Personalis Inc (PSNL) 2025 Q4 法說會逐字稿

(Operator Instruction)

It is now my pleasure to introduce your host, Caroline Corner.

Thank you. You may begin.

Thank you, operator. Welcome to Personalis fourth quarter 2025 earnings call. Joining today's call are Christopher Hall, Chief Executive Officer and President, Aaron Tachibana, Chief Financial and Chief Operating Officer, and Richard Chen, Chief Medical Officer and EVP R&D.

All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements within the meaning of US securities laws, including any statements regarding trends and expectations for our financial performance this year and longer-term, cash runway and liquidity position, revenue expectations and timing, size and booking of orders, products, services, technology expansions of clinical volume, reimbursement goals, the outcome and timing of reimbursement decisions, expectations for existing and future collaboration activities, cost expectations, market size, and our market opportunity and business outlook. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. We encourage you to review our recent filings, including the risk factors described in our most recent filings. Personalis undertake no obligation to update these statements except as required by applicable law.

Our press release with our fourth quarter and full year 2025 results is available on our website www.personalis.com under the investors section and includes additional details about our financial results. Our website also has our latest SEC filings which we encourage you to review. A recording of today's call will be available on our website by 5 p.m. Pacific Time today. With that, I would like to turn the call over to Chris.

Good afternoon everyone.

Thank you for joining us to discuss our fourth quarter and full year 2025 results. As we stand here at the beginning of 2026, I'm incredibly proud of the progress our team made over the past year and the momentum that we have today. 2025 was the year we validated our winning MRD strategy. 2026 is the year we expect to scale.

Physicians increasingly trust our next personal test. Our clinical volumes are building, and our strategic roadmap is being validated by the medical community.

For those listening in for the first time, Personalis is a leader in MRD testing services, and we're helping patients, partners, and doctors see more in cancer samples. We operate at the leading edge of MRD sensitivity. Our ultra-sensitive next personal test is capable of detecting approximately single fragment of tumor DNA in a million.

This is not merely a technical improvement; it's a clinical necessity. This level of sensitivity allows physicians to detect cancer recurrence months ahead of standard imaging and provides them with far greater confidence in a negative result.

The clinical market for these types of tests, known as minimal residual disease or MRD tests, is growing rapidly and is expected to mature into a 20 plus billion dollars dollar opportunity, and Personalis is exceptionally well positioned to command a significant share of that opportunity.

Beyond clinical testing, we remain a leader in supporting biopharma companies through clinical trials and drug development. Our platforms are used by our partner companies to analyze tumors and identify new biomarkers serving as the foundation for the next generation of personalized therapies. We are the engine that supports researchers as they explore new treatments and allow physicians to personalize treatment for every cancer patient.

Now turning to our results, the headline of our performance is our explosive clinical growth and our achievement of two Medicare coverage decisions. In the fourth quarter, we delivered 6,183 clinical tests. This represents a 41% sequential growth over the third quarter of 2025 and a 329% increase year over year. Now to put that in context, in Q4 of 2024 we delivered just 1,441 tests. Our performance this quarter reflects the strong uptake of next personal in the marketplace.

For the full year of 2025, we delivered more than 16,000 clinical tests, growing 394% over 2024.

We achieved $17.3 million of revenue in the fourth quarter in line with our preliminary announcement last month.

Our full year revenue of $69.6 million reflects the transitional period for our topline. As we previously discussed, we've shifted our commercial focus from lower value project work to higher value MRD partnerships, which meant that we experienced a nearly $20 million year over year decline in revenue from the Natera while we set the stage for growth with our MRD engine.

The uneven biopharma spending environment we discussed last year has persisted, creating variability in the timing of large project-based translational research. However, it is critical to note that the underlying demand for our strategic MRD offering remains exceptionally strong. We grew our MRD biopharma revenue by nearly 240% over 2024. We believe we are the partner of choice for biopharma companies who need to see what others cannot, and we expect penetration of our MRD testing into biopharma companies to be a growth driver for years to come.

Next Personalis has the potential to help these partners fail in early clinical trials sooner, and succeed in these trials quicker, and enroll the right patients into their studies.

Now innovation is the heartbeat of personnel. Just as we've led the way in pioneering ultrasensitive MRD detection down to one part per million, we recently announced the next evolution of our next personal MRD test, our real-time variant tracker report. Cancer changes over time, and it can change in reaction to treatment. The real-time variant tracker allows for the detection of mutations targetable with therapy and the identification of resistance mutations during MRD surveillance with NeXT Personal.

