3.

Our balance sheet and expected cash flow will enable us to continue to invest in our business to drive organic growth through new product development and sales force expansion while also increasing operating efficiencies through investments in technology, and automation.

Turning to full year 2025 results. Revenue was up 10% versus prior year to $727 million, driven by deeper penetration into the community setting, a continuing shift to higher-margin modalities and execution of revenue cycle management initiatives.

Total clinical revenue increased 15% and growth was 13%, excluding potline. Nonclinical revenue declined 24% for the year, in line with our revised expectations. Adjusted gross profit increased $23 million or 8% to $335 million. This represents an adjusted gross margin of 46% or a decline of 111 basis points mostly driven by path line, the decline in nonclinical revenue and the operating cost of the clinical liquid biopsy launch.

Cash flow from operations was positive $5 million in 2025 with free cash flow improving by over 35% as compared to 2024. Adjusted EBITDA increased by $4 million to positive $43.4 million, an improvement of 9% over prior year. And now I'll hand it over to Abhishek to introduce our 2026 guidance.

Thank you, Jeff. I would like to begin by thanking my colleagues at Neo for their warm welcome. Over the past month, I spent time with investors and analysts attended our global sales meeting visited our labs and gained deeper insights into our strategy and the opportunities ahead. It has been a productive and energizing first month. With that context, let me share our 2026 guidance.

For the full year, we expect revenues of $793 million to $801 million. The midpoint of our 2026 revenue guidance assumes rate our ST revenue in mid-single digit millions for our approved indications. A modest revenue contribution from PanTracer liquid and sustained softness in nonclinical through the year exiting 2026 down low to mid-single digits.

While we do not provide quarterly guidance, let me provide some color on quarterly cadence that is impacted by the Pathline acquisition and revenue assumptions for RaDaR ST and PanTracer liquid, which are weighted towards the back half of the year. I suggest modeling approximately 10% year-over-year growth in the first quarter, 8% to 9% in the second, 9% to 10% in the third and slightly above 10% in the fourth quarter of 2026.

Regarding the extreme weather throughout the country so far this year, we know some providers had to close their offices and appointments have been rescheduled. As a result, there will be some impact on volumes and revenue for Q1, this has been contemplated in our full year 2026 guide and cadence by quarter.

We expect adjusted EBITDA to be in the range of $55 million to $57 million for 2026 representing year-over-year growth of approximately 27% to 31%. We expect adjusted EBITDA to grow by low 20% year-over-year in the first and the second quarter and low 30% year-over-year in the third and the fourth quarter, respectively.

We will continue to take a balanced approach to investments, strategically increasing sales and marketing and R&D spend for new product initiatives and clinical programs that support payer reimbursement and drive top line growth while improving liquidity with the goal of becoming free cash flow positive this year.

Now let me turn the call back to Tony.

Thanks, Abhishek, and welcome to the team. To recap, during the fourth quarter, we again delivered very strong clinical volumes and revenue, while advancing NGS and MRD initiatives that we believe will contribute to accelerating our growth for years to come.

Looking forward to 2026, in our clinical business, the focus is on strategic, profitable growth driven by continued expansion of NGS revenues and market penetration for the Pantraser family and radars TV.

Simultaneously, we're implementing tools and solutions we believe will enhance the productivity of the entire sales organization and working to enhance customer workflows through solutions like our Epic Aura integration. In parallel with our product and service offerings to grow revenue, we are making targeted investments to drive top line growth and margin expansion.

There is a very strong financial discipline embedded throughout the organization, and we're going to build on that as we continue to grow revenue and improve operating efficiencies and margins. Thank you for your continued interest in NeoGenomics. And operator, this concludes our prepared remarks, so please open the line for questions.

(Operator Instructions) David Westenberg, Piper Sandler.

So I'll just ask one question, but it will be kind of on the longer side, I'll just ask it upfront. You talked about the intimate launch of RaDaR SD. Can you pride a little bit more specific. You mentioned specific -- submissions to MolDx. Can you give us more specific timing?

I get that this is trying to predict government. But is this end of the year, is this potentially dragged into the next year, et cetera? And then you mentioned also '25 sales reps, I just want a clarification that is specific to MRD or esoteric tests in general.

