NeoGenomics, Inc. (NEO) 2026 Q1 法說會逐字稿

Good afternoon and welcome to the Neogenomics first quarter 2026 financial results call.

Please be advised that today's conference is being recorded.

I will now turn the call over to Priya Vedaraman, Senior Vice President of Finance.

Thank you, Matthew, and good afternoon, everyone. Welcome to Neogenomics first quarter 2026 financial results call.

With me today to discuss the results are Tony Zook, Chief Executive Officer; Abhishek Jain, Chief Financial Officer; and Warren Stone, President and Chief Operating Officer.

Additional members of the management team will be available for the Q&A portion of our call.

This call is being simultaneously webcast. You will know that we will be advancing through a brief slide presentation to accompany today's call. We have also made the presentation available on the Investors tab of our website at ir.neogenomics.com.

During this call, we will make forward-looking statements regarding our future financial and business performance, planned future operations, and related expectations with respect to timing and performance, future financial position, future revenue, growth potential and expected growth drivers, projected costs and capital expenditures, prospects and plans, estimated market size and position, and objectives of management and financial guidance. We caution you that the actual event 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 this 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, 8-K that we filed with the SEC.

So 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 referred to certain non-GAAP financial measures that involve 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 referential to the most directly comparable GAAP financial measures in the table available in the press release we issued this afternoon and in the slide deck available in the Investors section of our website.

I will now turn the call over to Tony.

Thank you, Priya, and welcome, everyone.

For those of you who are relatively new to the Neogenomics story, let me review our investment thesis. We're a pure-play oncology solutions company, leveraging our strong heritage in hematology with pathologists and community hospitals, where we enjoy a leading 25% share across diagnostics and therapy selection. We believe we're highly differentiated from large reference labs as well as specialty diagnostic companies in two regards: the depth and breadth of our portfolio and a relentless focus in the community setting. We believe in the power of our portfolio and see it as a point of competitive distinction and advantage.

We reentered the MRD space with RaDaR ST which we will discuss momentarily, allowing us to address a $20-billion market opportunity where we will continue to leverage our ambition to be a partner of choice among community practices. And importantly, we believe we're well-poised to deliver consistent double-digit revenue growth. As mentioned, it's our desire to be a partner of choice in the community from diagnosis to recurrence monitoring. Our foundation and strength in hematology and diagnostic testing affords us a strong platform for growth. We have and will continue to be purposeful with our portfolio transformation as evidenced by our product launches enabling our penetration into the $13 billion therapy selection market and now with RaDaR ST, we've reentered the $20 billion MRD market, both of which are enjoying robust growth but are still relatively modest in penetration rates. This portfolio's transformation is evident in our selling performance. The five NGS products we launched in 2023 that we have consistently tracked contributed 25% of our clinical revenue in Q1.

So with that, let's highlight some of our key performance metrics for Q1.

During the first quarter, we again delivered double-digit revenue growth, reflecting our ability to generate consistent and predictable sales. Total revenue for Q1 was $186.7 million, representing 11% growth year-over-year, exceeding our guidance. Adjusted EBITDA of $9 million increased 27% over the first quarter of 2025 and the adjusted EBITDA margin increased approximately 60 basis points year over year. Our clinical business continued its robust growth, with revenue increasing 14% year over year to $171 million. Clinical performance was driven by effective execution of our commercial strategy, enabling volume growth and share gains in all segments of our business. In this quarter, we again saw an improvement in AUP, which reflected an 8% year-over-year growth and volumes growing 6% year over year.

Turning to NGS, revenue grew 26%, well ahead of the NGS market growth rate, driven by strong volume and AUP growth. Our NGS business now represents about a third of our total clinical revenue. Moving forward, we believe the addition of PanTracer liquid biopsy to the PanTracer family, combined with ongoing investments in our field force size and capabilities, will help us to sustain above-market growth for this part of our portfolio.

The momentum with which we exited 2025 continued into the first quarter. As we have shared, we continue to see above-market growth with our non-NGS clinical business, which should continue to grow in the mid-single-digit range as we take share across all modalities. Importantly, and in line with our overall strategy, our NGS business is scaling at a rate that is 3 to 4 times faster than our core clinical business.

We're often asked, how do we win in the community setting, and is the growth sustainable? I'm going to ask Warren to step you through our commercial strategy and give you some insight into our early launch experiences with the PanTracer family and RaDaR ST.

Thank you, Tony, and good afternoon, everybody.

Our primary focus is the community setting where approximately 80% of patients seek treatment so they're close to their support structure. Additionally, most patients live an hour or more from the nearest NTI-designated cancer center. To start, we believe that community oncologists prioritize historic patient management and prioritize certainty over possibility. Guidelines drive their decision-making and ensure actionability, with large patient volumes and resource constraints that choose partners that reduce friction and support confidence in treatment decisions.