As an example, in metastatic HR positive breast cancer patients, the ESR1 gene can acquire mutations over time that cause resistance to the hormone therapy patients may be receiving. Knowing when these mutations can happen allows physicians to adjust therapy proactively. The addition of this opt-in report is intended to give clinicians a dynamic window into how a patient's cancer is evolving in real time.

We announced the Early Access Program for this module for clinical and academic leaders in January of this year. The feedback from early discussions with doctors has been positive, and we believe this provides a powerful new tool for physicians as they seek the best possible outcome for their patients. This new addition to NeXT Personal underlines our continued innovation in MRD and most importantly, our commitment to innovate for patients.

Looking ahead to 2026, we expect total revenue to be in the range of $78 million to $80 million. However, to understand the velocity of the business, you must look at our strategic growth engines, that is, our clinical revenue and our biopharma MRD revenue. We expect our strategic revenue to grow from approximately $14 million in 2025 to a range of $30 million to $32 million in 2026. Which would be roughly 121% growth driven by the expectation that clinical volumes will quadruple. I will now dig deeper into the three pillars of our winning MRD strategy that are driving us forward. The first pillar is clinical adoptions. Now the numbers speak for themselves.

Last quarter we had more than 900 oncologists ordering our test, and we're seeing strong retention among those who adopt NeXT Personal. We're scaling our commercial footprint to onboard more oncologists and drive testing volumes. We now have more than 10 dedicated reps in the field working in close coordination with our partner, Tempus. In 2025, we expanded our relationship with Tempus to include colorectal cancer, and our commercial efforts are fully aligned to champion the market shift towards ultra-sensitive MRD testing.

We're setting our initial 2026 annual volume guidance at 43,000 to 45,000 tests, which would be about 170% growth year over year. This underscores the tremendous momentum we are seeing in our confidence in our commercial team and our physician partners.

Our second pillar is building clinical evidence and the data we need to support continued positive reimbursement decisions. We made massive strides here in 2025. We submitted 3 dossiers for coverage to Medicare backed by industry leading clinical data. In the fourth quarter, we successfully achieved Medicare coverage for breast cancer with favorable pricing and just a few weeks ago, we received Medicare coverage for lung cancer. These coverage decisions validate the value of our technology in changing patient lives, and I'm proud of our team for these accomplishments. Both reimbursement frameworks are for ongoing cancer surveillance for patients, so our tests can be used at multiple time points along the patient's cancer journey and across many years.

We currently have an additional dossier under review with Moldex for the use of NeXT Personal to monitor immunotherapy and metastatic cancer patients. Though exact timing remains subject to Molde's review, we remain confident in our data. Our drive towards coverage has been powered by data and the strong performance of our NeXT Personal test. These last several months, we continue to build upon our foundation to transform Personalis from a high growth testing company into a high margin reimbursed clinical powerhouse. The landmark studies with TRACERx, Royal Marsden, and VHIO published in Cells, Annals of Oncology, and Clinical Cancer Research respectively are the anchors of our evidence base.

The TRACERx lung cancer study is one of the largest, longest, and most rigorous lung cancer MRD studies to date, with over 400 patients. In this study, NeXT Personal showed exceptional sensitivity and specificity throughout the patient journey from diagnosis to surveillance, even in lung and adenocarcinoma, the most common yet difficult to detect subtype.

Our Royal Marsden breast cancer study also showed exceptional sensitivity and specificity across HR positive, HER2 positive, and triple negative breast cancers, with 15 month plus medium lead time ahead of imaging.

The VHIO study across 24 cancer types showed that advanced cancer patients receiving immunotherapy who achieved durable molecular clearance had 100% overall survival.

The pan cancer UCSD IP-Predict study was just published in NPJ Precision Oncology, and it showed the next personal identified molecular progression in a medium of 161 days over 5 months before imaging in late-stage cancer patients receiving immunotherapy.

Yale University is leading the case study to demonstrate the utility of next personal and breast cancer. Furthermore, our prospective Be-STRONGER-1 trial in triple negative breast cancer is well underway, having now enrolled more than 200 patients.

Overall, we're now involved in 35 plus additional studies that are powering the next generation of evidence, and that number just continues to grow. In 2026, we're focused on neoadjuvant breast cancer and colorectal cancer and submitting for coverage there. As a reminder, we've presented data earlier from PREDICT and Gandar studies. Those studies showed the power of next personal and neoadjuvant breast cancer, and the British Columbia Cancer Study showed the power of the technology in colorectal cancer.