And then on those sales reps, do you plan on just going after the head and neck, the subindications of breast? Or are you actually, in fact, thinking about some of those future multi exhibitions that you have there?

And then lastly, I get this is really long but just talk about the complementarity with PanTracer liquid.

Okay. So Dave, there's a lot to unpack there. Why don't I -- I'll try and start it and kick us off and then look to Warren to address perhaps follow-up questions six, seven and eight. Okay, Warren, so get ready for that. Relative to RaDaR ST, Dave, you are right, that the attention is we go out at the end of this month for our full launch relative to focus.

It will be focused, Dave, on the initial indications of head and neck and the subsets of breast that we have articulated, HPV negative and the HR HER2 negative breast. So that will remain the focal point for the initial launch activity. So that was one of your questions.

As far as additional indication flow, as you say, all we can do is submit and put the best packages forward that we believe are possible for MolDx to work their way through. For all the assumptions, we believe, Dave, that those additional indications would be available in the latter half of this year for us.

And so we still possible to potentially generate some revenue from those in this year, but that would be upside against our guide. We're not counting on those and certainly will help fuel additional robust growth going into 2027.

Relative to the actual field force expansion, I'm going to turn that over to Warren because what we wanted to do, Dave, was do two things. First and foremost, we wanted to take advantage of the HPV negative indication because we believe we'll be the only MolDX approved product for HPV negative. And it's a very specialized group of physicians that account for that bulk of that business and there's a fairly clear road map to how we can get to those.

And so Warren's team is initially now expanding to cover that group and then we'll build the additional reps over time for the added indications that we have. And yes, Dave, they were intended to be complementary to MRD and NGS. They won't be specific only to MRD. So Warren, maybe a little bit more color on the coverage aspect.

Absolutely. Thanks, Tony, and Dave. So yes, the expansion is taking place. There's an initial expansion happening sort of as we speak. That is to really address the RaDaR ST launch in particularly head and neck HPV negative.

And the reason why we felt we needed to do a small initial expansion is one of the primary call points for head and neck HPV negative is the ENT and there hasn't been a traditional core point for us up until now. So we actually are investing in a small team dedicated towards ENTs, and they will be almost exclusively focused on the RaDaR head and neck indication.

They will have an option to represent other parts of the portfolio, but we feel that their focus will be largely focused on the RaDaR ST. The -- as we've done in the past and very successfully, I might add, as we expect new products and, in this case, demunications to come to market, we do expand our sales force because we want to increase reach and frequency. And we will be doing that in quarter two and in quarter three in anticipation of the additional indications that we expect from MolDX.

Again, these team members will be oncology sales specialists, they will be responsible for selling our oncology portfolio, which is therapy selection for and solid tumor as well as MRD. It's probably a bundle of about 12 or 14 tests if you really look at it, but we see a 100% core point overlap between our portfolio for therapy selection as well as MRD.

And today, based on our size of our sales team, we feel a bit more value by consolidating sales activities within one resource versus having specialized sales teams although we will get some good lessons from our dedicated ENT group that we're establishing as we speak.

Bill Bonello, Craig-Hallum.

Hoping to sneak in a couple, but the first would be just on the clinical volume. Any chance you could quantify the impact of exiting the low-value business? And then maybe clarify whether there's more business that you will still be exiting in future quarters so we can have some sense of how to think about volume growth as we progress through the year.

Sure, Bill. I'll kick that off. And again, if I -- I'll look to Abhishek or Jeff to add in any additional color. So Bill, if you just step back and you look at us historically, right? And if you look at how the revenue models were built, volume represented for us typically this upper to single digit growth.

And AUP was more in the low single-digit growth. There's two factors that are driving our thinking now. First of those is this constant and purposeful penetration into therapy selection in MRD. With that, we will be the beneficiaries of higher AUPs and therefore, a better impact on our margins and business overall. So that's point number one. We expect our AUPs to continue to grow.

And then the second point, Bill, was this idea, we want to make sure we secure the right call. We want to be a business that's growing our revenue as well as our margins over time. And you'll recall that we had -- we talked about a contract throughout last year that was a high volume, low value-added opportunity for us. The AUPs bill in that were like in the low $200 range.

