Earnings call transcript: Caris Life Sciences sees 81% revenue growth in Q2 2025

Caris Life Sciences reported significant growth in its Q2 2025 earnings call, highlighting an 81% year-over-year increase in total revenue, reaching $181.4 million. The company’s molecular profiling services led this growth with an 86% increase. Currently trading at $32.54, InvestingPro analysis suggests the stock is slightly overvalued, with a market capitalization of $8.4 billion. The stock has shown strong momentum, gaining over 15% in the past six months.

Key Takeaways

• Caris Life Sciences’ total revenue surged by 81% YoY to $181.4 million.
• Molecular profiling services revenue grew by 86%.
• Gross margin improved significantly to 62.7%.
• Positive adjusted EBITDA of $16.7 million was reported.
• The company ended the quarter with $723 million in cash and marketable securities.

Company Performance

Caris Life Sciences demonstrated robust performance in Q2 2025, driven by substantial growth in its molecular profiling services. The company’s innovative product offerings and strong market presence have positioned it well within the competitive landscape of precision oncology. The launch of MyCancerSEQ, the first FDA-approved whole exome/transcriptome tissue assay, has strengthened its market position.

Financial Highlights

• Total revenue: $181.4 million, up 81% YoY
• Molecular profiling services revenue: $162.9 million, up 86% YoY
• Pharma R&D services revenue: $18.5 million, up 49% YoY
• Gross margin: 62.7%, up from 37.5% in Q2 2024
• Adjusted EBITDA: $16.7 million
• Free cash flow: $5.9 million

Outlook & Guidance

For FY 2025, Caris Life Sciences has set a revenue guidance of $675-685 million, representing a 64-66% YoY growth. According to InvestingPro data, analysts maintain a strong buy consensus with price targets ranging from $31 to $38. The company aims for a gross margin of 60% for the full year, improving from the current 46.71%, with a focus on organic platform development. Clinical therapy selection volume is expected to grow by 19-21%. Get access to 12+ exclusive ProTips and comprehensive financial analysis with an InvestingPro subscription.

Executive Commentary

Brian Brilli, EVP and Vice Chairman, expressed optimism about the company’s future, stating, "We believe that we are in the very early innings of our company’s remarkable journey." CFO Luke Power emphasized the company’s strategic focus, saying, "Our goal is not to maximize our profits or hoard cash... we have a lot of exciting things we’re working on."

Risks and Challenges

• Market competition: The precision oncology market is highly competitive, with rapid advancements in technology.
• Regulatory hurdles: Obtaining FDA approvals for new assays can be time-consuming and costly.
• Economic factors: Macroeconomic pressures could impact healthcare spending and investment in new technologies.

Q&A

During the earnings call, analysts showed interest in the company’s commercial payer traction and the expansion of blood therapy selection. There were also discussions on potential market opportunities in MRD and early detection, as well as the continued focus on AI and comprehensive testing.

Full transcript - Cai International Inc (CAI) Q2 2025:

Kevin, Conference Call Coordinator: Good afternoon, everyone, and welcome to the Keras Life Sciences Q2 twenty twenty five Earnings Call. My name is Kevin, and I’ll be your coordinator today. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that this conference is being recorded.

I would now like to hand it over to Narendra Chokshi with, Carus. Please go ahead.

Narendra Chokshi, Unspecified, Caris Life Sciences: Thank you, operator. Earlier today, Caris Life Sciences released financial results for the quarter ended 06/30/2025. Joining from Caris today are David Hallberg, Chairman, Founder and CEO of Caris David Spetzler, our President Brian Brilli, EVP and Vice Chairman and Luke Power, our CFO. Before we begin, I’d like to remind you that during this call, management will make forward looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.

These risks are discussed in our SEC filings, including our prospectus filed with the SEC in connection with our IPO and our quarterly report on Form 10 Q to be filed later today. Kerris disclaims any intention or obligation to update or revise financial projections and forward looking statements whether because of new information, future events or otherwise, except as required by law. The information in this conference call is accurate as of the live broadcast. This call will also include a discussion of non GAAP financial measures, which are adjusted to exclude certain specified items. The reconciliation of these non GAAP financial measures to the most directly comparable GAAP financial measures are available in the press release issued today.

A copy of today’s presentation materials can be found on our Investor Relations website. I will now turn the call over to Brian.

Brian Brilli, EVP and Vice Chairman, Caris Life Sciences: Thanks, Narendra. Thank you all for joining our second quarter twenty twenty five earnings call. This is our first earnings call post our June IPO and we’re very enthusiastic to begin reporting our results publicly. I’d like to start this call by expressing our gratitude to all of our investors who participated in our recent IPO, as well as the investors who have supported our previous private financings over the past seven years. The IPO was a significant milestone for us.

We were deliberate about waiting for various elements of our strategy and platform to be in place before going public. We are pleased to finally be public and we believe that we are in the very early innings of our company’s remarkable journey. As Narendra mentioned, we’re joined today by David Halbert, our CEO and Founder, who had an exceptional run previously as CEO and Founder of Advanced PCS. Without David’s vision and personal funding, we would not have been able to build KARIS Life Sciences with a truly long term and strategic perspective. Doctor.