The 3rd pillar is leading in the biopharma sector. MRD, or NeXT Personal biopharma revenue, grew nearly 240% this past year. Biopharma companies are realizing that to prove the efficacy of their next generation therapies, they need the most sensitive detection tools available, and this has led to our success in driving their adoption of NeXT Personal. We made tremendous strides this last year with biopharma companies in terms of their adoption of NeXT Personal. As a part of that progress, our business has been evolving towards more prospective work where revenue from a project is spread out over several years compared with retrospective analysis, where an entire study is analyzed in one batch.

In 2026, we expect our biopharma revenue to be in the range of $20 million to $21 million. This growth in our core MRD offering is expected to propel our entire biopharma segment, providing a stable and high value revenue stream that complements our clinical expansion.

In closing, Personalis is a different company than it was just a year ago. We've proven that we can build world-class clinical evidence and win Medicare coverage, and we've proven that our technology is the gold standard for sensitivity. We're starting 2026 with the winds at our backs and the confidence that we are winning in MRD. Changing the way medicine is practiced is never easy, but progress like we've seen over the past year shows our efforts have been worthwhile. I want to thank our employees and collaborators for a great year and thank our biopharma partners, physician champions, and their patients for trusting us to provide results that truly matter.

Thank you, and I'll now turn it over to Aaron to dig deeper into our financial results.

Thank you, Chris. I will be discussing our fourth quarter and full year 2025 results and then cover guidance for 2026.

Total company revenue was $17.3 million for the fourth quarter of 2025. While this is a modest 3% increase year over year compared with $16.8 million for the same period last year. The headline number masks a positive rotation in the quality of our revenue. We are successfully replacing low margin and sporadic legacy revenue with high velocity clinical volume.

For the full year 2025, total company revenue was $69.6 million. As Chris mentioned, we navigated a planned $19.5 million decline in revenue from Natera during the year and also the conclusion of the Moderna melanoma trial enrollment, which was a $10 million decline from 2024. Despite these headwinds of nearly $29 million, we delivered 239% growth in biopharma MRD revenue over the prior year.

We are no longer dependent on a single legacy contract. We are building a diversified and sustainable high growth engine which is centered around our win and MRD strategy.

Moving to our core revenue, biopharma was $10.9 million in the fourth quarter compared with $12.2 million for the same period of the prior year.

For the full year 2025, biopharma revenue was $49 million compared with $51 million for 2024.

Both the fourth quarter and the full year declines were due to the expected decrease in the Moderna volume mentioned earlier.

For clinical revenue, we recognized $0.9 million in the fourth quarter and $2 million for the full year of 2025 compared with $0.2 million for the fourth quarter and $0.8 million for the full year 2024.

The 4th quarter 2025 includes initial breast cancer surveillance revenue, which was covered by Medicare in the 4th quarter.

Now I want to address gross margin directly, as it's a critical indicator of our MRD investment strategy.

Gross margin was 11% in the fourth quarter and 22.7% for the full year. It's vital to understand that this margin compression is intentional but temporary. We foresee margin dilution to continue into 2026, with the lowest point expected to be in the first quarter of the year until the time when our third reimbursement coverage, which is expected to be IO, begins to convert to revenue. The margin dynamic is driven by the strong growth in volume of next personal tests ahead of reimbursement revenue.

In the fourth quarter alone, unreimbursed costs diluted margins by approximately 1,900 basis points.

We are securing the oncologist and the volume now, so when coverage decisions like the recent wins in breast and lung cancer come online, that volume run rate begins to convert to higher margin revenue.

We expect to realize the benefits from investments to gain market share over the next 2 to 3 years as our clinical revenue gets to scale.

Operating expenses were $27.2 million in the fourth quarter compared with $22.7 million for the same period of the prior year. For the full year 2025, operating expenses were $103.8 million compared with $95.1 million for the full year 2024.

Our clinical business is thriving, and we are investing for future growth. Most of the year over year increase was related to commercial expenses for ramping up test volume and also R&D investments for clinical evidence to support reimbursement initiatives and technology development.

The fourth quarter R&D expense was $13.1 million compared with $11.5 million for the same period of the prior year, and SG&A expense was $14.1 million compared with $11.2 million for the same period of the prior year.