We entered into that with the potential opportunity to secure longer-term growth into higher value tests. But if they don't materialize, we had to look at it in the macro sense. And for us, we believe the better course of judgment here was to say, our resources are better used and focused in the areas where we're seeing higher margin opportunities and higher growth.

And so the model now kind of inverts a little bit, what you should be expecting is AUP now in the upper single-digit range with volume in the lower to mid-single-digit range. But that being said, I just want to make sure we clarify on this, Bill, because it's an important point.

we're still growing all the right volumes, right? We're going to continue to grow by modality. We have no desire to pull back in that area. We continue to expect NGS to have robust growth as well. And so that's going to continue.

We saw robust NGS volume and AUP growth in 2025, we would expect similar results in 2026, and so the right volume will come through. And on that NGS business, again, it's now over one third of our clinical business.

And an interesting fact, Bill, is that one third of our clinical revenue is actually being supported with only 9% to 10% of our volume. And so it's the right volume that's generated these kinds of growing numbers. So I would expect most of this to be evident through Q1 and Q2.

And then from that point on, we will be back to kind of normal growth trends. Does that help, Bill?

It does. And I mean, should we think even a bit lower perhaps as we get into Q2 and Q3, just then on the volume growth. It sounds like maybe a little to still come? Or is this a pretty good proxy?

So let me take that one, Bill. So we are -- like for example, what you have seen in Q4 results, our sequential volume growth was slightly down and we are anticipating as we kind of go in Q1, our numbers will be sequentially down in a similar way as we kind of start to focus on these high-margin, high-value tests.

And this is very intentional from our strategy standpoint, and that's the reason we are moving in that direction. But as we get into Q2, we'll basically be year-over-year flattish, and that's where we will start to grow our volumes in Q3 and Q4 on a year-over-year as well as on the sequential basis.

Andrew Brackmann, William Blair.

Maybe just also a similar line of questioning to Bill's here, just sort of around guidance. by my math, it looks like the core clinical business, when I exclude Patin and some of these new contributions from LBx and MRD, it looks like that core is called the sort of grow in that high single digit to maybe 10% year-over-year.

Can you maybe just unpack some of the underlying assumptions there for the export book of business? And I guess, in particular, just sort of reconciling that to the -- I think you did 14% same-store sales growth in Q4. So just sort of reconciling to that high single to 10% growth.

Yes, Andrew, again, I'll kick it off and I'll look to Abhishek and Jeff to add additional color. So yes, in 2025, we saw expat line, we were about 13% growth. on the clinical side. And we are anticipating double-digit growth on the clinical. And so what's within there.

First, there will be a full year path line that will be built into the numbers as well. As I just mentioned with Bill, that one contract that we exited, that has an impact in the totality of the clinical side. And then of course, in the guide itself, Andrew, just to be clear, we want to be prudent relative to the back half with LBx.

Since we still do not have LBx approval in hand, we thought it better to only pack in revenue for the second half of the year at a modest rate. And so we don't really see the benefits of that coming through in the current guide.

If we, in fact, get [DX] support for LBx earlier than that, then it would represent upside in our total growth, and of course, that will be on the back of the total clinical business. And so again, I hope that gives you some color and Abhishek and Jeff, if I missed any key points if you just call out for Andrew.

No, I think you have covered it well, Tony. And Andrew, we are expecting the clinical business to be growing at about 11 points based on our low to mid-single digit on the nonclinical side. So it's kind of in the range that we have been expecting the company to be growing in at about 10 points that's what we have called out.

And that's where our midpoint currently is $797 million is pretty close to that 10%. I think the guide is pretty prudent to the extent that it gives us a very high degree of confidence to be able to meet these numbers.

And then we will, of course, see if the things were to pan out as we are anticipating, it gives us some room to actually do better than the expectation.

That helped Andrew?

That's helpful. And then -- yes, that's very, very helpful. And then just on the LIMS rollout here. Obviously, that's a multiyear process for that rollout. But anything you can maybe share with respect to how that might be impacting the model or sort of just sort of the workflow in 2026.