Spetzler, Luke and I will present our results and all four of us are available for questions after this presentation. Let’s start with our mission on slide two. We are focused on delivering on our founder’s mission of making precision medicine a reality. We believe that the breadth, depth and scale of our tech platform, whole exome and whole transcriptome in one universal assay is a highly important competitive edge, both from the perspective of providing optimal clinical utility, but also the generation of uniquely valuable data. Moreover, our Carus Assure blood assay is designed to provide the same technology across the continuum of cancer care, including therapy selection, MRD monitoring and early detection.

Our long term strategic perspective and the early investments we made in our tech platform have enabled the results that we are pleased to present today. We’ve had an outstanding first half of the year and second quarter with second quarter total revenues increasing 81% year over year to $181,400,000 As shown on slide three, this result was driven by strong performance from both clinical profiling as well as pharma R and D services. Molecular profiling services revenues increased to $162,900,000 representing an increase of 86% year over year. And pharma R and D services increased to $18,500,000 for growth of 49% year over year. On slide four, with respect to molecular profiling revenue, you can see the remarkable increase of 86 year over year, which is driven by consistent growth in clinical case volumes, as well as very strong growth in clinical ASP.

Clinical case volumes were slightly over 50,000 profiles representing growth of 22% year over year and over 9% sequentially. Carus Assure for therapy selection continues to gain market share and produced a 56% year over year case volume growth in the second quarter. In addition, overall ASP increased to $3,256 per profile for growth of 52% year over year. This is primarily due to the new CMS rate of $8,455 which took effect retroactively to November, the date of MI CancerSEEK’s FDA approval. Following this FDA approval, we launched this novel assay on January 1.

My CancerSEEK is the only FDA approved tissue assay on the market, which features whole exome, whole transcriptome and its adoption has been excellent. This mix shift to MI CancerSEQ has driven a significant increase in ASP this quarter. It’s worth noting that the FDA approval of My CancerSEQ has also produced other benefits more broadly across private payers, which Luke will describe. In summary across the board, we’ve had a very productive second quarter illustrated by the quarter highlights on slide five. The strong revenue performance combined with the operating leverage inherent in our business model naturally has produced significant margin improvement.

And specifically gross margins improved to 62.7% up from 37.5% in the second quarter last year. This is driven by several factors, including strong overall revenue growth in both clinical and biopharma revenues, as well as lab and other operational efficiencies. It’s important to note that our gross margin now properly reflects our MI CancerSEEK CMS pricing, which is caught up with the tech investments, notably the move to whole exome whole transcriptome that we introduced a number of years ago. We deliberately front loaded investments in tech, lab capacity and distribution channel, and we believe the P and L is now very well positioned for sustained profitable growth. In fact, with this gross margin improvement, we have successfully achieved a major milestone in our path to profitability.

And in this quarter, we generated positive adjusted EBITDA of $16,700,000 as well as positive free cash flow of $5,900,000 And Luke will expand further on these important developments. In addition, our balance sheet has been strengthened substantially with the June IPO, which raised net proceeds of $519,000,000 including the green shoe together with the April crossover round, raised $159,000,000 in net proceeds. We finished the quarter with $723,000,000 in cash and marketable securities. Accordingly, we believe that the significant strengthening of both our balance sheet and P and L provides us with strategic flexibility for ongoing investment to develop Kerris’ extraordinary opportunities in MRD monitoring, early detection and other markets as well. Slide six illustrates the consistent and systematic growth that our team has generated in clinical profiling over many years.

We’ve grown clinical case volumes at a CAGR of 28% over the past five years. And this growth rate has continued in the 2025 at 26% year over year. The sustained case volume growth reflects several factors. First, the unparalleled breadth and depth of our 23,000 genes, DNA and RNA continues to resonate with oncologists, KOLs and cancer center leadership. In addition, our differentiated strategic coverage, as well as research orientation, The CARES Precision Oncology Alliance, for example, provides us a competitive edge in the market.

Finally, we believe that the therapy selection TAM continues to expand with new indications, as well as ASP growth. And most importantly, we believe that the penetration rate for CGP remains relatively low at around 30%, providing us with growth opportunities to serve more physicians and patients with superior technology over many years to come. We also benefit from strong operating leverage associated with our established distribution channel, seasoned sales force and strategic relationships at both the institutional and oncologist level. We are now consistently reaching approximately 5,500 oncologists across the country. In addition, there are other technological efficiencies such as EHR integration, have further enhanced the pipe connectivity with our clinical client base and have facilitated case volumes.

We are now EHR integrated with approximately 2,500 clinical sites and over 60% of our orders are transmitted electronically. As you can see on slide seven, the CARES data set has continued to grow driven by our clinical profiling activity and now exceeds 900,000 genomic profiles and 600,000 matched profiles. Since every profile has been generated with whole exome whole transcriptome technology for many years, our dataset features 529,000 exomes and 580,000 transcriptomes. This gives our dataset tremendous power for our own internal product development and continues to enhance our attractiveness as a preferred research partner for both academic medical centers, as well as biopharma. The growth of the Carus Precision Oncology Alliance also continues as shown on slide eight.

This quarter, we welcomed LSU’s Cancer Center to the POA as our ninety seventh member. This growth illustrates the continued strength of the Alliance as well as the scale of the overall POA collaboration. The POA members benefit from access to our Code AI genomic dataset as well as the opportunity to publish with us And the collaboration has proven highly productive with a cumulative total of over 1,100 peer reviewed joint publications. Finally, we published a landmark Keras Assure platform study, which demonstrates both the power of our whole exome whole transcriptome approach, as well as the potential for this universal assay across the continuum of cancer care. I’ll now turn the presentation over to Doctor.