Secondly, our leadership in hematology, where we hold greater than a 25% market share, provides trusted access and creates strong foundations to expand adoption of our broader portfolio.

Third, rapid test results directly impact patient outcomes, and our balanced lab network enables industry-leading turnaround times. The Pathline acquisition strengthened our Northeast presence and grew at 1.5 times our national average, demonstrating the power of local scale to drive service and growth.

Finally, our portfolio spans over 500 tests across diagnosis, therapy selection, and MRD, positioning us as a true partner in patient management. We have developed over 330 interfaces, including the recently announced Epic Aura, which were published third-party research could drive a 20% to 30% increase in test adoption per site. This position is also supported by a broad commercial payer network of more than 300 contracts. Also minimizing friction for both providers and patients. In summary, we simplify the complexity of oncology diagnostics so physicians can focus on delivering the best possible patient care.

Turning now to RaDaR ST, a circulating tumor DNA assay with exceptional sensitivity for early detection of molecular residual disease. In late February, we announced the full clinical launch of RaDaR ST, which has detection as low as 1 ppm. The launch targets two approved indications, HPV-negative head and neck cancer and a subset of breast cancer. In addition, we have submitted to MolDx for reimbursement in two additional cancer indications, which, if granted, would more than double our market opportunity. Early insights from the RaDaR ST launch to date are very encouraging. Approximately, 29% of customers who previously used RaDaR 1.0 have ordered RaDaR ST since launch. Additionally, 34% of RaDaR ST Orders received include additional NEO tests. All test results to date have been delivered faster than our published turnaround times.

RADAR-ST represents a very important advancement in MRD testing, and with its clinical launch, we now offer a comprehensive solid tumor solution spanning diagnosis profiling, therapy selection, and MRD. Looking ahead, we are focused on targeted R&D investments in whole genome sequencing, including our next-generation MRD assay and whole genome solution for heme. The strengthening of our pipeline increases durability and positions us effectively to address future market needs.

Our next-generation MRD platform is progressing well with data generation expected next year and a potential launch as early as 2028. In parallel, we're advancing our non-clinical portfolio to meet the evolving needs of the pharma. This includes expanding our MRD offering with an off-the-shelf single-tube AMR flow panel designed for broader applications across CLL, BALL, and multiple myeloma as well as enhancing our AHC menu with five new CDX-relevant markers.

Turning to our PanTracer portfolio. Our integrated solution with solid tumor therapy selection, designed to combine tissue and liquid testing to deliver confident, actionable insights for real-time treatment decisions. PanTracer liquid is a non-invasive blood-based test that analyzes circulating tumor DNA to identify key genomic alterations that inform treatment decisions in patients with advanced-stage tumors. With MolDx reimbursement received, we expect revenue contributions to ramp throughout the year.

The expansion of the PanTracer family with PanTracer Pro turns a very fragmented tumor physician workup into a coordinated and accelerated workflow from a single sample. It fully integrates the therapy selection workflow by combining comprehensive genomic profiling with immunohistochemistry and other auxiliary tests, allowing oncologists to manage the entire cancer diagnostic workflow from a single requisition and sample. This allows for foster test turnaround and a more timely clinical decision-making.

Slide 13 illustrates a typical PanTracer workflow. After the test requisition is received, the pathology report is reviewed and ovarian cancer diagnosis is confirmed. The OncoTree then identifies the guideline-relevant add-on tests. In this case, five medically necessary assays, including the recently launched PD-L1 22C3 FDA for ovarian carcinomas are included. The slides are prepared and the test is performed.

The add-on results were reported to the physician by day four and the NDS results were reported on by day eight. As part of our greater market strategy, we have expanded our sales force to increase reach and frequency and accelerated penetration in therapy selection and MRD markets. The commercial expansion capital worth the only MolDx-approved HPV negative test currently available positions us to accelerate adoption. We plan to add roughly 25 sales resources by the third quarter of this year to support the launch and penetration of RaDaR ST and two new indications, which we have submitted to MolDx.

In summary, we are very pleased with our performance, both financially and strategically in the first quarter, and we are excited for the business levers that are available for us to drive improved and accelerated financial performance in the future.

With that, I'll hand over to Abhishek to further discuss our results for the quarter.

Thank you, Warren, and good afternoon, everyone.

In my remarks today, I will discuss our first quarter financial results and revised 2026 guidance.

We reported total revenue of $186.7 million, up 11% year-over-year, driven by clinical revenue of $171.2 million, which drove a strong 14%. This performance was driven by healthy underlying demand with volumes up 6% and AUP increasing 8% as compared to the same quarter last year. Same-store revenue, excluding Pathline, was $167.9 million, representing 12% growth versus the prior-year period, driven by a 3% increase in test volumes and a 9% increase in AUP. Importantly, both teams at test volumes and AUP growth performed at the high level of our expectations, despite the anticipated impact of strategically exhibiting a high-volume low-value contract.