Yes. Great question. Thank you for that. As you know, historically, we were built for effectiveness, not necessarily for efficiency. And moving to a common limb system, we think, is foundational for us to continue to advance towards ever improving margins and efficiencies for the company.

What we will see through the course of 2026, Andrew, you know, we have these eight existing LIMS systems, we'll be on a path to migrating to one common system. What we wanted to do, though, is manage that effectively over time. And so we are going modality by modality site by site. We're not going to just do kind of a big bang theory put any risk at all into the business. And so that means the benefits of wins only start to become evident for us in the latter part of this year.

Now there are some natural efficiencies that Warren's team are already seeing, and I'll look to him to add some of that added color for you but the more pronounced impact will be in '27 and '28 as we can retire all of the legacy systems and build upon the existing LIMS architecture. So Warren, any added color.

Yes. Thanks, Tony. Andrew, I think in terms of sort of technical debt benefit, that's coming in 2027, to be clear. But as we put the limb system in now, we're actually not just replacing our existing LIMS or the new LIMS. We're actually looking at the workflows and optimizing the workflows based on how we understand the business and how it's likely to develop over time.

So as we get each modality in place or in each site, start to see workflow efficiency there. So that's sort of -- well, saying that will start to come through in operational efficiency. I think the other big benefit that we're getting is far greater capabilities from analytics and insight point of view to really understand where inefficiencies lie within our workflows.

And that analytics and sort of transparency will also help us translate a better customer experience by providing visibility to real-time sample tracking, et cetera, which is one of our key initiatives for 2026.

And I would say, Andrew, again, this is foundational for us because it affords us then the opportunity to build on that which is why I maintained it. We're still in the early engines relative to gross margin expansion opportunities for ourselves.

So growing limbs and you looked out of the platform opportunities like DX things that Warren and his team can do the digital pathology and automation. We believe that the gross margins are in early and we'll continue to build once revenue, but margin expansion as well.

Subu Nambi, Guggenheim.

Thank you for all the color in different businesses. Given some longer selling cycles and maybe some easing of the funding pressure, where do you see pharma ordering playing out this year between first half and second half? And what products do you expect to lead the order book from Pharma?

Could you repeat the second half of the question, please?

What products do you expect to lead the order book for Pharma?

Okay. Got it. So relative to Pharma, I would say that my view certainly have not changed from where we were about to eight months ago. We anticipated that the erosion that we were experiencing on the pharma side of the business would continue into 2026, albeit at the same rate that we saw in 2025. So I've always been of the belief that it would be 2027 before we would see a return to growth for that book of business.

And that's how we built the guide. So we expect still to see modest erosion in the Pharma book of business for 2026. Certainly, it will be much reduced from where it was, but still in that mid- to upper 5% to 10% range for the pharma side of business. I think the big part to return to growth here is based on RaDaR ST. That will be one of the key growth drivers for us in that book of business.

There, we've had pretty good conversations. We've been well received. We're back at the table with RaDaR ST. There seems to be a really good sense of interest in it. and that portfolio of opportunities continues to grow.

And so relative to the year, again, the guide would still anticipate modest erosion in the pharma side of the business. If we can get that back to flat, that would then represent upside opportunity for us. Warren, I know the long lead cycle times, but perhaps if you talk about RaDaR ST and how that's being received?

Yes. So maybe a couple of comments there. So first and foremost, in terms of the focus, a little bit like on the clinical side. Really, our focus is to protect our position in diagnosis, but really look to grow in therapy selection in MRD. We look at form in a very similar way.

We're very well known from an IHC perspective and we continue to focus on IHC because it's very relevant for pharma from an antibody drug conjugate perspective. And it's a good door opener for us but expect our focus to really lie towards therapy selection and MRD.

So there's a strong a strong alignment here between what we're doing in clinical and with pharma. As Tony said, robust opportunity pipeline that's developing with regards to RaDaR ST and Pharma some legacy users and many new users and expect first bookings to materialize shortly.

And I do appreciate the question. This gives us the opportunity to clarify it. The other thing, I guess, would remind the group, this is a relatively small portion of our overall business, talking is about 5% to 6% of our overall business. And so we continue to put the primary focus and energies on the clinical side of the business with the intent to stabilize this business and return to growth in '27. So thanks for the question.

