Earnings call transcript: Adaptive Biotechnologies Q3 2025 beats forecasts with EPS and revenue

Adaptive Biotechnologies reported a strong financial performance for Q3 2025, surpassing market expectations with an EPS of $0.06 against a forecast of -$0.17, marking a surprise of 135.29%. Revenue reached $94 million, exceeding the anticipated $60.48 million by 55.37%. Following the earnings announcement, Adaptive Biotechnologies’ stock saw a 3.96% increase, closing at $16.92, although it experienced a slight decline in aftermarket trading. The stock has continued its upward momentum, trading at $17.59 as of the latest session, just 1% below its 52-week high of $17.89.

Key Takeaways

• Adaptive Biotechnologies reported a significant earnings surprise, with EPS at $0.06 versus a forecast of -$0.17.
• Revenue grew 102% year-over-year, reaching $94 million, largely driven by MRD business growth.
• The stock price increased by 3.96% post-earnings release.
• The company achieved cash flow positivity in its MRD segment.
• Full-year MRD revenue guidance has been raised to $202-$207 million.

Company Performance

Adaptive Biotechnologies demonstrated robust performance in Q3 2025, with revenue doubling year-over-year. The company’s MRD business was a key driver, benefiting from increased test volumes and expanded payer coverage. The firm maintained its market leadership in MRD testing, leveraging its FDA-cleared assay and strong clinical experience.

Financial Highlights

• Revenue: $94 million, up 102% year-over-year
• Earnings per share: $0.06, compared to a forecast of -$0.17
• Adjusted EBITDA: $28 million, a significant improvement from -$14.3 million last year
• Cash position: $217 million at quarter-end
• MRD revenue: $56.8 million, up 52% year-over-year

Earnings vs. Forecast

Adaptive Biotechnologies exceeded expectations with an EPS of $0.06, compared to the forecasted -$0.17. The revenue surprise was equally notable, with actual revenue of $94 million versus a forecast of $60.48 million. This earnings beat is significant, marking a positive shift from previous trends.

Market Reaction

Following the earnings release, Adaptive Biotechnologies’ stock rose 3.96% to $16.92, reflecting investor optimism. Despite a slight aftermarket decline, the stock remains near its 52-week high of $17.886, indicating strong market confidence.

Outlook & Guidance

The company has raised its full-year MRD revenue guidance to $202-$207 million and expects approximately 104,000 tests for the year. With anticipated total MRD revenue growth of 39-42%, Adaptive Biotechnologies is confident in its continued expansion into 2026.

Executive Commentary

CEO Chad Robins highlighted the profitability and growth of the MRD business, stating, "MRD is now a profitable scaling business that is delivering consistent growth and margin expansion." He also emphasized the role of data in improving model accuracy, reflecting the company’s commitment to innovation.

Risks and Challenges

• Emerging competition in the DLBCL market could impact market share.
• The company faces challenges in expanding its presence in community oncology settings.
• Macro-economic pressures could affect payer coverage and reimbursement rates.
• Maintaining high growth rates in MRD testing amid increasing competition.
• Potential regulatory changes affecting the healthcare sector.

Q&A

Analysts inquired about the potential for 30% volume growth in 2026 and the benefits of EMR integration. The company addressed its serial testing capabilities and the possibility of MRD serving as a primary endpoint in more indications, underscoring its strategic focus on innovation and expansion.

Full transcript - Adaptive Biotechnologies Corp (ADPT) Q3 2025:

Jacinda, Conference Operator: Good day, and thank you for standing by. Welcome to the Adaptive Biotechnologies third-quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Karina Calzadilla, Head of Investor Relations. Please go ahead.

Karina Calzadilla, Head of Investor Relations, Adaptive Biotechnologies: Thank you, Jacinda, and good afternoon, everyone. I would like to welcome you to Adaptive Biotechnologies third-quarter 2025 earnings conference call. Earlier today, we issued a press release reporting Adaptive financial results for the third quarter of 2025. The press release is available at www.AdaptiveBiotech.com. We are conducting a live webcast of this call and will be referencing a slide presentation that has been posted to the investor section of our corporate website. During the call, management will make projections and other forward-looking statements within the meaning of federal securities laws regarding future events and the future financial performance of the company. These statements reflect management’s current perspective of the business as of today. Actual results may differ materially from today’s forward-looking statements depending on a number of factors, which are set forth in our public filings with the SEC and listed also in this presentation.

In addition, non-GAAP financial measures will be discussed during the call, and a reconciliation from non-GAAP to GAAP metrics can be found in our earnings release. Joining the call today are Chad Robins, our CEO and co-founder, and Kyle Piskel, our Chief Financial Officer. Additional members from management will be available for Q&A. With that, I’ll turn the call over to Chad. Chad.