Net loss for the fourth quarter was $23.8 million compared with $16.4 million for the same period as the prior year, and for the full year 2025, net loss was $81.3 million which was the same as 2024.

Now let's review the balance sheet.

We finished the fourth quarter with a strong balance sheet with cash and short-term investments of $240 million and no debt other than some small equipment loans.

For the full year of 2025, we used approximately $74 million just below our $75 million guidance. We operated with discipline throughout the year and even as revenue fluctuated, we managed more than $12 million in downward spending adjustments to protect our cash runway.

Now looking into 2026, we entered the year with a focus on scaling volume. Our guidance reflects reimbursement coverage decisions received to date. Any upside may be realized from faster coverage expansion, payer adoption, faster volume growth for clinical tests, and continued strength in biopharma MRD demand. Additionally, we are guiding annually this year and not providing detailed quarterly ranges due to the variability and seasonality that may occur throughout the year.

Our 2026 guidance is as follows.

Total company revenue in the range of $78 million to $80 million and this assumes clinical revenue of $10 million to $11 million.

Specifically, from breast and lung cancer surveillance tests recently covered by Medicare.

Revenue from pharma tests and services and all other customers in the range of $55 million to $56 million.

MRD revenue from these customers is expected to grow rapidly and to be in the range of $20 million to $21 million.

Population sequencing plus enterprise customers of approximately 13 million.

Gross margin is expected to be in the range of 15% to 20%, with the 1st quarter potentially being the lowest point of the year.

Net loss of approximately $105 million, and we expect our cash usage to be approximately $100 million as we continue to invest in our winning MRD strategy. This estimate reflects our decision to accelerate volume and gain market share.

With $240 million of cash on hand, we expect to have the capital to execute our plans.

Additionally, our success is opening up additional clinical studies that may be able to influence guidelines and therefore we are stepping up investments in this area too.

What you are hearing from both Chris, and I is unwavering confidence in our ability to execute our winning MRD strategy and plans.

We have proven that our ultra-sensitive technology can help change patient care.

The market is expanding fast towards the 20+ billion dollars dollar estimate.

We have growing test volume and we are turning on the reimbursement engine to drive revenue growth this year and beyond.

We look forward to updating you on our progress during the next conference call in a few months. With that, I will turn the call back over to the operator to begin the Q&A session.

Operator.

(Operator Instruction)

Subbu Nambi, Guggenheim.

Thank you for taking my question. Moving in a short period of time from no reimbursement to now two indications, potentially more here early in 2026, how does that affect the focus of reps internally, externally with Tempus for clinical and also your eye for still building the pharma business longer-term?

Thanks, Subbu. Appreciate the question, but I think there's a couple ways to think about it. I mean, what we're starting to do is, increasingly gate the business increasingly to pick up steam. We had the number this year, guided 43 to 45 that we think represents a good mix between investing aggressively but at the same time making sure that we manage the cash in a prudent way.

As we go through the year and we continue to make more progress potentially with reimbursement getting more decisions we've got IO in front of us. We'll find ways to collect more, etc. We could continue to invest more in the area, and we'll play it as we go. But right now, this is the way that we see it. We're continuing to push hard on biopharma companies. I mean, those relationships growth, that's a big growth driver, and we've spent a significant amount of time over the last 2 to 3 years establishing ourselves and growing that business. I think we're having a lot of success there.

Thank you for that, Chris. Chris, how has the reimbursement changed its activity from clinicians compared to other competitors in the field? Have you seen an acceleration in ordering since the reimbursement announcements?

I think overall what you have with getting reimbursement gives you legitimacy in the conversations. I think being able to say that you've passed through the process and the rigor of Medicare, gives you legitimacy when you're having discussions with physicians and certainly key opinion leaders. I think there's a wide recognition among people who are in the know that Moldex does a particularly phenomenal job reviewing the evidence and looking at it deeply. So, yes, I think it does help to reinforce the power of what you're doing when you've got Medicare coverage and does put wins to your back in the field.

Super helpful.

Thank you so much guys.

Mark Massaro, BTIG.

This is Vivian. I'm from Mark. Thanks for taking the question. I just wanted to ask one on the biopharma outlook. So are you seeing, pushouts or cancellations of contracts there? And then just at a higher level, you're investing into next personal MRD and focusing more on the clinical side of your portfolio. So just how material do you think, MRD side of biopharma is, versus other areas that you've done historically like PCV is longer-term? Thanks.

Thanks.