Absolutely. Thank you for clarifying this. Can you talk about the framework from LIMS integration this year? What's being finished, what's left to go? And then maybe how that will show up in earnings in 2026.

So I'd say where our focus is today. So we've completed flow. So one about our key modalities. Our next step right now is around accessioning and NGS is really where our focus is, again, aligning to our strategic priority, looking to be able to provide increased value, both from an efficiency perspective and customer trifability those would certainly be things that you would look to conclude in 2026, probably for other modalities as well rolling into that. But we can certainly take that offline and provide more granular detail, if you like.

But those are the key focus areas for us from 2026 is molecular and accession.

Mike Matson, Needham.

This is Joseph on for Mike. Just, I guess, in terms of the guide for RaDaR for 2026 in the mid-single-digit millions, I'm just kind of wondering framing up your guys' confidence and the ability to hit that mid-single-digits number. And I guess just trying to understand how much of that is the clinical side versus the biopharma side maybe for both of those, which do you see to have the higher potential to drive upside to that mid-single-digit number?

Yes. Thanks for the question. I would say, first and foremost, we do have a high degree of confidence in that. That's why it's in the guide at the midpoint level. So we do have a high degree of confidence there.

Relative to the mix, I think it would be fair to say in the early part of the launch, you would expect a heavier component of that to probably be more on the Pharma side. than the clinical side only because the clinical launch just takes time to build, right?

We'll have the indications of head and neck and breast, and then you'll build and you'll start to see a slow build of that activity and just with the lead time of the product you start to see the clinical effect of that probably in the latter part of the year, whereas pharma, you have the opportunity to take on a little bit more of a pan orientation and can secure pricing sooner.

And then as we build the indications over time, you're going to see the clinical side of the business certainly accelerate, and that would be the largest of the drivers moving into the outer years with RaDaR ST. But Abhishek, anything else of --

No, I think Tony, you have covered it very well. As I basically discussed in our prepared remarks, we are actually launching, our RaDaR ST by the end of this month, and that gives us a very high degree of confidence of the numbers that we are putting in our guidance.

Okay. Yes. Great. And then maybe just one more quick one. Can you maybe just talk about the potential for continued ASP growth?

I think you guys kind of talking about high single digits or upper single digits, maybe for 2026. But the potential for that to continue without any additional reimbursement announcement. So what is currently approved and reimbursed in your pipeline, NGS products, PanTracer as it stands today without LBx.

Yes, I'll start and Abhishek can join, this is Jeff. So I think, look, the continued shift in NGS is going to be -- continue to be the big driver of our AUP growth as it was in 2025 as well. So I think that is one factor. We expect to continue to have success with direct client build pricing increases, which still going in the first quarter of the year. And we also are continuing to have success with managed care pricing increases, which started in the back half of last year.

We're expecting a full year impact of those to hit in '26 as well as new agreements and new increases approved. And then finally, we're still working on other RCM initiatives to kind of close that gap between what we expect to be paid and what we are being paid. And so that AUP growth will come for those drivers to the extent we get additional indications or tests approved, that will be incremental on top of that.

Tycho Peterson, Jefferies.

Maybe one for Warren. Just on the sales force. I appreciate your color on go-forward additions. But as we look back over the last year, obviously, ramping the sales force was a big focus. Maybe with that cohort matured, can you just talk about where they are in terms of productivity.

I think you called out over five tests ordered on providers, but maybe just any other metrics we can look to track the scaling up of the sales force over the last year? And then separately, are you baking anything in for adaptive related revenues this year and any metrics you can provide there?

Thanks, Tycho. Yes, absolutely. As you pointed out, we did expand our sales force late '24 and into the beginning of 2025. We kind of see that sort of six- to nine-month ramp-up period and I would say that that's sort of maturing or that productivity of those resources was a big contributor to our success in 2025. And we anticipate that that's going to be a tailwind for us and in the first half of the year for sure as that sort of momentum continues to annualize into this year.