Chad Robins, CEO and Co-Founder, Adaptive Biotechnologies: Thanks, Karina. Good afternoon, and thank you for joining us on our third-quarter earnings call. I’m pleased to share another quarter of strong execution and accelerating momentum across the business. We delivered meaningful wins, sustained growth, and further strengthened our financial position. Let’s now turn to slide three for a summary of this quarter’s highlights. The MRD business delivered major profitability milestones. This quarter, adjusted EBITDA was $7 million, reflecting strong sequential growth. Also, this quarter, and ahead of plan, the MRD business became cash flow positive, a significant achievement that underscores the strength and scalability of our model. MRD revenue grew 52% year over year, driven by robust increases in clinical volume and ASP. This growth reflects expanding clinical utility and broader integration of MRD testing into patient care. Clinical validation continues to deepen.

The NCCN guidelines were updated again this quarter, this time in CLL, incorporating MRD-guided treatment options, providing more specific direction on testing frequency and supporting clonoSEQ ID testing at diagnosis. Operationally, we’re scaling efficiently. With clonoSEQ now running on the NovaSeq X Plus, we’re realizing meaningful cost efficiencies and expanding gross margins. Total company sequencing gross margin improved 10 percentage points year over year to 66%. Our focus on operating discipline is paying off. Operating expenses remained stable sequentially while cash burn continued to decline. Through the first nine months of the year, we reduced cash burn by 51% versus last year, ending the quarter with a strong cash position of $217 million. Given this performance, we are again updating our full-year guidance to reflect a higher MRD revenue range, lower operating expenses, and a reduced annual cash burn.

Kyle’s going to cover the details shortly in his prepared remarks. Let’s now turn to slide five for a deeper look at the MRD business. ClonoSEQ clinical revenue had impressive growth of 83% year over year and 18% quarter over quarter. We saw broad-based volume expansion across all reimbursed indications, delivering over 27,100 tests, up 38% versus prior year and up 7% sequentially. By indication, multiple myeloma remains our largest contributor, accounting for 42% of US ClonoSEQ volume, followed by ALL at 32%, CLL at 10%, DLBCL at 9%, and MCL at 5%. This volume growth continues to align with our strategic priorities. First, blood-based testing now represents 45% of volume, achieving our full-year goal ahead of plan. In multiple myeloma, blood-based contribution reached 24%, up from 21% last year.

Second, community-based testing represents 31% of total clonoSEQ volume, with increasing contribution from Flatiron integrated accounts. Third, NHL testing expanded to 15% of total clonoSEQ volume, led by DLBCL and MCL sequential growth. Fourth, ordering HCPs grew 38% year over year to more than 4,100, with sequential growth of 9% in academic centers and 12% in community practices. Finally, we tested over 19,400 unique patients in the quarter, a 41% increase year over year and 8% sequentially. In addition to volume growth, we saw continued improvement in ASP, with US clonoSEQ ASP increasing to over $1,340 per test. Reinforcing our confidence to achieve full-year average ASP of $1,300 or higher. During the quarter, we achieved several policy wins, including our first large commercial payer coverage in DLBCL and two major payers in CLL, bringing our total CLL covered lives to over 260 million.

We continue to improve cash collections and expand our reimbursement footprint with new payer contracts. Overall, all ASP metrics and contracting initiatives are trending in the right direction, positioning us well to reach our long-term ASP target of $1,700-$1,800 per test. Let’s now turn to slide six to review progress on EMR integrations. Our EMR integration efforts continue to gain momentum across both academic and community settings. These integrations are a key driver of volume growth and support two other important strategic initiatives. The first is to build a scalable moat around clonoSEQ, protecting against new entrants and minimizing disruption from account turnover. The second is to maximize clonoSEQ’s usage across the care continuum by directly embedding into EMR-driven workflow, which translates into more tests per patient.

Since last quarter, we’ve completed 11 integrations, seven academic and four community, with six of our top 10 accounts now integrated. Among accounts integrated with Flatiron last quarter, volume in these accounts grew 17% sequentially and now represents 24% of our community volume, up from 20% pre-launch. We’re also leveraging integration to enable serial testing plans, with many ordering providers at Flatiron integrated accounts selecting recurring testing at 3, 6, or 12-month intervals. Importantly, nearly 40% of our commercial tests this quarter came from integrated accounts, which continues to outpace growth from non-integrated accounts. Looking ahead, we plan to further expand our EMR footprint and expect continued acceleration from integrated accounts, with fewer ordering discrepancies and deeper account retention. Let’s turn to MRD Pharma on slide seven. Our MRD Pharma business delivered a solid quarter, with revenue up 11% year over year, including $6.5 million in milestone revenue.

Multiple myeloma remains the largest contributor to our biopharma portfolio at over 60% of our active trials, followed by CLL at 17% and ALL at 9%. We ended the quarter with a backlog of more than $200 million, reflecting strong partner demand and sustained program activity. ClonoSEQ is most well established as an endpoint in multiple myeloma, where the ODAC and CHMP votes reinforce its role in assessing treatment response and supporting accelerated approvals, particularly in the frontline setting. The momentum is now extending to other lymphoid cancers and driving diversification across our portfolio. Endpoint qualification efforts are underway in CLL and DLBCL, which are already translating into results. 2025 CLL bookings are more than twice what they were last year. Currently, the FDA is accepting MRD as an endpoint on a case-by-case basis in other lymphoid cancers.