Most encouraging is the ongoing mixed shift towards the high-value testing driven by strong performance in our NGS business that was up 26% year-over-year and now represents approximately one-third of our clinical revenue. Our targeted investments in the sales team are delivering tangible results and supporting this continued momentum in our NGS business.

Further, this favorable mix shift towards high-value testing is also contributing meaningfully to drive AUP growth of 8% year-over-year. AUP increase was also supported by our (inaudible) initiatives, including managed care pricing gains and improved pull-through.

Turning to our non-chemical business. We reported $15.5 million in revenue, a decline of 15% year over year, primarily driven by expected softness in pharma. Our ODx business delivered double-digit growth that helped partially offset the declines in pharma. We believe that we are near the bottom for this business and expect to see sequential growth in the back half of the year.

Adjusted gross profit improved by $7 million or 9% over the prior year and adjusted gross margin was 46%, down 80 basis points as compared to last year. As expected, the decline in the gross margin in the first quarter was primarily driven by the dilutive impact of Pathline acquisition and the launch of PanTracer liquid Prior to MolDx approval. Together, these factors represented approximately 150 basis points of headwind in Q1 of '26.

In addition, we were impacted by high trade costs and fuel surcharges due to the geopolitical situation. These headwinds were partially offset by the gross margin expansion, primarily driven by AUP increase and lab efficiency. Looking ahead, we continue to expect gross margin expansion of approximately 100 basis points year over year in 2026, driven by our lab of the future initiatives, which includes strategic sourcing, digital pathology, lab automation, and platform updates. We also expect margin progression to benefit from easier compares in the coming quarters.

Total operating expenses in the quarter were $99 million, a decrease of $2 million or 2% from prior year. We plan to make targeted investments in our sales and R&D functions to drive clinical test volumes and higher AUP, while continuing to improve leverage in G&A, which we expect to continue to decline as a percentage of revenue. Adjusted EBITDA was $9 million, up 27% year over year and the adjusted EBITDA margin expanded 60 basis points. This margin expansion was driven by operating leverage in our G&A function that more than offers the segments from adjusted gross margin reduction.

Cash used in operations was $8.1 million in the quarter, down from approximately $25.3 million in the same quarter last year. We ended the quarter with total cash of $146 million. Our goal continues to be free cash flow positive this year.

Turning now to our 2026 guidance, considering our strong first-quarter revenue performance and earlier than assumed MolDx approval of PanTracer liquid in March, we are increasing our full-year revenue guidance to a range of $797 million to $803 million, up from $793 million to $801 million previously.

The key assumptions underlying the midpoint of our revenue guidance are as follows.

First, no change in RaDaR ST revenue assumptions, which remains in the mid-single-digit millions.

Second, we expect PanTracer liquid revenue to be in mid-single-digit millions following MolDx's approval in early March.

Third, no change in revenue assumptions for our non-clinical business, which we expect to be down low- to mid-single-digits year over year in 2026.

Regarding the quarterly cadence, we now suggest modeling approximately 9% year over year growth in the second quarter, up from 8% to 9% range previously discussed, followed by 9% to 10% growth in the third quarter and above 10% in the fourth quarter of 2026.

Turning to gross margin, no change in our guidance, and we expect approximately 100 basis points of gross margin expansion in 2026, given by a combination of factors we discussed earlier. Still maintaining and reiterating our full-year 2026 adjusted EBITDA guidance of $55 million to $57 million, representing year-over-year growth of approximately 27% to 31%. As discussed previously, adjusted EBITDA was impacted by high freight costs and fuel surcharges due to geopolitical environment. We have taken actions to offset these specialists by remaining committed to our previously communicated adjusted EBITDA items.

With that, let me turn the call over to Tony.

Thanks, Abhishek.

Reviewing the significant catalysts for the year, I'm very pleased with our progress to date. We launched RADAR-ST in head and neck in a subset of breast cancers, and we received MolDx reimbursement for PanTracer liquid biopsy, and we continue to drive NDS growth well ahead of market growth rates.

Looking out for the remainder of the year, we anticipate MolDx reimbursement decisions for two additional RaDaR ST Indications, which, if granted, would double the population of patients eligible for this advanced MRD test. We're also advancing plans to expand our sales force by the third quarter to capture these additional opportunities that are emerging in advanced cancer testing. Taken together, I believe these catalysts form a solid foundation from which to drive future growth.