I think we're seeing the sector stabilize right now. We haven't seen any pushouts or any big jolts to the business. I mean, last year was certainly more challenging. We're not seeing biopharma companies come rushing back in a major way for translational purposes. And we reflected, I think what we see right now is what we've reflected in the guide. But we haven't, I think things are stable right now in that sector's overall is what we're seeing. I think we are making progress.

MRD, and we feel like we've been accelerating our progress there. I mean those customers are some of the most discriminating buyers. They often do head-to-head trials, with the data. So, when you win there and you should see the revenue growth that we're showing in that sector, which I think was nearly 240% year over year and was that came off a particularly strong year the year prior and we see it continuing to grow this year. That reflects the decision of large companies who do really detailed analysis to choose personnel, so we feel like we're well positioned there, but we're investing heavily overall to win the space, both biopharma and also clinical.

We've always thought that those two work synergistically and that the evidence that we built in biopharma helped drive the clinical business and that's been one of the key vectors. As with our relationship with Moderna, we've been focused on supporting them through their journey of their INT program, and that's been a potential, driver of our revenue over the odd years.

Okay, thanks so much for that color.

Next, personal, can you share any detail in the mix of, volumes you expect to run in 26 in your reimburse indications versus you're not, reimbursed indications? I think the volume and dev guide you, yeah, go ahead.

Yeah, go ahead. I mean, yeah, go ahead and finish the question if you want.

Okay, sure. I was just going to say, I think the volume and rev guide implies that a good chunk of the volumes you're running today are not lung and breath, so I just want to understand what indications you're seeing there.

Sure, Aaron will take this one.

So, if you just look at the volume at the top level, so for the 43,000 to 45,000 tests, roughly 20% or so is coming from breast, 15% to 20% is coming from lung, IO is somewhere between 20% and 25%. CRC is around 20% and all other is the remaining 20% or so.

It's true there's a fair amount that we're running for zeros, right? We're not getting paid. We're only getting covered for breast and lung at this point in time, so it's less than half of the tests, right, A\and Medicare is roughly half of the volume. And the fee for service is half of that 50, and so, again we are running a lot of tests with zeroes.

When you're dealing with physicians, you have to accept samples of all different cancer types, and that's what we're doing. We're doing really well and we're finding that our ultrasensitive test is really sticky with physicians. Now as we want to go forward here to drive more growth, we're going to be adding more physicians, commercial presence on the Tempus side and internally. We also intend to add another 10 or so, sales representatives. We ended the year with 10 reps, and our plan is to double that at this point. Depending on how the first couple of quarters progress, we may even invest further.

Please note, the guy didn't assume IO yet, but that's clearly out there and we've got a significant amount of revenue. We expanded the relationship this past year with Tempus to include CRC and we've gotten tremendous uptick and energy around that from doctors. The data that we had at AACR last year showed that if you apply an ultra-sensitive approach onto the testing paradigm, you can get a dramatic leap in performance at Landmark. That really raised a lot of eyebrows, and a significant number of physicians have been starting to adopt in the CRC.

So, we have been investing because that's been a historically strong space and we've looked at it that we're making investments and growing that market and our presence in the CRC market, and we've had a lot of progress. So, when Aaron talks about 20% of the samples coming from that of physicians, that's been for 20% of our samples coming from CRC, that's been a really nice growth engine, and I think over the arc of time progress we're making there is really going to pay off.

Okay perfect that's super helpful thank you.

Absolutely good questions.

Thomas Flatton of Lake Street.

Good afternoon. Thanks for taking the questions. Aaron, just to follow-up on your last prepared comment about having the cash to execute your plan. Should I read that as having cash to break even or should I not read that far into it?

So, we haven't said anything about cash to break even or cash to profitability or anything like that, so that's probably reading a little bit more into it. What we meant by that statement, Thomas, is that we had $240 million of cash at the end of the year. We're going to use approximately $100 million in 2026. So, you can see just by the simple math, it's 2.5 years or so of cash on the balance sheet. Which means we have plenty of capital here for the next couple of years to go and drive to go get market share, and that's the focus right now, really investing for market share.

Got it. Then just a question on the real-time variant tracker. I think Chris in your prepared comments you mentioned that was an opt-in test. So are people ordering it? I mean, of the physicians you went out to with the early access program, are they ordering it? Do they literally have to click a box or just mechanically, how does that work and how do you drive the stickiness on that?

Rich is with me and can add any color to it, but it's an opt-in module, it's not something that just everybody gets by default.