Spesler to discuss this landmark study along with a brief update on our exciting pipeline. David?

David Spetzler, President, Caris Life Sciences: Thanks, Brian. We were very happy to see this study published as we wanted to demonstrate the power of our universal approach across the cancer care continuum utilizing a single assay. I will touch on some of the highlights from our approach, and these are reflected on slide nine, which also incorporates AI powered insights that leverage nine distinct feature sets, including liquid biopsy specific features like fragmentum, motifoam, entriome, positome new, and positome TF. For therapy selection, we observed high concordance, a PPA of ninety three point eight percent, PPV of ninety six point eight percent in detecting driver mutations from blood samples compared to matched tumor tissue, especially with ChIP subtraction. In minimal residual disease and monitoring, the platform accurately predicts disease recurrence with patients predicted to have an event showing significantly shorter disease free survival with a hazard ratio of 33.4, a p value less than 0.005 for MRD, and a hazard ratio of 4.39 with a p value of 0.008 for monitoring.

Importantly, this is achieved through a tumor naive approach, removing the need for prior tumor tissue sequencing. The publication will support continued engagement with MolDX on MRD reimbursement for CRC, and I’ll provide an update on this in a few moments. For early detection, our platform demonstrated sensitivities for stages one through four cancers of eighty three point one percent, eighty six percent, eighty four point four percent, and ninety five point seven percent respectively, all achieved at a high specificity of ninety nine point six percent. We believe these sensitivities compare very favorably against all other industry data. Again, it was great to get the study and demonstrate the strength of Carus Assure as our universal assay, and our unique approach allows us to learn from all clinical samples in developing our pipeline, as this flywheel allows us to be efficient with our R and D resources, which can be seen by our R and D spend remaining flat year over year.

We also had a productive past few months on the publication front, and we have highlighted some of these on slide 10, along with a summary of the purpose of the publication. One in particular that I will call out briefly is our GPS AI paper, which is an internally developed AI tool we utilize in determining cancer of unknown primary and correcting misdiagnosed cases. We also run this on every tissue case at no additional cost to the patient’s insurance provider, and no additional specimen requirements, and this led to a diagnosis change in seven zero four patients through the first eight months of the study window, and these changes led to altered therapy eligibility based on level one clinical evidence in eighty six point one percent of the cases. That has a huge benefit on ensuring the patients get the right treatment at the right time, and we believe, as we continue to leverage our best in class data set, that these AI tools will become more and more prevalent and continue to make our solutions more proprietary, and ultimately providing better outcomes for patients across the whole care continuum. Moving to slide 11, I’ll give a quick update on our pipeline.

As demonstrated by our existing solutions, we always take a comprehensive approach when developing new solutions, which is driven by the MOM rule, treating every patient as if they were your mom, and everything on this slide continues to demonstrate that with some exciting advances. We are not guiding to potential launch dates until we have made it through various milestones, including obtaining reimbursement, but I will provide a quick status update on all of the below. For MRD, adjuvant colorectal cancer, with the paper published, we are currently working on submission to MolDEX. The initial study was performed with approximately 44 patient samples, which was not designed to establish the clinical utility of MRD, just that our performance is similar or better than existing solutions. After we submit, we should be able to provide a clear update and feedback from Molvex.

In therapeutic monitoring, we have run samples with four time points from 190 patients from the MONSTER-two trial with our Japanese colleagues at the NCCN Japan, and it provides across, and it spans across a variety of solid tumors minus lung. We currently believe that this will be our next MolDEC submission once we get CRC submitted in the adjuvant setting. We are taking a different approach with early detection with our initial focus being on breast cancer. You can see from our published data that we have a differentiated platform and great initial performance for M SIT due to our WESWTS approach, and we will continue to refine this ahead of any potential launch. We do not currently plan to seek third party reimbursement for this, and would initially launch as self pay with either a commercial partner or through our existing distribution channels.

Our heme assay will be whole genome and whole transcriptome, leveraging our experience in solid tumors. We are very excited about this and the potential impact this can have on patients with hematological malignancies. We are currently running internal validations, and we’ll provide updates as we get further data. Our unique approach to running the Buffy coat within therapy selection, and because we are already measuring CHIP, supports the potential to add germline to our suite of offerings, and we are currently working on validating this solution, and we’ll provide further updates as we progress. And finally, for clarity breast cancer recurrence, you saw from our press release last October that we have partnered with ECHOG Akron Cancer Research Group to interrogate the landmark TAILORx breast cancer trial, along with obtaining data and samples from the National Surgical Adjuvant Breast Cancer and Bowel Project.

As part of this, we have completed sequencing about 8,000 samples that were initially used in the original TAILOR X trial, and we are developing a digital pathology solution from this data that could have potential determining the expected breast cancer recurrence in the ranges of one to fifteen years. Similar to the above, as we progress, we will provide further updates publicly. You can see there is a lot we are working on, and we are very excited for the next phase of our pipeline and utilizing our vast dataset that Brian mentioned earlier. I will stop there and now pass it over to Luke. Luke?