Of our 19 ongoing primary endpoint studies, 12 are in multiple myeloma, 6 are in leukemia, and 1 is in MCL. While recent agency news views on surrogate endpoints have introduced some uncertainty, we remain confident MRD will gain broader acceptance as an endpoint for accelerated approval in other lymphoid cancers. As the first and only FDA-cleared MRD assay, clonoSEQ holds a distinct and durable position to capture this market. In summary, MRD is a strong growth engine with multiple levers to increase penetration. Now, let’s turn to immune medicine on slide nine. Our immune medicine business is executing across our three strategic priorities. First, we continue to generate large-scale, high-quality proprietary data to develop a digital TCR antigen prediction model. We’re making good progress by using our data to train and improve the accuracy of our models.

As we deploy these models, we see promising results in multiple immunology applications. One of these applications included the ability to select the best TCRs to use in cancer cell therapy products in partnership with Genentech. Earlier this quarter, we announced the conclusion of our partnership with Genentech following its internal portfolio prioritization. As a result, Adaptive is released from exclusivity and any further obligations related to this partnership. Importantly, the scientific and technical progress we’ve made along the way allowed us to significantly accelerate both our data generation and our AI/ML modeling capabilities across multiple use cases. We are deploying our knowledge and infrastructure that we built towards multiple high-value partnership opportunities. Second, for our T cell depletion antibody program, we are on track to establish a preclinical data package in our lead autoimmune indication. This quarter, we selected our lead antibody candidate.

This key milestone is based on robust potency and other functional characterization data that we generated this year. We’ve also started planning for CMC ToxWork, which represents a key step towards IND-enabling studies for this lead T cell depleting antibody in autoimmunity. As we continue to execute on these two focused R&D priorities, we remain financially disciplined and are on track to achieve our 2025 cash burn target between $25 million and $30 million. Now, I’m going to pass it over to Kyle to walk through the financial results and updated full-year guidance. Kyle? Thanks, Chad. First, I will go over the financial results, including $33.7 million of non-cash revenue recognized this quarter from the remaining amortization of payments previously received from Genentech. Total company revenue for the third quarter was $94 million, representing a 102% increase year over year.

Total company adjusted EBITDA was $28 million compared to a loss of $14.3 million a year ago. Interest expense from our royalty financing agreement with Orbimed was $3 million, which was $700,000 higher than interest income. Net income from the quarter was $9.5 million. Now, and as shown on slide 10, the revenue and adjusted EBITDA figures, which I will be discussing forward, are presented, excluding all non-cash revenue from Genentech in all periods presented. Looking at this quarter’s performance on slide 10. MRD revenue grew 52% year over year to $56.8 million, with clinical and pharma contributing 67% and 33% respectively. ClonoSEQ test volume, including international, increased 38% versus last year to 27,111 tests delivered. US ASP grew 28% to over $1,340, reflecting continued strength in cash collections and improved pricing through our various contracting initiatives.

MRD pharma revenue grew 11% year over year, inclusive of $6.5 million in milestones. Immune medicine revenue from pharma and academic services was $3.4 million versus $5.5 million a year ago. Turning to gross margins and expenses. Total company gross margin, again excluding Genentech revenue, was 70%. Sequencing gross margin, which excludes MRD milestones, was 66%, up from 56% a year ago. This improvement was driven by operating leverage in the lab from higher volumes, stronger pricing across both clinical and pharma, and efficiency gains from the NovaSeq X Plus implementation. Total operating expenses, including cost of revenue, was $83.7 million, up 6% year over year and flat sequentially. The year-over-year increase was primarily driven by higher SG&A expenses related to our expected EMR and reimbursement efforts and higher cost of revenue from volume growth, partially offset by lower R&D expenses. Turning to profitability.

As shown on the segment reporting table at the bottom of the slide, the MRD business delivered positive adjusted EBITDA of $7 million compared to a deficit of $6.1 million a year ago. Immune medicine adjusted EBITDA deficit, again excluding the Genentech revenue, was $10 million versus $8.7 million in Q3 of last year. At the total company level, adjusted EBITDA, excluding Genentech, was a loss of $5.8 million compared to a $17.8 million loss a year ago. Total company net loss for the quarter was $24.2 million, again excluding Genentech. Turning to our full-year 2025 updated guidance on slide 11. We are raising our full-year MRD revenue guidance to a range of $202-$207 million, up from the prior range of $190-$200 million. This increase reflects stronger than expected clinical revenue performance in Q3 and higher MRD milestone revenue for the year.

With sustained clinical volume momentum, we now expect to deliver approximately 104,000 tests for the year, exceeding our prior growth target of 35% over 2024. We also expect MRD milestone revenue between $18 million and $19 million, up from our previous $14 million-$15 million range. Overall, this outlook implies 39%-42% total MRD revenue growth year over year and 38%-42% growth for the MRD-based business, which excludes milestones at the midpoint. We are also tightening and lowering the top end of our total company operating expense guidance, including cost of revenue, to $335 million-$340 million, from our previous range of $335 million-$345 million. We continue to expect roughly 69% of expenses from MRD, 23% from immune medicine, and the remainder from unallocated corporate costs.