I'll close by outlining how we're driving accelerated financial performance through disciplined execution across our key business leaders. The launch of RADR-ST and MolDx approval for liquid biopsy have opened up large addressable markets and we're focused on driving adoption alongside continued expansion into new indications and advancement of our next-generation MRD programs. Commercial initiatives across sales, pricing, and payer coverage are improving access and monetization, while ongoing investments in automation, platform upgrades, and lab optimization are enhancing efficiency and scalability. Together, these efforts position us well for sustained growth in 2026 and beyond.

Thank you for your continued interest in Neogenomics.

And operator, this concludes our prepared remarks, so please open up the line for questions.

(Operator Instructions)

David Westenberg, Piper Sandler.

Congrats on all the growth.

So I want to focus on the positive here. The NGS growth has been robust. You've been tracking in the mid-20s% for a long time, but you know you are facing difficult comps. As we model the durability of the growth algorithm, can you talk about NGS predicated on or growth predicated on PanTracer liquids versus tissue? How should we see that mixed growth? Can that help you sustain kind of that 20% range? And then secondly how do we think about the AUP over the next couple of years as this starts to ramp? And I'll ask one small follow-up.

Okay, Dave, so thanks for the question. I'll kick us off and then Warren can fill in some color as well.

First, on the sustainability of NGS, I appreciate the question, right? I mean, we are showing really good growth in NGS as we said, 26% revenue growth, and that was driven by 16% volume growth. If you turn back the hands of time, we closed last year, I think 23% in the quarter of Q4, and we did 22% for the year. And at the time, we said, we thought that we were -- be able to sustain that at a minimum, if not even beat it with the addition of PanTracer LDX.

And so, we. Look at where we sit right now, Dave, when we feel very good. The early products that we've launched before, they were up to 25% of our clinical revenue in the quarter. Early days of PanTracer are showing really good signs for us. Warren can go into a bit more detail on PanTracer LBx, but even PanTracer Pro, which was introduced in the mid of February, we're seeing it now almost cover 10% of PanTracer volume, which is exciting because it's captured 15% of new users today. So we absolutely do think that it's sustainable and with the addition of liquid biopsy to the family, we think it can go even further.

And with that, maybe I'll turn it over to Warren to a little bit more color on LBx, and then we'll get to the AUP.

But you've covered a lot of ground there, Tony. I said that the PanTracer family for us, we really look at the category growth overall because the tissue in the liquid get used sort of concurrently or certainly as a reflex to QNS TMPs that might take place on tissue or as a standalone. So this is really, really versatile. And we are encouraged by the attractive growth that we've seen from the category overall, including liquid.

And if you look through, you would have seen a graph in the presentation which shows 16% volume growth but a 26% revenue growth. And that acceleration in revenue growth is coming because we're moving towards the larger CGP panel that's driving the growth and that's also helping the AUP. So to your question on our sustainability to stay above the sort of the 20% mark, certainly PanTracer liquid, but PanTracer family as a whole is going to be a key driver for us.

And then, Dave, on AUP. Again, very, very strong performance there. We were up 8% year over year, and I would say that's indicative of the strategy, right? We've been very purposeful saying that we are going to drive growth with that NGS portfolio of ours. And so increasing it as a percentage of our business, which is now up to a third of our business, and when we're growing it, that's going to have a big contributing factor to AUP. But I would say as well, about half of it is driven by the great work that the team does behind the scenes on the RCM initiatives.

We talk about the 300 contracts, but we look at those contracts all the time and every opportunity we have to increase price there, to do direct price increases, and all of those initiatives add up. And so we believe the AUP is also sustainable this year. And again, about half of that is driven by mix and the increased volume in NGS, and about half is just good work behind the scenes.

Maybe one final point just as kind of the icing on the cake with AUP while NGS is the big driver there, Dave, and I know that's how you were focused the question good news is we're seeing AUP increase in contributions across all of the modalities and so it's not just NGS that's contributing, it's the portfolio.

Got it.

Actually that was a really long answer, so I mean long answer so I'll just hop off thanks so much.

Tycho Peterson, Jefferies.

Maybe one for Abhishek just on the guidance raised. In the past, you've gotten over your skis with raising guidance to cut later. I guess, why not banks the beat and de-risk the remainder of the year? Or conversely, can you point to what's trending more positive with the April data points, the new launches, obviously, you've talked to but maybe get us comfortable that guidance is still conservative and beatable here?

Yeah, sure. Be happy to. And then, again, I'll let Abhishek jump in on the details.

Relative to the guidance cycle, you're right. We want to maintain the philosophy that we shared with you, right? And that is when we issue our guide, you asked us to only speak with a high degree of confidence, not just with the center point of that guide, but making sure we get to the upper end of that guide at a minimum. And we've taken those factors into consideration with this guide.