Luke Power, CFO, Caris Life Sciences: Thanks, David. Brian mentioned some of these already within the highlights, and as you can see within our earnings release, we’ve also provided a summary metric table that will cover a lot of these points, so I’ll be relatively brief ahead of opening it up to questions. Moving to Slide 12, starting with revenue. From a year over year performance standpoint, we had exceptional organic revenue growth in the second quarter, with total revenue growing 81.3% versus Q2 of last year. And this was led by our growth within the molecular profiling business line, which saw 85.9% growth over the prior year.

There are two factors driving this growth. Obviously, our volume continues to be strong across therapy selection due to the great work by our sales teams, but the key driver was our improved reimbursement, which was driven by FDA approval of and the associated reimbursement uplift with that on our tissue solution, along with additional progress and true ups on CarAssure for therapy selection. And these ASP walks and true ups are reflected on slide 13 for additional reference. As Brian stated earlier, we launched MyCancerSEQ at the start of the year, and we’ve been able to ramp up the volume from this solution as we progress through the 2025, with MyCancerSEQ representing approximately 78% of our tissue cases in Q2, which was up from fifty four percent in Q1. This has allowed us to get to an ASP north of three thousand a case quicker than expected and provides a great tailwind as we transition into the second half of the year.

We continue to see excellent progress with national commercial payers due to medical policy updates and medical policies that cover FDA approved assays, which has facilitated additional contracting. We also saw good progress on our pharma line of business, which grew 49.1% to $18,500,000 for the quarter. Our goal for pharma is to enter into long term partnerships that are multi year and that continues to be our focus going into the second half of the year. These revenue numbers obviously had a very positive impact on our gross margin for the quarter, which was 62.7 and up from 37.5% in the 2024. And was the result of the excellent work by our lab teams in maintaining operating efficiencies with the increased volume, along with the ASP improvement and the pharma revenue growth.

You will also see this great trend on slide 14 and we believe with the step up in ASP and our initial revenue guidance that we can achieve our goal of getting to 60% gross margin for the full year of 2025, which would be an increase from 43.4% that we have for 2024. From an operating expense standpoint, we continue to demonstrate excellent operating leverage and the 26% ramp year over year was primarily driven by stock compensation and RSUs that vested upon the completion of our IPO, with stock compensation expense contributing $23,800,000 of the $27,100,000 increase reflected on this slide. With the IPO, you’ll also see in this quarter that we had some large one time material noncash transactions that hit our net loss and our EPS, and these were the results of the conversion or exercise of the various equity instruments to common stock upon our IPO, and we have called these out in our earnings release. Since these have now all converted to common stock, we do not expect this sort of unusual transaction to occur going forward. The last item I’ll comment on from this slide before jumping to the guidance slide is free cash flow.

Q2 was great in this regard as we achieved positive free cash flow for the quarter in the amount of $5,900,000 and this was aided by getting all our payments cut off from Medicare, which I’m happy to say has been completed, and this catch up is disclosed in the earnings release. Those who are familiar with our history will know that we achieved free cash flow breakeven before back in 2018, but in late twenty eighteen, under David’s direction, we purposely took the goal of developing our whole exome and whole transcriptome platform, which while more expensive, followed our philosophy for being patient first regardless of cost, since we have always believed that more information is more power, we and wanted to provide more power to patients and their physicians in the battle against cancer. So while we have some catch ups in Q2 on the payment side, you can still see the dramatic improvements we’ve made in cash burn by comparing the first half of this year with a free cash flow burn of $28,000,000 versus the first half of last year when we had $141,000,000 of free cash flow burn. We also believe that as we transition to the second half of the year, that we’ll continue to show improvement, with our goal for the remainder of the year being able to control our burn and achieve positive free cash flow along with continuing positive adjusted EBITDA, while also continuing to pursue the exciting pipeline that Doctor.

Spetzer discussed earlier. And finally wrapping up, jumping to slide 15, I’ll give a brief update on guidance. As a company, we will initially provide guidance on total revenue and expect the clinical therapy selection volume basis. With regards to these, we currently expect our total revenue to be within the range of $675,000,000 to $685,000,000 for FY 2025, which would be a 64 to 66% increase over 2024. And I expect our clinical therapy selection volume to be within 19% to 21% growth for the year.

I will wrap up there. And with that, we’ll now open up the call to questions. Operator, over to you. Thank you.

Kevin, Conference Call Coordinator: Your line is open.

Mike, Analyst: Great. Thanks for taking the question guys and congrats on solid first quarter out of the gate. I want to ask on the ASP update in the quarter, really good uplift versus 1Q and just sort of what was expected. Can you talk a little bit more about where you saw some of the biggest jumps? Was it on the Medicare side in terms of getting that realized ASP, the full CDx rate of eighty four point five five?

How much progress you made there versus some of the commercial payers on the tissue? And then I’ve got a follow-up. Thanks.

Luke Power, CFO, Caris Life Sciences: Yes. Hey, Mike. It’s Luke. Yes, so the key thing that drove the ASP for tissue was primarily kind of what we disclosed, the seventy eight percent of our tissue cases. That was kind of the number one driver.

We did get kind of everything caught up for Medicare and it’s operating kind of as expected. So that was great. And then the other uptake was on the commercial side. So right now through the first six months of the year, we’ve contracted and we’ve had covered lives greater than 170,000,000 so far in the first six months, which is a testament to kind of the great work our market access team has done. So that’s kind of driving the uptick and kind of better than expected for Q2.