Further, we are also narrowing and lowering our full-year company cash burn guidance to $45 million-$50 million from the prior $45 million-$55 million range, driven primarily by higher MRD revenue. We expect approximately 15% cash burn from MRD, still anticipate $25 million-$30 million from immune medicine, and the balance from unallocated corporate costs. It’s encouraging to see the MRD business generate positive cash flows, achieve positive adjusted EBITDA on the base business, all while continuing meaningful top-line growth. With that, I’ll hand it back over to Chad. Thanks, Kyle. Our results this year highlight the strength of our strategy and the discipline of our execution. MRD is now a profitable scaling business that is delivering consistent growth and margin expansion, and immune medicine continues to advance key R&D programs and unlock new partnership opportunities for future growth.

We’re confident in our trajectory and are well-positioned to finish the year strong, with a solid foundation for long-term value creation. With that, I’d like to now turn the call back over to the operator and open it up for questions. Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press Star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Mark Massaro at BTIG. Hey, guys. Thanks for taking the questions. Congrats on the strong beat and raised. Just a question, maybe to start.

It looks like your MRD pharma business is becoming a little more recurring in nature than it was maybe a year ago, and it’s actually starting to look linear, increasing about $1 million a quarter. I’m not expecting this to continue in a linear way, but can you just give us a sense of the $200 million you have in the backlog? How should we think about that backlog being released, say, over the next several quarters? Thanks for the question, Mark. Thanks, Chad. So I think first I’d just say that we are pleased with the performance of the business, and we reiterate our anticipated revenues for the year.

We think that the ODAC, the CHMP decisions in multiple myeloma, as well as our strong pipeline in NHL and our increased accelerated progress in leukemias this year all point to a strong potential for 2026 and beyond. We do expect—we have not provided guidance next year—but we do expect continuing growth in a similar range to where we have been this year. I think the backlog, which we will recognize generally over a five to seven-year time frame. It is a strong backlog going into the year, and our new bookings have also been quite strong. We expect that to continue given the role of MRD potentially as an endpoint in additional indications beyond multiple myeloma in the coming years. Okay. That is helpful. It is great to see the 38% growth in MRD volume. I guess as. I am not asking for hard guidance on 2026 or anything, but.

Based on the fact that you’ve got Epic integrations, not just Epic, but other EMR integrations, you’ve got blood increasing, you’ve got community penetration increasing, you’re testing a lot of new patients. There are a lot of drivers that are working in your favor. Is there any reason to think that perhaps a 30% bar is something that you can perform against in 2026 in terms of MRD volume growth? Hey, Mark. Thanks for your question. As you mentioned, we’re not going to specifically yet come out with 2026 guidance. I can just say, all of the kind of underlying factors that you mentioned give us great confidence in the trajectory of the business in 2026 and beyond, and we will provide more specific guidance shortly. Understood. Thanks, guys, for the time. You bet. Our next question comes from Subbu Nambi at Guggenheim. Hey, guys.

Thank you for taking my question. In the spirit of just trying to model on ClonoSEQ ASPs, can you help us think about next year? I know your long-term target is $1,800. As we think about next year, it appears ClonoSEQ is well on track to hit your target this year. How much should ASPs continue to lift from here? Yeah, Subbu, appreciate the question. Look, I won’t give a firm number yet on 2026, but what I can say is, with the profile of the business and $1,340 in Q3, I feel confident about the exit rate that we’re going to exit the year at. With the momentum around coverage and not only CLL and what we’re seeing in DLBCL as well, I think we’re setting our foundation up fairly strong to go into 2026 to have meaningful growth in ASP.

That’s where we think we are. Again, reiterate that $1,700-$1,800 long-range target, and we’ll continue to grow the next year. Perfect. Thank you for that. Another one for me. Are mature EMR integrations remaining strong? What do those run rates look like? If still accelerating for the more mature accounts, how long before some of them actually steady off? Sure. I can answer that question, Subbu. Thanks for asking. As you’ve seen, our EMR integrations have continued to progress well and to drive growth across really accounts of all sizes, both academic and community.

I will just take a moment to mention that we do not just see the benefit of growth acceleration, but also we are protecting existing business from competition, and we are increasingly finding ways to utilize tools built within the EMR to help us increase the consistency and the frequency of testing, which will have long-term value for our growth in those accounts over time. We do see that the more mature integrated accounts do continue to grow more quickly than non-integrated accounts. That can vary to some extent based on the size of the account. As you can imagine, more well-penetrated accounts cannot sustain those significant accelerations that we see post-integration long-term, but we see a variety of benefits in those large accounts, even if they go back to sort of more stable growth rates after some time. We see that the integration helps democratize ordering, so more HCPs can place orders.

That reduces the impacts of staff turnover. We see reduced HCP workload, which sort of eases the effort we have to put in to maintain that business. We see we’re strengthening our competitive moats. Even in those largest accounts, this has long-term benefits. In general, to give you some statistics, when we look at our integrated account commercial volumes this quarter in Q3 versus Q2, we saw a 9% quarter-over-quarter growth across the entirety of the group, whether they were mature or newer. Non-integrated accounts grew 6%, so a 50% increase in the growth rate just looking across the entire group. That group is getting bigger, and the number of mature accounts is getting bigger over time, but it’s still relatively small. Most of our integrations are less than a year old.