Again, the focus of those resources, they are oncology sales specialists, they're really focusing in on therapy selection and they're going to be supporting our launch from a RaDaR ST perspective in MRD. So that's where the focus is. I would say that those resources are at productivity now, so sort of in strike. The positive is we've seen very, very low attrition as well. So it's not like there's been a high churn or anything.

So I feel we're executing well, and we're starting to see general increased productivity across our entire sales team, not just the 35 that we brought on board in 2025, the sort of entire 140 or so that we have within our complement today.

And Tycho, the only other few points I'll be a little bright for Warren and his team, who may be a little humble here. I think if you look at how that expansion has taken place, there are some proof points that we can look to I mean, first and foremost, you do got to look at that NPS score, right?

To have an NPS score of 79, which is a step up from where it was already, and that had to be based with feedback from oncologists. So I think that is a really positive sign that reaching frequency model is beginning to have an effect. And then within the subsegments of our own data, when you start to see over 14% of oncologists and pathologists are not wording five or more neo tests.

I mean I think that's another proof point that this model is taking effect, and we have now over 40% we estimate of oncologists, pathologists prescribing the five or more tests. I think these things are what's fueling the NGS growth opportunities for us. And I think to take the sales force on that journey over the past 12 to 16 months has been an incredible one and one we're proud of and what we're going to continue to build on.

And then relative to your second question, I would say that from a revenue perspective, we look at the adaptive partnership, much probably more strategically than economically. We see it as an offering that we can offer our customers that offers them then an expansive portfolio of opportunities for us.

Over time, we will see -- we'll be a company that can offer flow MRD, we can we'll have RaDaR ST, we'll have next-gen MRD. And so that whole speed of product, we think, is an important one to offer and to have an outstanding partner like Adaptive is more strategic than I would say it's economic at least for us. but we're going to continue to work and manage that relationship to the best of our ability. Thanks for the question.

Dan Brennan, TD Cowen.

Maybe just to start off, just on PanTracer tracer. I understand the conservatism there. Just any more color about kind of the back and forth. It sounds like it's imminent. But the blood market is growing a lot faster than the tissue CGP market.

So you've had really good success on tissue volumes. Just -- is it just conservatism? Or like what do you expect once that's really dialed in for that penetrate of liquid to grow it from a volume basis?

Yes. I'll kick us off and then Abhishek and Warren could add a little bit more. So yes, Dan, we have responded to all the questions that MolDX had relative to LBx. And so we're just kind of in a waiting or response mode. Now what we have seen is across -- it's not just us, but across the sector, it's averaging about 4 to 5 turns through MolDx for new offerings.

And so that puts us right around four turns right around the 12-month mark. And so that's kind of where we sit today. So we are confident. We see this as a when we get it, not and if you get it. And then that's why we thought, yes, it was prudent to not include revenue for the first half of the year and then just kind of a modest and slow build in the second half of the year.

Anything that would come before that will then be opportunistic upside for us. Relative to kind of modeling at the high level, again, you called it out tissue is ensuing robust growth. We highlighted before the volumes for '23 to '24 doubled.

We saw the same, almost nearly doubling in we're think that's probably a decent predicate as a way to look at LBx over time. And so we look to our total portfolio, of which the PanTracer family is a big driver of that to experience a robust growth again in 2026 and beyond.

It's certainly in line with 2025 and then depending on MolDX time, it could be better than 2025. So hopefully, that gives you a little bit more color. And Warren, don't know if you want to get anything more specific to how you're seeing with LBx and tissue.

Yes. I'd say the point. I think, Dan, you're right that the liquid market is growing faster. But since the launch of Pantracliquid, we've actually seen a good acceleration across the category. We saw increase in utilization of PanTracer tissue.

And we've seen attractive uptake of Pantry and liquid as well. And we feel -- and actually, we launched PanTracer Pro very late last week and expect that to be another inflection point in terms of how this solution for solid tumor therapy selection is positioned for the market. So we're -- I'm very confident in terms of the outlook here it's really just around unknowns with regard to MolDx reimbursement timing, I think, is what you're seeing within the thought process from a guy's point of view.