And we're getting geared up for the early access program as we speak, so, but we expect that physicians will opt in and a lot of them will, and there's been a lot of excitement about it.

One of the feedbacks has been, it's not just being able to quantify the tumor, in the blood, but being able to track how the tumor is changing is really one of the key unmet needs in cancer and so starting to superimpose this longitudinally. Really is, I think, exciting and I think is the next big innovation in MRD and quite frankly sort of underlines our ability to lead the space in innovating. I mean, having started with the ultra-sensitive push that we've been pioneering and now starting to add this, I think it's a great positioning for where we are and the impact that we're making for patients.

Just one quick last one of the clinical volumes you're expecting this year, you mentioned that you had 900 oncologists ordering last year. Do you have a sense, of how many docs are going to be responsible for that 43,000 to 45,000? Just again, big ranges are fine. I'm just curious about depth versus breadth.

This year we'll keep focusing on driving deeper within existing accounts, the 900 doctors ordering from us will continue to grow. We'll continue to go to broader, but we are, we're focusing always on going deeper, as is our partner Tempus, because I think people start to use the technology, they see the power of it, and our experience has been that the customers who have been with us for longer tend to be the customers that order the most, and so we're focused on continuing to tell the story, underline the value, and driving deeper within existing relationships.

That's great, thank you.

Thanks, Thomas.

Kallum Titchmarsh, Morgan Stanley.

Thanks for taking our questions. So maybe just a question on 2026 guidance. How should we think about the queue over clinical volume growth? You delivered 6,200 clinical tests in the fourth quarter. Is that a good jumping off points for you guys from what you guys could grow 24% to 25% queue over queue to get to the midpoint of your, volume guide?

So, we haven't given quarterly guidance, but if you take the 61 83 exiting 2025 in the fourth quarter, and just maybe linearize it that probably gets you close. There would be a little bit of seasonality. The second and the 4th quarters are going to be the strongest, where the 1st and the 3rd will have a little bit of seasonality. Yeah.

I mean, Q1's always and Q3 are always the slower growth quarters in this kind of an environment versus Q2 and Q4 because of the combination of vacations, holidays, and then Q1 weather, and we've always seen that. But right now we're still learning exactly how the seasonality works, but we saw that in our numbers last year, and I think that's, I spent years in this business, that's pretty cool/

Thank you. That was helpful.

Then maybe just as a follow-up, so a question on the competitive landscape. There's a lot of new entrants in the MRD space and there's been some consolidation the space as well with one of the large MRD players recently making a large acquisition of another large MRD player in December and, potentially integrating their IP to enhance the sensitivity of their assay. So could you just share your thoughts on the current competitive landscape and why you think you can gain share against arguably larger players with deeper pockets?

Thank you.

I think we've proven this over the last couple of years that we can execute. We've been focused on pioneering this story. I think a lot of people are trying to either get to or debut ultra sensitive products. Our intention is to stay ahead and continue to push forward. We're aligned with one of the biggest partners in the space, Tempus, which is providing the commercial infrastructure which gives us the ability to move quickly and. And make progress and we've gotten traction now with, we talked about in the script 30 plus ongoing studies and that continues to grow and so, we're investing heavily in R&D and driving forward.

I think if you look at where we've been, where we are, we've emerged as one of the large players in the space. I think we've, stitched together as only 2 to 3 companies with more than 2 coverages now and MRD and we're there, and I think just in terms of test volume we've emerged as a major player and we've got momentum and we're still leaders in data and in terms of where it is so we feel like we're positioned well and we're continuing to make the investments necessary to keep that position in the industry.

Great I appreciate the answers guys.

Bill Bonello, Craig Hallum.

Thanks a lot. The volume expectations look excellent, well above what many people anticipated, and the Tempus commentary last night was incredibly bullish. I think what may surprise people is where you're landing on clinical revenue, gross margin, and the cash‑flow guide. You’ve talked a bit about your philosophy, but could you provide more color on what’s driving those outlooks?

Historically, your approach has been more gated from a sales‑execution standpoint, and Tempus also seemed to face some limitations in terms of how aggressively you were encouraging them to operate. You knew reimbursement was coming, so what’s changed? Is it the response you’re seeing in the field, or something else that’s led you to effectively “step on the gas” now and move away from the more capital‑light strategy you’ve emphasized in the past?