We will have more to say as this continues, but we are confident that this is a real trend and that it is something that we can continue to build on with some of those tools I mentioned that the EMR offers us to optimize testing. Fantastic. Given we recently initiated, in most of our checks, we felt the competition was nonexistent almost, or there was no close competitor, maybe a distant second. When you refer to competitive moat, could you shed light on what kind of tests truly compete with ClonoSEQ? Sure, of course. In many of our indications, what we are really competing against is sort of lack of testing or use of traditional methods for disease burden assessment that are not really MRD. In those cases, we are focused primarily on educating clinicians on the clinical data, the utility, the use cases.

Now increasingly the guidelines, which are strongly supportive of MRD adoption. There are technologies, like you’re aware of, like traditional and next-generation flow that are utilized in academic institutions in-house that we have to compete against in those settings. Our data strongly supports the advantage of clonoSEQ over both traditional and next-gen flow. You’ll see some data at ASH, actually, that’ll look at that. On top of many existing data sets that’ll continue to be favorable to clonoSEQ. The one indication where we are seeing emerging competition is, of course, in diffuse large B-cell lymphoma. Competitors have entered the market. We anticipate will continue to enter the market in the coming year. The great news is that we’re very confident in our position. We’ve established strong credibility. We have robust clinical experience.

We’ve run more than 7,000 DLBCL tests in the past 12 months and had more than 900 HCPs order the test. We are way ahead from an established clinical base. We have a number of other established advantages: commercial footprint, relationships, our Medicare coverage, and now our expanding commercial payer coverage, which we’ve just started to see really secure a foothold. The fact that we can offer universal testing for all lymphoid cancers means even in a space where we may have more emerging competition, we do still believe we are well-positioned to maintain our market-leading position. Super helpful. Thank you so much, guys. Our next question comes from Andrew Brackman at William Blair. Hi, guys. Good afternoon. Thanks for taking the questions. Chad, I think you called out recent guideline wins this year and even in Q3. Obviously, we saw those throughout the year.

Have you seen those sorts of changes to the guidelines start to impact utilization already, or is that still something on the come? I guess bigger picture here, just on the commercial front, how are those updates perhaps maybe changing the conversation that your team is having with these docs? Thanks. Yeah. Maybe I’ll start and just kind of. Because we have had an impressive list of guideline wins this year, maybe I’ll cover them, and then I’ll turn it over to Susan to talk about kind of the impact that we’re seeing from a clinical standpoint. First, I mean, there’s been several meaningful guideline updates. In multiple myeloma, the recommendation to obtain a clonality ID assessment was really strengthened this year. This is key for clonoSEQ to help to reduce the barriers to the initial ID testing.

It’s also relevant to our education and penetration of the community, which is obviously a key driver of our growth. Also, in DLBCL, MRD assessment was included in the NCCN lymphoma guidelines for the very first time. We mentioned CLL in the prepared remarks the first time that the guidelines include a recommendation for serial MRD assessment and specified a frequency of three to six months. It also provides additional reinforcement about NGS being an alternative to flow, which Susan just mentioned. This is really just a great opportunity for us to educate on the data that emphasizes that clonoSEQ can detect disease that’s missed by flow below a threshold of 10 to the fourth. This is definitely starting—I just want to be clear—these guidelines came out this year. It’s certainly a helpful call point.

To go in with a strong data presentation, but I’ll turn it over to Susan to talk about how it’s impacting the clinical uptake. Sure. Maybe, Indra, I can just give you a couple of examples. First of all, in multiple myeloma, we’ve been talking a lot about the MIDUS data, which allows MRD-negative patients to potentially avoid a transplant. In that setting, we can now, with the support of the guidelines, underscore the value of the ID test at diagnosis to make sure that no patient misses that opportunity. That opportunity is particularly valued in the community setting where patients have to leave their local doctor to go get a transplant. Neither the doctor nor the patient likes that. There is a lot of motivation, and with the support of the guidelines to say that ID test is now.

There is a stronger recommendation around doing that. It ensures that more patients are accessible to this MIDUS message that we’re delivering. In CLL, where the guidelines were very recently updated, we’re really just getting started, but we are exposing community doctors to some of the potential benefits of limited duration therapy, which many of them haven’t experimented as much with yet, but we’ll do more and more with the, we expect, upcoming approval of some of the combination regimens that are being referenced in the guidelines now. We can talk now about testing frequency in the context of a limited duration therapy in a much more specific way, which is what the community doctors really want. They want us to tell them when to test, who to test, and the support of the guidelines just tremendously strengthens our ability to deliver that message.

Susan, maybe to follow up there, I think in an earlier question, you referenced tools in the EMR to increase the frequency of testing, getting that scheduled. Maybe just sort of practically, what are you referencing there? I guess how does that drive the increased utilization here? Thanks. Sure. Yeah. A couple of things that I’m referencing are things like treatment plans and order sets. There are ways within Epic, let’s say, that a clinician or a department can set up specific sets of actions that they want to take for a given type of patient at a given point in time. We are now talking to clinicians in our integrated accounts increasingly about how clonoSEQ might be incorporated into order sets. How do guidelines, existing data, well-vetted clinical trial designs, support specific time points? Where are there places where you might want to make decisions?