Mike, Analyst: Okay. And if I look at the guide you issued for the year and sort of like where you’re exiting 2Q, it assumes you had a big jump 1Q to 2Q, especially on the ASP front, a little bit more on the volume. It assumes a much more almost linear or almost flat sequential, both on volumes and ASPs to hit that midpoint of around $680,000,000 Could you just talk to the conservatism embedded there, an ability to again drive ASPs a little bit higher as you go through the year?

Luke Power, CFO, Caris Life Sciences: Yeah, there’s definitely opportunity to drive it higher. Obviously, we’ve only had about four months of payments so far flow through at MyCounterseek. So similar to kind of our science approach, the more data you get we believe will have greater insights and greater opportunity to drive that further. But we’re kind of waiting for the collections to come in. The way the model is kind of built from an ASP standpoint, because we disclose both our tissue and blood separately, I’ll provide kind of what those numbers are.

So when we guide to, and what I’m going to do as a guide going forward is I’m not going to include any true ups or anything. So our results for Q2 obviously includes a little bit of a true up, pounds 7,000,000 true up for tissue and about a 4,600,000 pounds for blood. So the way we’ve kind of built out the model is going from a $3,200 pre true up in Q2 and adding incremental $200 each quarter for tissue. And then for blood, blood we had a good catch up in Q2, but going from the base, which is about $1,900 pre true up, you’re kind of incrementally going up $150 to $200 in each of those quarters as well. So that’s kind of how we built it up.

And then with regards to volume, volume has been great for the first half of the year. We kind of entered the year being more kind of high teens, mid to high teens from a therapy selection standpoint. Obviously, as Doctor. Spencer has gone through, we have a lot of stuff in the pipeline that we’re working on. So from a guide standpoint, I’m going to kind of maintain that mid teens, high teens just going forward.

But the great thing about the first half of the year is seeing that reacceleration in our tissue growth. Obviously, last year was about 14%, it’s about 19% for the first half of the year. So that was definitely very positive. We think we can continue that momentum into the second half of the year.

Mike, Analyst: Okay. The comments on the true up are helpful as well. And then one last one for me on the profitability. Congrats on the adjusted EBITDA positive right out of the gate. If I just take your comments on gross margin and how that should be sustainable going forward, Looks like you should be able to stay adjusted EBITDA positive the rest of the year and go forward.

But just any clarity you can provide on that in terms of R and D or sales and marketing, any OpEx spend in the second half of the year that prevent you from staying positive adjusted EBITDA? And I’ll stop there.

Luke Power, CFO, Caris Life Sciences: No. No, Mike, I think we’ve crossed that bridge now. So obviously, the goal for us is not to maximize our profits or hoard cash anything like that. We have a lot of exciting things we’re working on, so that’s the focus. But we don’t expect to go back now that we’ve crossed that bridge in Q2.

Vijay Kumar, Analyst, Evercore ISI: Great. Thanks.

Kevin, Conference Call Coordinator: One moment for our next question. Our next question comes from Dan Brennan with TD Cowen. Your line is open.

Dan Brennan, Analyst, TD Cowen: Great. Thanks for the questions. Maybe just sticking on the tissue volume, Luke, since you just kind of addressed that the acceleration in the first half of the year is 19% versus 14% last year. Can you just I know you touched upon some of the factors, but pretty impressive. Could you just walk through again kind of what is driving this big pickup and why do you think that’s sustainable for the rest of the

Luke Power, CFO, Caris Life Sciences: Yeah, I think there’s two components to that Dan. So obviously last year, like we did a big launch with our Sure product and it was quite unique. Obviously we have the buffy coat there with the liquid and it was a lot of education for the field and for physicians. So we kind of worked on that last year. What we’re seeing this year is obviously the FDA approval is helping quite a bit with that kind of acceleration.

And obviously the renewed focus from the sales team on both, now having both products kind of up and running this year, I think has benefited us. So going into the second half of the year, again, I’ll be we kind of started the year with that kind of mid to high teens, so that’s what I’d probably guide to in the second half, with hopefully some upside, but I don’t want to guide there.

Brian, EVP and Vice Chairman, Caris Life Sciences: And Dan, I add that the macro here we feel very good about. I mean, this market continues to evolve. The TAM is large and growing. It’s growing with adoption and education of the physicians. It’s going to earlier staging, ASP growth, all of the things you’ve observed before.

And the penetration rate is still relatively low at about 30%. So that’s the market. And then as it relates to us, we feel like we have a highly differentiated platform. The technology is really being appreciated by the marketplace. And our channel is quite special as well with the POA and other features.

So we feel great about tissue therapy selection, blood, all of those things before you get to the pretty exciting product pipeline.

Dan Brennan, Analyst, TD Cowen: Great. Thanks for that. And then just maybe one more just back to price since it is so important. Just I know, Luke, you mentioned a number of covered lives on the commercial side. Could you just elaborate a little bit just what are the conversations been like as you engage with some of these big national payers?

Have you had any headwinds on that front, any pushback? And just kind of confidence in that progress continuing in the back half of ’twenty five and into ’twenty six?