What are the positives? What do we look towards? So, again, 11% revenue, but it was driven by 14% clinical revenue growth. And so that is certainly a driver and the NGS is a driver for us to be certain. And so based on the middle of that guide, where do we see potential opportunity and where is there some risk? I would say the opportunity is certainly with the NGS portfolio with emphasis on PanTracer LBx, getting another quarter of opportunity to drive revenue, getting out in front with commercial payers. If we can plow that field well, we think there is probably upside opportunity associated with the guide relative to PanTracer LBx.

We think that there is potential opportunity as well in our non-clinical business. It's way too early to spike the football there, which is why we still want to be relatively conservative. But we're seeing early signs that in fact, we're planning and hitting what we said, which would be kind of that low-single-digit erosion on the non-clinical side, so there's some risk there that we think that it's taken into account at this point.

I guess the other area of opportunity for us would be even better uptake with RaDaR ST but again, we're playing this one right down the middle, Tycho, with the single millions in the middle of the guide. And I guess if the additional indications were to come on board sooner than we thought, that could represent some upside. And so we do see some potential risk, which would be on the non-clinical side, that's not a news story to you, but we see the rate of decline of that business beginning to slow and activity beginning to pick up. And so on balance, we would say there's probably more opportunity than downside against what we've shared with you today.

Does that help?

That does.

Another question is you lap Pathline next quarter, I guess, how do we think about the volume growth as you lap that, you grew volume was 2.8% ex Pathline, is that kind of the right run rate for the business? You're rolling off the big lab contract, so how do we think about just lapping Pathline?

Well, I think the most important element, and I'll ask Abhishek if you can get into his very specific question on volumes. I've gotten to the point where I probably look less at the actual volumes associated with just pure Pathline because I look at more than Northeast because that was the strategic purpose of having it. And what we have seen is our growth rate in the Northeast region was 1.5 times faster (laughter) than the other regions, and that's a first for us. And so we see the strategic benefit of serving those customers coming through, so our total value associated with Pathline in the Northeast region is absolutely increasing on plan, albeit the actual volumes might be down just a little bit because the non-oncology, I'll let Abishek take some of that.

Yeah, let me also kind of talk about the overall volume picture there, Tycho, right, because we basically guided low-single-digit for the full year, we came in at about 6% growth for the first quarter. And as for the guidance, what we are saying that the second quarter is going to be flat issue over your growth standpoint, but what's the start to happen from now onwards that we'll start to see a sequential growth in our volume in Q2 onwards? So that's a good part, right, but a lot of the work that for the revenue growth is going to come from the AUP in our remaining quarters for the year.

We are basically trying to kind of explore exiting this high-volume, low-value contract as we kind of look into Q2 and Q3. Q3 '25 was the peak quarter for this particular one contract, and that's the reason we'll have those headwinds in Q2 and Q3. But overall cases, from the overall revenue growth standpoint, as Tony pointed out, on the clinical revenue, we are growing a strong 14% in the current quarter and our guide basically still keeps us about 11% above growth for our clinical business for the rest of the year.

Okay (multiple speakers) one last quick one.

Obviously, you said maybe just on the convert, you burned $14 million in cash, you have $146 million in cash, and $342 million convert through January 2028. Can you maybe just quickly touch on plans for that, and then I'll hop off.

We are actually discussing with many of the leading banks on the convert refinancing and everybody has told me that this has been a good market 2025 and what we have seen in 2026. We are hearing that there will not be any challenge in terms of refinancing the convert. We are trying to basically make sure that we are able to get the currency of our stock, which we believe is highly under-appreciated kind of come back to a level where we feel that this is the right time for us to kind of do the refinancing. But in any case, our time is to get the refinancing done in the second-half of the year. We do not want to leave this open for fairly late in the game.

Puneet Souda, Leerink.

So first one, just wanted to see if there was any weather impact in the quarter and if you are expecting any -- as a result, expecting anything in 2Q for that.

And also on the NGS side, how should we think about the ceiling, it's a third of your business, it's growing rapidly in the community setting. Just trying to understand, overall NGS, what's the ceiling there? And I assume that NGS is all of the solid tumors. Can you clarify the boundaries of NGS? What is included in NGS and what is not?

Sure. So, Warren, you'll take a crack at the NGS one and on the weather. Just to be clear, when we issued the guide, as you just rightfully pointed out, for the first quarter, we had already indicated what we anticipated to be the weather impact, and it came in pretty much as we expected. And so we don't see any drag or any issues moving forward through Q2.

And relative to the NGS question?

So, I mean, how we're defining NGS today is simply it's NGS for our heme cancers and it's NGS for our solid tumors. Largely fitting within the therapy selection vertical. At the moment, even though MRD runs on an NGS backbone, we're probably going to carve that out. So the 26% growth that you see, that excludes MRD.