Hi Bill, this is Aaron. Thanks for the question. As we exited 2024 and entered 2025, we intentionally moderated our pace, primarily because at that time we had no reimbursement coverage at all, and our balance sheet certainly didn’t have the $240 million we have today. Those two factors have meaningfully changed over the past several months.

Now that we have Medicare coverage for both breast cancer and lung cancer, along with favorable pricing, we finally have the unit economics needed to drive our gross margins into the low 60% range, with a clear pathway toward 70% at full reimbursement. That gives us the confidence to step on the gas and accelerate, because this market is evolving into a $20billion to $30 billion opportunity over time.

There are only a few players in this space today, really just two true tumor‑informed competitors with robust tests, and we are the leader in the ultrasensitive segment. That’s why it makes sense for us to move quickly while the window is open and competition in the ultrasensitive category remains limited.

In doing so, we do expect to sacrifice some cash burn efficiency and gross margin in the near term, simply because until we secure additional coverage decisions, gross margin will remain somewhat diluted. But the trade‑off is clear, accelerating now positions us to capture significant market share over the next year or two, and we believe this is the right moment to scale aggressively.

That makes sense.

It does, and I get the capital and the reimbursement. I was just curious if you were seeing things in the market that were saying we should really step up as well too, but it sounds like it was more than another.

Yes Bill, I mean, we see strong demand, and I mean I think you're hearing that from people talking about it and we're here to meet the demands of the physicians and we're still managing this carefully. I mean the step up from 74 to 100, it's not like a crazy drive forward.

We're also investing heavily in R&D, both in the studies, the evidence development, pushing forward in multiple different ways to accelerate coverage. The guide at the current level doesn't have any more progress in coverage or in reimbursement, we feel like there's a lot of upsides there that'll be, that'll continue to be helpful as we go forward. So, we feel like this is the right spot. The guide, I think he hit a good cadence of investment versus weighed up against expansion, and I think the investments that we do make now will pay dividends in the future, and we could probably ungate and go ever faster, but you know that would spend even more money and so I think we feel like we've hit the right balance here.

Sure, just a couple follow-ups then are to the extent that you're allowed to talk about this, if you sort of given Tempus also the green light maybe not to go full throttle but do they have a little more freedom in what they can do with sales as well?

But we're focused on going deeper within accounts and we're focused on we've added some more reps ourselves and you know I feel like we're in a good, we're in a good position and we work really well right now and we're driving forward with the idea that you know we we're building demand for this ultra-sensitive approach and making progress.

Okay, that was a good non-answer. The last thing is just cash burn, for the year, I think you just in your comment there was no cash flow statement, but I think in your comment you just said it was, about $70 million, for this year, is that right?

Yeah, so we used about $74 million and that was in our prepared remarks bill, and we expect to use $2 million in 2026, yeah.

Okay perfect thank you so much.

Mike Matson of Needham and Co. Please go ahead.

Hi Chris, Aaron, Rich. Thank you very much for taking our questions. This is Joseph on for Mike.

Just a couple of quick ones: In your prepared remarks, you highlighted an increased focus on CRC and neoadjuvant breast cancer going forward. Should we expect at least a reimbursement submission in 2026 for those two indications? And I have a couple more questions after that.

Thank you

Absolutely. We're not laying out exact timelines yet because everything depends on when we can get the relevant publications submitted by investigators and then accepted, since we can’t submit for reimbursement until those steps occur. That said, we are pushing hard to be in a position to submit for coverage for both indications this year.

However, there is still quite a bit of variability around the timing and sequencing, so this isn’t something that’s explicitly included in the guide. Even so, we’re moving quickly because we see strong demand for the technology in these indications and a real opportunity to help patients.

Building on that, regarding your strategy for evidence generation across additional cancer indications, I'm wondering whether your approach has changed now compared to what you did in breast and lung. Specifically, are you still prioritizing participation in very large, landmark studies, or does having reimbursement in two indications give you more flexibility?

Do you believe that smaller studies can now meet the Medicare bar, given the precedent you’ve established? You mentioned having 35 clinical trials underway, so is the strategy shifting toward a greater number of studies, rather than concentrating on a smaller number of very large‑patient‑count trials?

I’m just trying to understand the broader direction of your evidence‑generation strategy going forward.

Richard will provide his thoughts on this one.

Thanks for your question. Our strategy has centered on working with the top KOLs globally to establish strong baseline evidence for each indication as we expand our reimbursement coverage. That approach has worked extremely well for us, and we intend to continue it.