Luke Power, CFO, Caris Life Sciences: Yes. So Dan, the $170,000,000 covered lives also includes Medicare. I just want to make sure that that’s kind of clarified. Not so far. We actually had very good progress with the commercial component.

I think they realized the comprehensiveness of our approach. And one of the other key things that they’ve kind of honed in on, and Doctor. Spester touched on GPS earlier, is these added offerings that we have on top of just the sequencing. So like GPS AI for instance, that can actually save and that can be a good guide for the payers because you’re getting the patient on the treatment, the right treatment at the right time. So we’ve seen a lot of positive from those, and obviously we have a plethora of other additional IACs, or not IACs but AI insights that are going to be flowing over the next kind of six to twelve months as well.

And I think they’re gonna they’re seeing the comprehensiveness approach actually has a a positive impact on them too.

Dan Brennan, Analyst, TD Cowen: Great. Alright. Thank you.

Kevin, Conference Call Coordinator: One moment for our next question. Our next question comes from Vijay Kumar with Evercore ISI. Your line is open.

Vijay Kumar, Analyst, Evercore ISI: Hey, guys. Thanks for taking my question, and congrats on a nice sprint here. Luke, maybe just back if you look at the guidance here, the annual revenue guidance, I think you’re implying something like $190,000,000 extra per quarter in the back half. You just did 180,000,000 maybe some true up in more of there. What are you assuming for back half?

How should we think of any seasonality in the business here versus Q4?

Luke Power, CFO, Caris Life Sciences: Yes. So hi, Vijay. So like Q4 is normally a bigger quarter for us in terms of pharma. There’s always some lumpiness throughout the year and it’s more heavily weighted towards the latter part of the year. So I would expect Q3 to have kind of that lower pharma amount and then step up in Q4.

Now obviously we have a pretty robust pipeline that we’re working with our pharma partners on, so that could change. But right now that’s kind of what we put in the guidance. So you’re looking at a growth rate for Q3 in that kind of 75%. And then Q4, obviously, it’s continued to step up from an absolute dollars. But because of that great Q4 we had last year, you’re probably in that 60% for Q4 revenue growth rate.

Vijay Kumar, Analyst, Evercore ISI: Understood. And just to be clear, the guidance assumes mid teens kind of clinical volumes in the back half versus the 20 plus in the first half, correct?

Luke Power, CFO, Caris Life Sciences: Correct. It’s kind of maintaining that mid to high teens.

Vijay Kumar, Analyst, Evercore ISI: Understood. I mean, one for Doctor. Spencer here. You brought up heme. Can you just remind us how big is the heme opportunity?

When you enter that market, what should reimbursement look like? Who should be the primary physician that you’re targeting in the heme space?

David Spetzler, President, Caris Life Sciences: I’ll take that one. So for heme, we’ll start off with the myeloid disorders. So that’s where there’s a current LCD from Moldex. So we’ll be targeting basically all the indications covered by that existing LCD. It’s the same call point that we’re calling on today through our existing channel.

And then there’s a published rate out there for the ChromaSeq assay that you can look at on the MolDX website. So we would anticipate similar reimbursement as to that.

Vijay Kumar, Analyst, Evercore ISI: Understood. Thank you, guys.

Kevin, Conference Call Coordinator: One moment for our next question. Our next question comes from Doug Schenkel with Wolfe Research. Your line is

David Spetzler, President, Caris Life Sciences: open. Hi,

Colleen, Analyst, Wolfe Research: thank you. This is Colleen on for Doug. Just a question on OpEx. Are we correct in assuming that most of the R and D spend in the near to mid term will be on the dry lab, computational based? That should stabilize R and D spend in dollar terms.

And are you doing any big studies to support the pipeline that we should be aware of? One thing that’s been coming up in recent years also on the OpEx side in Specialty Diagnostics is that you really need brand recognition and accordingly need to spend on your sales force to grow. Can you potentially dial back on R and D and G and A to support higher levels of sales and marketing spend over time?

Luke Power, CFO, Caris Life Sciences: Yes, so I could actually take the first part and then I’ll let David Spencer answer kind of the study’s question. So Colleen, yes, so from an R and D standpoint, one of the unique things about us and it’s one of the reasons why Brian and Doctor. Spetzer called out the CARs Assure assay is we’ve done a lot of this development already. It’s one assay across the care continuum, so that allows us to be very efficient as we kind of develop and roll out these future products. So for my expectations around, you asked about OpEx, OpEx probably in the kind of GBP 115,000,000 to 120,000,000 a quarter for the remainder of the year.

There might be some variability there because again, we’re going to be strategic as we get all this growth going. But from an R and D standpoint, yes, we kind of do expect it to remain flat, again because we’ve already done the investment on our assay. And then, Beth, if you want to answer that, the publications and the studies.

David Spetzler, President, Caris Life Sciences: Yeah. We have some fairly large studies that we’ll be reading out in the next six to twelve months. We’ve done the vast majority of the investments in those studies already, so they won’t significantly contribute to increased OpEx, but you can expect some significant study results from OPTIMA.

Colleen, Analyst, Wolfe Research: Go ahead.

Brian, EVP and Vice Chairman, Caris Life Sciences: I just going to add, Colleen, you’ve sort of pointed to the operating leverage in our business and the sales force. And I think that’s a source of leverage and strength of ours. So we’ve built out that channel over many, many years. And in fact, our volumes have doubled over the past few years while the relationship management Salesforce team has been basically flat. So we benefited from that over the past few years.