Yes. We launched PanTracer tissue in end of Q1 in '23 and started to build throughout '23, I mean we really saw a big uptake in the first and second quarter. And that was a big driver of our NGS growth over that time.

Puneet Souda, Leerink.

So just clarifying, given the guide here, is the long-term LRP that you had put out earlier, I believe, 12% to 13%. Is that still in consideration or is that off the table? And then if I look at the same-store sales versus new tests, a 5% revenue per test growth reported versus 7% same-store sales. Can you elaborate on how do you expect to convert these new customers to sort of higher-value test? And how long would that take for us to start to see an impact there.

Okay. So first on the first question, we're not talking to LRP. We've tried to make it clear as we can that taking our feet and firmly planting them in the year we are in. And so I am not projecting it out. I would simply say that I believe that we will this guide, we are very confident in.

I think we will end the year in a very strong position with an accelerated growth opportunities as we head into '27, we would start to then see the full benefit of RaDaR ST and PanTracer LBx coming through the system. So -- but I won't go into any more relative to an LRP discussion. The second question?

Yes. From an AUP perspective, with the guy going on, I think adding those tests and coming in the back half of the year, you should expect AUP will grow as we add those incremental tests over time. And I think that's is kind of a good example of that.

Yes. No, my sense is also that AUP we kind of move into these high-value tests right because in any case, these are going to be priced at a much better rate, and we expect the AUP will grow as we move in this direction.

And as you said, Puneet, so the same store, excluding top line was higher, it was in the mid-single digit in the quarter. And I think over time, adding these tests in the back half of '26 will help drive AUP growth as well.

And please, maybe building on this sort of opportunity to penetrate and how long -- again, coming back to the commercial strategy to protect expand, acquire done a really good job at protecting that sort of hole in the bucket is really something that has improved significantly and the NPS score sort of helps to drive that.

But the expand elements of the strategy is very much around taking new products and sell into existing customers. That's an active part of the strategy. And we do that both on the pathology side of the business, for the TBMs were relevant, but very specifically, on the oncology side as well with the oncology cell specialists. And as we bring on more and more new oncology practices, we typically lead in with a heme solution because that's where we differentiated.

And then we use that as a basis to expand into solid tumor. It's difficult to give you a finite example of exactly how long it takes because every practice is different. But sales cycles here are relatively quick and as soon as we can put sort of interfaces in place to streamline workflows introduced things like PanTracer Pro, we expect that acceleration to -- or the speed to accelerate through '26 and into '27 as well. So the active part of the strategy, I'm very confident in our ability to pull that through based on past experiences.

And just very quickly on the leading with him and then entering with solid tumor into those accounts, could you just elaborate on sort of what do you see as the competitive landscape in tissue today and also liquid obviously, significant penetration in the market, multiple competitors out there. Maybe just give us a sense of how you think you're positioned today in the community setting versus the competition that you're seeing in the community study.

Puneet, I'd say that -- we haven't seen a marked change in terms of what's happening from a landscape perspective on the solid tumor side of things in the community setting where we are focused. As we've said before, we tend to bump into most of the normal competitors in different parts of the country, et cetera.

We find our portfolio to be very well received based on the fact that we focused on actionability and a high degree of service. And that Tony shared earlier that 75% or three out of four new oncologists that try out tend to stay with us. And that's not only unique in the heme side of things that happens through on the solid tumor side of things as well.

So certainly, it is a competitive landscape, but I can't say I've seen any material changes. And we're seeing success on the liquid side of things as well, despite the fact that we're a late entrants. And I put that down to the fact that we have a broad portfolio and physician practices are looking to simplify their workflows and standardize on vendors, and that places genomics in a very favorable position.

Mason Carrico, Stephens Inc.

On MRD for the two indications that you submitted you plan on launching RaDaR for those indications ahead of MolDx approval to start building that volume stream? Or do you plan on launching after you gain coverage?

Yes. As I tried to convey earlier, we're going to stay focused on the two initial indications of head and neck and the subsets of breast in the initial launch period. And then we will expand accordingly as we get MolDX coming through the system. There certainly would be enough on our plate in the short term with just those two, and then we'll build in the latter half of the year.