We presented very strong neoadjuvant breast cancer data last year at major conferences, along with compelling colorectal cancer data, all generated in collaboration with highly regarded KOLs. This kind of evidence has been instrumental in the Medicare coverage process, and we will maintain this strategy not only for these indications but for others we’re moving into.

In addition to that, we’ve also been seeing significant inbound interest from KOLs who want to conduct clinical utility studies, where our assay is used to guide clinical decisions and demonstrate that it can improve patient outcomes. This is critically important for the long term, not just for advancing the field but also for eventually securing inclusion in clinical guidelines. You’ll start to see more of this type of work from us as well.

Okay great, that’s really helpful. Maybe just one last question. To reach the higher gross‑margin targets you’ve outlined, reimbursed test volume is clearly the biggest driver. But beyond that, in terms of lab optimization, automation, and other operational efficiencies, have those initiatives already been fully implemented? Are there additional steps planned?

In other words, where would you say you are in the overall process of getting the lab and operations fully ready to scale reimbursed clinical volume?

That’s a good question. We haven’t provided a specific percentage in terms of how far along we are across all operational initiatives. What I can say is that we continue to automate the workflow, and as we add capacity, we’re doing it in a measured, staged way. Not all of the capacity for the year is installed at once you need time to purchase equipment, hire and train people and getting too far ahead of that curve would put additional pressure on margins. So we’re taking a deliberate, step‑by‑step approach.

That said, we are consistently working to automate, streamline workflows, and remove costs whether from labor, overhead, or other operational components to drive efficiency. Over the past couple of years, as we launched the product, we’ve made substantial progress, and we believe we’re in a solid position today.

When it comes to achieving the upper end of our gross‑margin range, part of that will depend on the biopharma mix. Biopharma is fee for service meaning they pay per test and, as Chris mentioned earlier, we have not included any immunotherapy (IO) coverage in our guidance. If reimbursement expands into additional cancer types, that could also help move margins toward the upper end, or even beyond.

Okay great. That's all from us and congrats on the reimbursement ones so far.

Thank you.

Operator Instruction

Tom Stevens of TD Cohen.

Hi everyone, thanks for taking my question. Just a quick one on adjuvant reimbursement. Have you outlined any expectations over the next couple of years for breast and lung cancer regarding the potential for adjuvant reimbursement? And what kind of pushback, if any, are you getting from MolDX on that front? Any color there would be helpful.

And second, on the neoadjuvant opportunity, could you give us a broad overview of where pharma is applying NeXT Personal in trials today? Neoadjuvant seems like a more straightforward use case, so any initial thoughts on market sizing for that opportunity would also be helpful.

Thank you.

Thanks for the question. For adjuvant breast and lung, rest assured these are also key areas of focus for us, and we intend to pursue reimbursement for them just as we have with our other successful indications. We recognize their importance in the broader clinical and reimbursement landscape.

Regarding neoadjuvant use particularly in breast cancer, there is substantial interest across biopharma. Oncology pipelines are increasingly shifting therapies that were originally developed for the adjuvant setting into earlier, neoadjuvant use. In those trials, sponsors want to know quickly whether their drugs are working, and a highly sensitive assay like ours is extremely valuable for generating those early signals.

The data we presented last year in neoadjuvant breast cancer highlight this clearly. In both triple‑negative and HER2‑positive breast cancer, our ultrasensitive approach demonstrated strong performance. The current standard of care biomarker in this context is PCR. In the studies we presented, our assay performed very well relative to PCR, and in some cases, performed even better which has only increased interest from biopharma.

As a result, we are seeing a growing number of companies seeking to use our assay to get an early readout on whether their neoadjuvant therapies are effective and to guide decision‑making within clinical trials. This momentum reflects both the strength of our technology and the expanding role of MRD testing in early‑stage treatment settings.

Great. Then just any initial view on the on the sizing of the kind of clinical market there and kind of what the potential for that could be long long-term.

I’d say there’s definitely opportunity there, though we haven’t formally estimated it. If you look at the MRD patient journey, it typically begins in the neoadjuvant setting, but that phase represents only a relatively small portion of the overall journey. The much larger component is long‑term surveillance over many years, where a significant amount of testing occurs both in breast cancer and early‑stage lung cancer.

That’s why we started in those areas and were able to secure coverage there first. And now, we’re essentially working our way backward into earlier indications, expanding from that foundation.

Got it. Thanks very much guys.

Thanks, Tom.

Operator Instruction