I think that will continue to be the case. And we may fine tune it a little bit as we add new modalities, etcetera. But the reality is that same team that has deep relationships into the cancer centers, the institutions and the individual oncologists. So that will, I think, serve us well. They’re looking for the next set of assays and capabilities from us through that same channel.

Colleen, Analyst, Wolfe Research: Thank you so much.

Kevin, Conference Call Coordinator: One moment for our next question. Our next question comes from Sebastian Sandler with JPMorgan. Your line is open.

Narendra Chokshi, Unspecified, Caris Life Sciences0: Hey, this is Rachel Wattensdahl from JPMorgan. Maybe just to dig into the blood performance there. So you guys saw a nice step up in volume. So can you walk us through what type of color did you really see on that blood therapy selection launch? And where are you seeing the traction?

Is it in new accounts? Or is it existing tissue customers adding a complementary blood test? And then can you give us an update on what is the attachment rate that you guys are seeing between blood versus tissue?

Luke Power, CFO, Caris Life Sciences: Yeah, so Rachel, it’s kind of a mix of both. So obviously it’s our existing accounts that are utilizing us for tissue and that are kind of switching over. And then it’s also new accounts that we’re kind of penetrating. So for us, like one of the key things we’re also tracking is obviously the updated guidelines around concurrent testing as well. So far for Q2, for example, like for our blood cases, about thirty five percent of those are also had tissue done, again in accordance with the guidelines.

So we are seeing some uptick in that, especially around lung in particular. So that’s kind of where we’re seeing the volume coming from. I think one of the key catalysts for us going forward is obviously right now, our assay is not in New York State. It’s not New York State approved. So that’s a catalyst we’re working on right now to get that submitted.

Hopefully over the next kind of six to twelve months, we’ll kind of continue to build on that. So it’s existing plus kind of new accounts, it’s a bit of a mix.

Narendra Chokshi, Unspecified, Caris Life Sciences0: Great. That’s helpful. Then just a follow-up. Regarding the Pharma R and D Services business, you guys saw a nice step up there in the second quarter. So how should we think about growth within Pharma R and D in the back half of the year?

And then can you just spend a minute talking about what you’re seeing in terms of your customer environment and how that sales funnel is looking in light of some of the policy headlines we’re seeing in pharma across tariffs, MFN, IRA, things like that?

Luke Power, CFO, Caris Life Sciences: Yes, so as I said earlier, Rachel, I think it’s more weighted for us, like our pipeline is more weighted for us in kind of Q4 and Q3. We do have a lot kind of working through our pipeline right now. Again, we’ve been generally kind of more clinically focused, that’s been our history and that’s what we’ve been focused on, so that’s why pharma revenue and R and D revenue has been in that kind of 10% range. So I definitely think going into the second half of the year, we’ll see some uptick there, especially against the first half of the year. But it’d be more along the pillar of data plus kind of our CDx pillar as well is where I expect the kind of growth to come from.

Narendra Chokshi, Unspecified, Caris Life Sciences0: Perfect. Thanks guys.

Kevin, Conference Call Coordinator: One moment for our next question. Our next question comes from Patrick Donnelly with Citi. Your line is open.

Narendra Chokshi, Unspecified, Caris Life Sciences1: Hey, guys. Thank you for taking the questions. Maybe one on the pipeline side. Obviously, MRD, big attractive market. You guys talked a little bit about that.

Can you just talk about the strategy there? Obviously, some bigger players, first mover advantage. How you’re gonna compete there? What the right way to think about timelines is? And and just the commercial strategy would be helpful as we think, think about the pipeline here.

David Spetzler, President, Caris Life Sciences: Sure. So our MRD offering, I think, is unique in that it is the same assay, whole exome, whole transcriptome, and tissue naive. So our turnaround time is the same as our current therapy selection for liquid biopsy. And there are some important components that we’re able to report out besides just MRD posivenegative. So, for example, when the patient is MRD positive, we include all of the mutations that we found that could indicate what therapies are more likely to be beneficial, less likely to be beneficial.

We also include the germline components that we found, so when there are incidental germline findings we’re reporting those out. And the CHIP mutations, which can have other health impacts and effects. So in terms of how we’re positioning it, it’s a much more comprehensive solution than anything that exists out there today. And we’re not guiding on timeline. There are too many factors outside of our control for that.

Narendra Chokshi, Unspecified, Caris Life Sciences1: Understood. And then maybe one just on the commercial payer side, obviously, important as we think about the ASP and revenue build going forward. It seems like great traction here post the approval. Can you just talk about how things are trending relative to your expectations? And just how we should think about more payers coming on board over the next few quarters as we just build that ASP?

Again, the commercial is obviously a big piece of the step up as we think about getting into next year.

Luke Power, CFO, Caris Life Sciences: Yes, Patrick. So yes, it’s been trending very positively. So we do expect so some of the bigger national contracts that we’ve signed already will start to play out now starting in the second half of the year. So like personally I think we’re like a quarter or two ahead of kind of our initial expectations going into the year. So we’ll get more information as we progress into the second half of the year, but I definitely think it’s trending positively and kind of a little bit quicker than our initial expectations going into kind of what it should look like next year in 2026.