Got it. And then on the 23% NGS growth in the quarter, could you provide any additional detail, I guess, on how much of that maybe came from the core existing business versus pull-through tied to the path line acquisition?

The bulk of it would still be the existing business with top line starting to ramp is how I would characterize it.

We're certainly seeing increased activity and penetration in the Northeast, but just the central gravity lies towards the other business. So therefore, that's where the lion's share is still coming from.

Mark Massaro, BTIG.

I'll keep it to one. Can you just speak about how we should think about gross margins in 2026? 2025 was obviously down when we put sort of the different increase in NextGen, I could see how there could be a path to gross margins increasing in '26, but -- however, there are some other headwinds as well. So can you just give us a sense if you think gross margins can grow this year? And any ability to quantify that would be helpful.

Sure. Absolutely, Mark, let me take this question. So most of our adjusted EBITDA margin expansion in the current year in 2026 is going to be coming from the gross margin. So we are anticipating the gross margins to expand at about like 100 basis points, and that's going to basically drop to the adjusted EBITDA margin expansion as well.

And there are multiple reasons, of course, on the gross margin expansion as we kind of look at our price increases as well as we rationalize our portfolio to the high value, high margin products as well as the work that our labs are doing to be more efficient, being there.

So the gross margin is expected to improve at about 100 basis points to 120 basis points in 2026, and most of that is going to be drop into our bottom line on the adjusted EBITDA.

Andrew Cooper, Raymond James.

Maybe first, Tony, I think you said you expected NGS growth to look pretty similar in 2016 to 2025. I know the target is 25%. You were almost there but not quite you have some of these tailwinds when we think about an tracer liquid coming on at least in the back half.

I don't know if you'll count MRD in kind of that bucket with NGS when you think about the target, but how do we think about that trending through the year, especially in context of a sales force that will be essentially tripled or quadrupled by the time you're done adding?

Yes. I think as you rightly put it out, we showed about 23% for the quarter, about 22% year-over-year for NGS growth. I would expect that we should be able to do that. in 2026, if not, we do at slightly better than that. And that's going to be driven, as we say, by the momentum of the sales force that we have, the addition of into the portfolio PanTracer Pro.

So we expect that we should do at least as well as we did in 2025. We opportunity debate PEP slightly. And much of that will be dependent on the timing of MolDX. And so I think that's a safe something we take into the year.

Okay. That's helpful. And then -- maybe just lastly for Jeff or Abishek or Tony, if you want to chime in as well. But when we think about that shift of growth being heavier volume versus ASP to the other way around and more ASP or AUP driving that growth? How does that change the way you think about that margin drop through over the longer term?

It sounds like when we think about '26, there's certainly some reinvestment that's probably eating up a bit of the flow through that would be there otherwise. But how does that change the way you think about sort of the long-term trajectory from a margin perspective, if at all?

Yes, great question.

No, that's a great question, Andrew. And that's, I think, the key strategic question that we have with Neo that we have a broad range of portfolio here we have tested like $100, $200 AUP and then we had very high value tests on the NGS side. Now that also basically kind of differentiates us from some of the other specialty diagnostic labs as to how we are thinking about our volumes.

Now when you look at our capacity when we're looking at our portfolio, we would definitely would want to be selling to the customers that are giving us the business, which is not only the low value, but also either there's a portfolio which combines the low-value test with a high-value testing and then that becomes more positive for us.

But if the client is only giving us a low order value trend, this is a natural shift that we do not want to be kind of taking those that particular business.

And that's where you're looking at more carefully as okay, what are those tests that you would want to be in. So from the margin standpoint, in the long term, as we kind of shift towards a high-value, high-margin test, that will definitely be accretive to our gross margins as we kind of also going to be able to improve our operational efficiencies using our lab infrastructure.

This does conclude today's question-and-answer session. I'd now like to turn the floor back over to Tony Zook.

I'd just like to thank everybody for joining us on the call. And I'd also like to thank our roughly 2,400 teammates for their unwavering commitment to our mission and their hard work throughout all 2025. I'm very excited for the year ahead for our company, our oncology position customers and their patients. I look forward to our next quarterly update in April, we will report our first quarter results. Thank you again and have a great day.

Thank you, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.