Would you want to have the clonality ID incorporated into the diagnostic workup? All of those things can be facilitated by tools that are built into Epic. Additionally, there are tools that allow you to do essentially analytics and reporting on your patient population. For example, very easily in Epic, you can pull up a list of all the patients who are within, let’s say, one month of the end of a frontline induction regimen in DLBCL, and you can make sure that your staff has those patients on their radar to place a clonoSEQ order when they come in. That kind of thing is incredibly powerful. It is really where you’re going to hear us talking a lot more in 2026 about those types of things because we’re shifting from just get as many accounts integrated as possible.

We’ll continue to do that, but now we can also look at our integrated accounts and what are all the opportunities to use those tools. Our next question comes from Sebastian Sandler at J.P. Morgan. Hey, thanks for taking my question and congrats on the quarter. My first question is on community. I think that had another solid quarter. It seems to be continuing to accelerate. Can you just help us level set where we stand in penetration into the community, which is where most of the heme cancer patients are treated? Do you have any color on whether the sequential increase in HCPs from these practices are coming from new accounts versus existing accounts? I think you’ve kept your sales force account relatively stable, so I’m wondering if you have any plans to expand as you penetrate further into the community setting. I have a follow-up.

Thank you. Sure. Thanks, Sebastian. Let me see if I can touch on all of those. First of all, our community penetration, while we’ve made substantial headway and now have about 30% of our volume coming from community settings, we still are under-penetrated, certainly relative to academic settings, and have a very high ceiling in that space. We are taking, as you know, specific steps to drive growth in that setting, one of which is the recent integration with OncoEMR via Flatiron Health. We’ve been really pleased with the results we’ve seen in the Flatiron accounts. I’ll just briefly mention that we saw 17% quarter-over-quarter growth in Q3 in our Flatiron accounts.

We’re only one quarter into our experience, but quite a lot of interest in opting into our serial testing offering in that interface, which we’ll learn more about how we can pull those tests through in the coming months. A lot of potential that I think we can build on with the option of serial test ordering in community settings. In terms of the HCPs, where are they coming from? We have a lot of white space in the community still. While it takes time to break into new accounts, we continue to see new HCPs in both new and existing accounts. In the existing accounts, integration is a big driver of bringing new HCPs on board because, again, it democratizes the ability to order. The new accounts will continue to penetrate.

There are Flatiron accounts that do not yet use clonoSEQ, and that is a big area of focus. Outside of that segment as well, in terms of the sales force, we have looked at this carefully, and we are comfortable with the 65 reps that we have, of which about half are focused on the community setting. What I would say is that this is the right number of reps based on what we can see in terms of potential in each territory, the number of accounts and HCPs each rep is calling on, and the amount of windshield time that the reps have. We do look carefully at our alignment, and we will occasionally add a territory or collapse a territory when we see some specific opportunity.

Over time, we will consider potentially new deployment strategies that could justify additional hiring, but we’re not anticipating any significant expansion in the near term. Got it. Very helpful. My second question is on sequencing gross margins. Those had a nice step up. Can you give us a little more granularity on the individual drivers of that improvement? I think more of the uplift from the X transition was expected to fall more in 4Q, but I’m wondering if that benefit was accelerated and had an outsized impact in 3Q. Any color on how we should think about sequencing gross margins exiting the year would be helpful. Thank you. Thanks, Sebastian. I appreciate the comment. Sequencing gross margin was 66%, and that was up from 64% in Q2.

I’d say if you drill in a little deeper on the MRD business alone, it was up 3 percentage points, and NovaSeq X contributed 2 percentage points of that. Certainly taking up the lion’s share of the improvement. We were only integrated starting at the end of July, so really two months of benefit. Expect it to continue. In terms of guidance as it relates to exiting the year, we said 5-8 percentage points. Post-launch, still reaffirming that. I think we’ll see a continued step up, especially as the volume continues to grow exiting the year. Great. Thank you. Our next question comes from William Bonello at Craig Hallam. Hey, guys. Thanks a lot. I just want to circle back to the question that Andrew was asking about the EMR tools. Did I hear you right earlier in the call that you said. With.

I need to be clarified whether it was Epic or OncoEMR, but that a physician now has the ability to essentially put in an order that would cover multiple testing time periods upfront. If I did hear that right, maybe you can talk a little bit more about how that works, if that’s available for all indications. Can a practice customize, or they—you mentioned some time points, but I do not know if those are fixed order points or a doctor has flexibility around that. Maybe what kind of lift do you think you might be able to get from that capability in terms of tests per patient? Sure. I’d be happy to talk more about that, William. The serial testing option is available to our Flatiron integrated accounts. OncoEMR offers this as an option in their interface that we’ve taken advantage of.

What essentially happens is when you’re placing an order, you have to select from a dropdown whether you’d like a single order or a serial cadence, which can vary from one, three, six, or twelve months. It is as simple as selecting from the dropdown. That is universal for all OncoEMR accounts that utilize their molecular precision MPI tool, which is what we use to provide integrated test ordering. It is across all indications. It is not customizable in the sense that it looks the same for every practice, but it is up to the HCP what cadence they select. We do see variability depending on whether an HCP is going to do blood or bone marrow, depending on whether they’re testing in DLBCL or CLL, etc.