In terms of the outlook, I mean, I'd say we'd be disappointed that if in the mid-term this is not more of the 40%, it's sort of how you need to think about that. This is definitely the growth engine of business. You can see the trajectory since 2022 and the portfolio that you've added in 2023 and have continued to add is going to continue to fill that growth in the sort of 20% mark.

Got it.

And then just to follow-up on, there's obviously a lot of discussions about repeat use of CGP Liquid. There's trials, ad comms, other things that are taking center stage. When you think about the setting you're serving, when do you think you can start to see some benefit from that, just given sort of the timing it takes for your test to be recognized by the market you're serving?

Yeah, so I think interestingly enough, we've already seen some repeat testing on liquid biopsy ready. So that's encouraging. And I think as the scale continues to grow in the second half of the year, as we outlined, we expect to see some repeat testing here as well, which is encouraging. And we also anticipate that as we put more and more patient programs into place to support RaDaR ST that we can obviously also layer some of those workflows and those applications into liquid biopsy as well. So this is certainly part of that growth assumption that you asked about earlier that will help to continue the momentum.

Bill Bonello, Craig-Hallum.

I wanted to ask a little bit about the PanTracer Pro program and just kind of how that works and what you're what you're seeing on that front, so am I understanding this right that somebody checks that box and then based on what you see in sort of maybe an AI-driven algorithm along with the pathologist's experience, you make a decision about follow-on tests that should be ordered or what complete set of tests should be ordered. And can you give us -- you showed a little illustration where you showed one example, but can you give us a sense of comparison in maybe value when physicians are ordering that option versus when they're just selecting a straight-up panel.

So I think you've outlined the workflow pretty well. But I think coming back to you, one of the things that we try and do is we try to take friction out of the system. We want to make that sort of ordering experience as easy as possible. And whether you choose to requisition this through a bidirectional interface, a portal, or paper, it's exactly that. It's a one-tick and that's it and the requisition will arrive in our lab.

And again, this is in the therapy selection vertical, so there's typically a diagnosis that's taking place already that's the path report that gets read and this algorithm then determines based on guidelines and what's medically necessary, this is a key aspect, what additional add-on testing should be performed based on that specific diagnosis. So one add-on testing will vary based on the diagnosis. And the example I shared was ovarian and we added on five additional tests, including that new PD-L1 for ovarian carcinomas.

So the system does that automatically. We then run the -- we cut the slides appropriately because the number of slides that you would cut would be dependent on the number of add-on tests. We will do the testing. We report out the results for the add-on testing as soon as that is available and that's typically before NGS. And the reason why that's valuable is you can get the first indication around what therapies you may want to put somebody on. And then once the NGS is available, which is typically three or four days thereafter, we'll submit the NGS results to the physician as well so that they have a complete package and they can make a more holistic informed decision from a treatment perspective.

In the past, a physician could have done that themselves. They could have figured out using that ovarian situation. They could have figured out that I want PanTracer tissue and I want these five markers. They could have done that manually, but the reality is in the community setting, very few actually have -- they're seeing so many different patients with different indications. They don't know that that well. So they would typically send PanTracer in and then potentially send a second requisition at a later stage to do some add-on testing. So that just takes longer. It exhausts more sample. So this really has a lot of efficiencies. And it also does typically result in an additional add-on testing, which has a revenue component attached to it. But I want to stress it's only what's driven by guidelines and what's medically necessary.

Mason Carrico, Stephens.

This is Ben on for Mason.

Could you help us enrich Q1 reported AUP to the underlying core AUP after adjusting for that low-value contract? I believe some remaining volumes of that contract were expected to flow through in the first quarter here.

Yeah, I will take that one question, Ben.

So we basically view our AUP by 8 percentage and year over year, excluding fast line, the number was 9% and if you were to exclude the impact of the high volume low value contract. Then I would say that it did not impact the AUP change as much because the numbers of tests, they became basically became a smaller number and there was a little bit of growth in the AUP that we have seen as we had moved away, like as we had progressed in 2025 from Q1 onwards.

For the high-volume, low-value test, about a point or so in the overall AUP growth. Our AUP growth was primarily driven by, as Puneet pointed out, because of the high mix of our high-value testing, which has been part of our strategy, the NGS growth as well as the impact of our teamwork that we have done.

Got it. That makes sense.

And then, on the two additional radar MolDx submissions, has anything changed there in your confidence or the expected timing of when you could get those decisions? Is prior to your end the right way to think about those?

It is, yeah, and that's been a consistent assumption that we've shared with you, so yeah. We submitted at the close of last year. We anticipate those could be available to us by the close of this year, which is why we're gearing up the sales force in anticipation of being able to address those in the second half of the year.

Subbu Nambi, Guggenheim.

What percentage of liquid biopsy orders today are Medicare versus commercial? And what's the realistic timeline to getting meaningful private payer rates? The reason I ask is the rate 3289 fully loaded cost to deliver, how much would it -- is it accretive to gross margin from day one, or is there a scale threshold you need to hit first?

And I have the same question for RaDaR ST as well, the impact on gross margin from day one to like when it runs.

Yeah, sure. Subbu, let me take this question for the liquid because we have not like seeing all the volumes since our like soft launch, I would say, in the second half of the year -- last year. We are going to basically push on a whole cylinder sound to push the volume. So I'll use PanTracer tissue as a proxy to provide you that payer mix. So, we basically have between the Medicare and the client bill, the red client bill, about 40% that you will basically get paid and then about 10 points of Medicare advantage and the other 50 is commercial payers.

And to your point, what we believe that we will start to get paid on the 40% that I first talked about was the (inaudible) and Medicare. And on the commercial, this is a process, right? As you know what we have seen how this process plays out, there will be a time, which -- it will take some time as we start to get the coverage and policy. My sense is that given the fact that we already have contracts with like 300 of these payers, that will definitely give us like a seat on the table and we'll be able to push through this one relatively faster, but this will take some time.

(multiple speakers)

Coming to the RaDaR, the mix is slightly different. I would say that's where Medicare is about 20% to 25%, and then you have Medicare Advantage, which will be 10% to 15%, and the rest will be commercial, and the Medicaid a little bit there. So that's where this plays out. So the overall payment rate for RaDaR, as in any other competitor that have seen this particular space, they're going to be starting to get paid on the Medicare, and then we'll have to start preparing the coverage for the commercial payers.

Got it. Thank you so much for that, Abhishek.

And Abhishek, just to put all the numbers together, the low contracts that you guys had, the rationalized volumes, were they largely Pathline volumes, or this has got nothing to do with Pathline volumes, these were just other contracts?

No, not Pathline volume, Subbu, because what I had called out that of our overall volumes in 2025, roughly $1.35 million, we basically said that this high-volume, low-value contract was about 3% to 4% of the overall volumes. Pathline is much more smaller, right, from that standpoint, so this was a different contract.

Dan Brennan, TD Cowen.

Maybe first one, just on the guide. Could you just speak to a little bit for Q2 and for the year? I think for the year you kind of spoke to it but just NGS, ex-NGS, kind of what are we expecting for Q2 and how does it look for the full year?

Yeah, so what we are guiding for the portfolio is $800 million at the midpoint. And for Q2, the revenue growth is going to be 9% year over year as compared to the 8% to 9% that we had guided the last time. It's basically adding more dollars in our Q2 because of the more DX approval for liquid, and that's the reason the guide goes up for the second quarter. For NGS, what we have basically called out, excluding liquid. We are going to be in line with what we have seen in 2025, which is about 22%, so that's the part in the NGS.

Now, if I were to step back and what Tony was saying that this is a code and guide, this gives us a high degree of confidence to be able to kind of hit the midpoint of the guide, but at the same time, we believe that we should be able to come in better as compared to the mid-single-digit millions on the liquid, we'll be disappointed internally if we don't actually do better there.

So there are some upsides there, as well as I would say on the NGS that we have been growing at 25%, 26%, and our guidance is basically 22%, 23%. If you're able to kind of see the silver kind of growth on the NGS, then that could be another website. So again, my takeaway on this one is that from the guide, midpoint standpoint, this is prudent, but it gives us the opportunity to be able to kind of come in ahead if what we are anticipating internally what is going on there.

Got it.

So 2Q NGS could be 22%, just like it is for the full year. Okay (multiple speakers) Okay.

You called out in the prepared remarks about Epic Aura and the upside that other players maybe have seen, or I forget how you termed experience, the volume uplift. Like, just remind us where you are, what are you seeing so far, what's baked in, and what would get you to see that kind of uplift? Like, what needs to happen?

We launched -- we went live with our first customer earlier this month. So and the beauty of Epic Aura allows for a significantly faster implementation with customers, so we're targeting the Epic Aura implementations for therapy selection and MRD, and we've got a robust pipeline of accounts that we're looking to activate with Epic Aura in (inaudible) all the way through the year. So I'm certainly hoping, expecting to see that uptick as the year progresses. And this is one of the key levers in terms of sustaining this high NGS growth rate that we've been talking about and also will help to drive demand for RaDaR ST as well because the certified workload that it'll bring.

Got it.

So some of the benefit is baked into the guide. It's not like -- there's potentially upside if you're successful with these account activations. Is that the right way to think about it?

I would say that if we're able to accelerate the implementations based on what we've put in the guide, there's upside there as well. We also, if the call-through is as significant as what was articulated in these independent studies that were done, I think there's upside there as well. We didn't assume that we would see that radical uplift, but there certainly are studies that point to that.

Michael Ryskin, Bank of America.