We haven’t quantified the specific lift associated with this yet because, as I mentioned, we’re only three months in, and most clinicians are selecting a three or six-month cadence. We are just now getting to the point where we’ll be able to start measuring. Do we pull those orders through, or do the physicians elect to delay or not send the sample? We are confident based on the early results that we will get incremental test growth from that offering. We are looking at whether there are ways to extend it to other parts of our business beyond Flatiron. If a physician, for instance, selects a three-month cadence, does that mean that for a period of time, every three months, another test is being ordered? I just want to make sure I understand that. Correct.

I mean, it’s essentially that way, but what happens is it’s like a placeholder order. The order is scheduled into the patient’s calendar within the EMR system. When that due date comes up, it will sort of pop up for the staff in the clinic and say, "This patient is due for another blood draw for a clonoSEQ test." The staff still have to take the action to make that blood draw happen before it comes to us and officially counts as an order. None of these orders are appearing in our order numbers, but if we pull them through, which we are actively working to do by putting in place reminders and field-based tactics to ensure that our clinicians are aware that these orders are coming due, we’ll be able to.

We expect, pull some number of those through and be able to provide more consistent testing to patients over time. Okay. That’s really helpful. Then just a completely different question for you guys. Where are we at in terms of blood today and uptick with blood and as sort of a percent of what you’re seeing and what are your thoughts on that looking forward? Sure. Overall, we have now reached 45% of all MRD tests being performed in blood. That was actually our goal for the year, so we’re pleased to have achieved that. A quarter early was to exit the year at 45% was our expectation. We are seeing increases in blood-based testing in both myeloma and ALL, which are sort of traditionally marrow-based tests. We now are at 37% of ALL tests in blood and 24% of multiple myeloma tests in blood.

That’s each up about three to four absolute percentage points from a year ago. We also have increased contribution from our primarily blood-based indications, which include DLBCL, MCL, and CLL. DLBCL, in particular, is driving some of the growth in blood-based testing because it’s simply becoming a larger portion of our total test base. Sure. Okay. If I can, just one last question. You mentioned the national contract wins. Just the way the bullet points were on the slide, I wasn’t totally sure if you were saying those were related. If they were two distinct points, are the rate increases related to just DLBCL and CLL, or are those across all modalities? Secondly, did we see any benefit from that this quarter, or is that all ahead of us? Yeah, I’ll start, and then Kyle, feel free to jump on. First.

There’s a difference between kind of coverage and potentially rate increases, although those can sometimes be combined. What I mentioned in the prepared remarks is that we obtained coverage, our first commercial payer coverage in DLBCL, and that for two CLL coverage policies. We obtained kind of further coverage. So those will hit now, but then you’ll see the impact come over time. Those wouldn’t be reflected in this quarter. Yeah, that’s right. And the contracting initiatives or wins we flagged were in effect in Q3, so some of that will pull through in Q3. We still think there’s some room to go just from an implementation perspective with some of those payers that we’re still working some of the kinks through, but we’ll get there on that front. Just to give you a good example. Remember.

We discussed a major payer win in terms of contracting kind of for Anthem last quarter and the implementation of actually probably two quarters ago, and the implementation happened this quarter. You do start seeing a lift in terms of your ASP from that. There is a lag often between contracting and implementation and kind of the rate increase and/or the rate increase. Okay. That makes sense. When I go back and look at it, I see it is sort of two distinct points, right? You have coverage policies for the two. Plus, I am reading that right, though, that there were three national payer price increases, but you are saying those, Kyle, you are saying those two quarters. Yeah, definitely that. Correct. That was in effect in Q3. Okay. Very helpful. Thanks a lot for taking all of those. Thanks, Bill. Sure, Bill.

Our next question comes from David Westenberg at Piper Sandler. Hi. Thank you for taking my question. I want to maybe start with the contribution margin of MRD at this point. I mean, I know you’re maybe not going to give the exact number, but I’m just kind of thinking about how as we see growth in that, we see this move to cash flow breakeven and kind of our ability to pace that. Also, just given the fact that you do have a pretty solid competitive lead in MRD in blood at this point, how are you thinking about balancing investments in sales and marketing, etc., to really push on that competitive advantage, maybe clinical studies or anything else there? Thank you. Yeah. Thanks, David. On the contribution margin comment.

Certainly, we have control to be able to manage and pace the growth as long as we continue to see and expect to see the growth. Again, this quarter was a great accomplishment to see the cash flow positivity, which gives us some confidence going forward that the business will remain cash flow positive. That being said, we may choose to make some additional investments to press the gas and grow faster, either in volumes and/or in the reimbursement environment. I think all of those things combined give us a little bit of control. And as the volume continues to increase, we can decide whether or not we want to reinvest in the business and what areas we want to go after. Maybe I’ll add on to that, and then Susan can as well. First, I think it’s worth pointing out, even though we’ve had great growth.