A couple of quick ones. One is, maybe as part of your answer to Dan just now some of your comments on growth expectations through the year, both of NGS and non-NGS. What's the implicit contribution from some of the sales force expansion? I just maybe wondered if you could, comment on the sales force edition more broadly, if that's playing a role in the second half, is that more of a twenty-seven benefit? Just how to think about that.

Well, I think about the sales force as being actually quite productive for us, Michael. I think if you look at the size of our sales force and the size of our spend, we're probably relatively under-indexed versus many of our competitors. We got a sales and marketing ratio is probably somewhere around 13%. And if we look to just the oncology, the OSS team being in the 50s, that is a relatively low number, but yet they have proven to be quite productive, right?

So the share gains that you have seen with the NGS portfolio is proven in large part by that increased penetration into the community oncology space. And so we do see the sales force as one of the levers for us to continue to drive growth. We also see it as an opportunity for us. You take a product like RaDaR ST and you see the relatively low market penetration rates, we think we can contribute there. And so we do see the sales force as an ever-increasing opportunity for us to continue to drive growth. And we will be selective in how we continue to expand and grow that side of the business because we think it is a large revenue driver opportunity for us.

What we always have to balance, Michael, is not overly disrupting customer relationships that are established as well. So we tend to take kind of a very thoughtful process system when we add them and how we add them, but they are clearly a growth driver for us. I don't think we'd be where we are today with 26% growth had it not been for that investment that was made a year ago.

All right. And for my follow-up, I just kind of want to make sure I'm doing the math right. We're kind of calculating like direct Pathline contribution. It continues to step down and kind of stepped down a little bit more this quarter. I heard what you called out on the call in terms of the benefit in the Northeast and the more broad uplift to the portfolio. But just anything specific to call out there? I mean, do we expect that to continue or is that the weather impact in the quarter? So I'm just sort of taking the Pathline (inaudible) Pathline volumes on the math, right?

Well, listen, I'll start us off and then Warren or Abhishek can jump in. Again, it shouldn't be a surprise that there might have been a slight step down in the volumes associated with Pathline because we were exiting some of that non-oncology business, and so that certainly had an effect. And then, of course, we're doing a lot of work here on load balancing. We want to make sure that the tests go, not necessarily -- they don't always have to go through Pathline. They can be ordered and be run down through Fort Myers or AV. And so load balancing comes into play. That's why, honestly, I don't put a lot of stock into what is directly attributed just to Pathline. It certainly delivered what we expected in its range of revenue, but the growth driver that we see in the Northeast, that is the catalyst.

Warren, you can maybe add a little bit more comment on that.

The third aspect that I would say that you didn't touch on is the Northeast was probably the area that was most affected by weather in the first quarter. So that's the third factor. So you've got weather, it's non-oncology business that we have no interest in entertaining, so we're stepping out of that business. And then the third dynamic is we're leveraging our lab network to provide the best possible turnaround time. Also try to scale where possible. So some of the testing that was historically done in the Ramsey lab, the Pathline lab, has moved to other parts of our network.

Overall, I'm very pleased with the development we're seeing so far. That 1.5 times market growth in the Northeast is really encouraging, particularly based on some of the trends we're seeing historically.

Mike Mattson, Needham.

Yeah, thanks. So I thought I heard you guys say that in the -- within the NGS business, there's some price benefit. So obviously, I mean, I know that the NGS is growing as a part of the overall mix and driving price, but like, is there some positive pricing mix happening within that NGS business and what's driving it?

No, absolutely. So, only in this business, what we have called out that this business grew 26%, 16% of that was driven by volume and the other 10% came from the increase in the AUP. And as we were discussing that AUP increase has been on account of some of the RC initiatives that we have put in place. But at the same time, we are seeing the increase in the CGT panel in the NGS business as we move from the single panel gene test. So that is basically kind of again moving towards the high value testing, which is helping us drive the AUP high.

Okay. And then the $20-billion MRD market, when you get these additional two indications covered, and you're at [four], and I think you said that would double the available market to you. So what portion of that $20 billion will you be covering?

Based on again, this is obviously somewhat subjective, but based on the analysis that we've done, we'll be north of 45% of the market across those four indications.

Thank you. That concludes our Q&A session. I'll now hand the conference back to Tony Zook for closing remarks. Please go ahead.

First off, I'd just like to thank everybody for joining us on the call. I'd also like to thank our roughly 2,400 teammates at NEO for their continued hard work and unwavering commitment to our mission. With meaningful additions to our therapy selection and MRT test offerings during the first quarter, I'm very excited for the year ahead, as well as 2027 and beyond, because these high-value tests represent a growing portion of our clinical business. I look forward to our next quarterly update in July, where we'll report our second-quarter results.

Thank you again, and have a great day.

Thank you. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.