There’s still a long way to go in penetration in order to fully capture this kind of large and expanding total addressable market opportunity. Particularly in terms of investments, we are continuing to invest in kind of blood-based testing, both in terms of assay improvements and in terms of clinical studies. In addition to kind of blood-based testing, I think that’s a key initiative for us overall, investing in clinical studies to continue to demonstrate the clinical utility of the assay as where a doctor can use our test to kind of improve patient care across the continuum. We’ll continue to make those investments. Got it. Just real one quick one on the guide. Apologies, I’ve been jumping between three calls here. Is there any seasonality in the Q4 MRD number?

I mean, I think you’ve had sequential growth of, I think it was 10%, 10%, 7%. I realize you can’t maintain that forever. I think the guide would kind of imply that maybe the volumes or the ASPs might be a little bit lower than what you’ve gotten in the quarter over quarter. Just wanted to see if you could remind us on the seasonality there. Yeah, I’ll just stop there. Yeah. As it relates to the guide, certainly something we are contemplating with respect to our guidance. Obviously, the volume growth has been phenomenal, and we expect it to continue to be phenomenal. Q4 is one of the tougher periods with the amount of holidays and ordering. I think that factored into some of our guide. Again, longer term and into 2026, we think there’s strong growth ahead of us.

There’s a little bit of seasonality in that growth. Doesn’t mean we can’t beat it. That is factored into our guide. Got it. Maybe I’ll just squeeze in one quick one. I might be at the end of the queue anyway. Just in terms of your thoughts on outside of multiple myeloma. Potential to see this as a primary or clonoSEQ as a primary endpoint, specifically written in as clonoSEQ or NGS clonality, etc. How far away are we from that? I mean, I’m guessing we’re seeing a lot of speeding up of clinical trials and really seeing more promising drugs coming through the pipeline because of this. When can we see that advancement to other sorts of areas like CLL, ALL, MCL, non-Hodgkin’s lymphoma, etc.? Thank you. Sure. As I think Chad mentioned earlier, we have.

There are active efforts ongoing for both CLL and DLBCL to establish a similar designation as the ODAC provided for myeloma for MRD as an accelerated endpoint for approval. The CLL effort is being led by a couple of KOLs and in partnership with a broad coalition of pharma partners. We’re actually getting engaged in that effort as well directly. What the leaders of that initiative have said to us is that it took 10 years for multiple myeloma. It will not take 10 years for CLL. That’s because we now have a blueprint for what the FDA is looking for. That said, the FDA has evolved since the time of the ODAC vote, and there are uncertainties around that. The data collection is advancing rapidly, and I think all the participants are confident that.

Current administration, notwithstanding, will see those things come to fruition much faster than they did in multiple myeloma. I think that other indications beyond CLL and DLBCL may have reason to explore this in the future as well. Just one point in terms of quantifying this. In terms of kind of bookings, our 2025 CLL bookings are more than twice what they were last year in the MRD pharma space. Thank you. Our last question comes from Dan Brennan at TD Cowen. Great. Thanks for taking the question. Congrats on the quarter. Maybe just on DLBCL. I mean, the mix ticked up. The mix ticked up pretty nicely in the quarter.

I know you may have addressed it a little bit, but just speak to a little bit of what you’re seeing there and how we might think about the opportunity there as we go into 2026 in terms of the pace of progress. Sure. Thanks for the question, Dan. Yes, we are continuing to see a nice solid uptick in the contribution of DLBCL, rising from 6% a year ago, three quarters ago, to 9% this quarter. It’s kind of poised to overtake CLL, actually, as the third largest indication probably in the next quarter or two, although we’ll certainly expect the CLL business to be buoyed by the recent guidelines update. In DLBCL, I think a couple of things contributing. Certainly, one is the noise around MRD in the space, which is not just coming from us. There is a large amount of data generation ongoing.

There is a lot of interest from pharma companies in how they can utilize MRD-guided treatment to optimize outcomes in this disease state, which is curable for a subset of patients and hopefully for a growing number of patients, proportion of patients over time. There are several companies that are currently advancing or considering trials that will include MRD-guided elements to them in the coming years. In addition to the interest in the clinic as it is, that will contribute, I believe, to greater use cases for MRD in the clinic. Great. Maybe just a follow-up. I know there’s a few questions on margins, but just wondering, as an early read, if we think about.

Into 2026 and the investments you’re making, but yet the OpEx leverage path you’re on, just can you remind us how we might think about the early look on OpEx leverage as we go into 2026 and what are the key puts and takes? Thank you. Yeah. I mean, I think we will continue to see growth in investment areas like EMR. At this point, we’re not planning any major investments. That being said, we might change our minds. At this point, I think we’re going to continue to see meaningful leverage across the business. We look at opportunities to take advantage of the position we’re in in the MRD business. The other area that I mentioned earlier, Dan, continuing to invest in kind of data generation for clinical utility studies. Overall, we’re looking to continue to get leverage out of the business.

Have you guys even—I forget. Have you commented publicly at all about OpEx leverage for ’26 in terms of where consensus is? Or no, not yet? Not yet. Not yet, Dan. I got it. Okay. Okay. Thank you. Thanks, Chad. This concludes the question-and-answer session. Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.

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