Kevin, Conference Call Coordinator: Great, thank you guys. One moment for our next question. Our next question comes from Saboon Ambi with Guggenheim. Your line is open.

Narendra Chokshi, Unspecified, Caris Life Sciences2: Hey, guys. Thank you for taking my questions. Are there any changes to your interest in or strategy for early cancer detection just based on some recent changes in the market and some potential changes to USPSTF from HHS?

Luke Power, CFO, Caris Life Sciences: Yes, David, you want to take that one about our early detection breast and our strategy?

David Spetzler, President, Caris Life Sciences: Yeah, so our strategy is to start with early detection of breast cancer. As you may know, the performance of mammography is limited, especially in those patients with dense breasts. And so we think that there’s a significant opportunity there, that doesn’t include the diagnostic ambiguity, associated with finding a cancer where there’s not a clear diagnostic pathway. And so our initial plan is to go after breast cancer. There’s a significant clinical unmet need there.

Narendra Chokshi, Unspecified, Caris Life Sciences2: Thank you, Seth. And while I have you, what have the KOL reactions been to recent GPS AI publication? Their offering has already been on the market in the first eight months. The reclassification data was already included in the paper. Do you expect this to be a market share inflection and order driver?

David Spetzler, President, Caris Life Sciences: Yeah, I think we’ve already seen improvement with the launch of this one, and it’s been on the market for quite a while now. The publication just came out more recently. So I mean, the number of cases that we found where we’ve changed the diagnosis is really quite significant. And those are profound events for the patients. So it definitely is something that is very significant for us.

Narendra Chokshi, Unspecified, Caris Life Sciences2: Perfect. So don’t view this as just some sudden inflection. This has been around for a while, is what you’re saying?

Luke Power, CFO, Caris Life Sciences: Correct. Yeah.

Narendra Chokshi, Unspecified, Caris Life Sciences2: Thank you, guys.

Kevin, Conference Call Coordinator: One moment for our next question. Our next question comes from Mark Bissar with BTIG. Your line is open.

Narendra Chokshi, Unspecified, Caris Life Sciences3: Hey guys, congratulations on a really strong quarter out of the gates. I wanted to start with the competitive environment. Clearly, you came in and delivered volumes well in excess of our model. I’m just curious, especially on the tissue side where you guys have a leadership position, What are you seeing in the field, I guess, the clinics and in the end markets? How much room do you think there is left to go?

I know Brian talked about 30% penetration. But I’m just curious about account by account, if you think you can continue to convert and take share in accounts over the years? Or do you see other players kind of in some of these accounts?

Brian, EVP and Vice Chairman, Caris Life Sciences: Yes. Hey, Mark. Thanks for the question. Yes, we’re very positive on this market. We think it continues to grow.

Physicians continue to adopt, and in particular understand the value of breadth and depth and importance of sophisticated information and assays. And I’d say the other very important thing is that the cancer centers, the institutions, academic and corporate, are really just in the beginnings in some respects of getting organized and standing up systematic precision oncology programs designed to get all patients profiled consistently, systematically, and generating the best data and the best outcomes. So this is a secular trend that has begun. It’s going to carry us for a long time, and the leaders in this field are going to benefit. So the clients in this sense, the doctors as well as the institutions need a real partner.

And I think not only our technology, but also our platform, the Precision Oncology Alliance, our strategic teams that help set up these programs, provide a real value add and an edge that will help us grow the market, increase the penetration of real CGP and in our case whole exome whole transcriptome against a field that remains relatively unpenetrated.

Luke Power, CFO, Caris Life Sciences: So I

Brian, EVP and Vice Chairman, Caris Life Sciences: think the value proposition for the client and the patient is very real and quite important. And as a result of all of that, we’re quite bullish on just the sustained case volume growth in therapy selection, including tissue. Well, more important than that is our AI insights of

Narendra Chokshi, Unspecified, Caris Life Sciences4: the maturity of our data of all that so called transcription allow us to provide information that no other company can provide and no other lab could provide. Even if they knew

Brian, EVP and Vice Chairman, Caris Life Sciences: what the signature was, they couldn’t provide because they don’t run it. So we’re returning something that may appear to you as being generic, it’s proprietary and more proprietary every day.

Narendra Chokshi, Unspecified, Caris Life Sciences3: Okay, great. And I wanted to ask a question about capital deployment. You’ve raised a lot of cash, over $700,000,000 of cash in the balance sheet. It’s been relatively quiet in the precision oncology space as it relates to M and A. We’ve seen some licenses and partnerships.

But I’m just curious if there was there is any appetite for you to potentially bolt on some capabilities. I understand you have plenty to work on organically. But I’m just curious how you would assess the external landscape and priorities with capital?

Brian, EVP and Vice Chairman, Caris Life Sciences: Yes, Mark, we don’t look, we’re very we’re pleased that our balance sheet and P and L, everything is in great shape. So I think that gives us strategic flexibility to invest and grow the platform. But we’ve been doing it organically and we intend to continue doing it organically. And I think that served us very well. So we just don’t see anything out there that would be incrementally helpful at all and kept our attention very focused.

I think it’s worked on standing up the best platform with the broadest and deepest molecular information. So, I don’t see that changing in the near term at all.

Narendra Chokshi, Unspecified, Caris Life Sciences3: Okay, great. And then last one for me. You guys have done a really good job on the ASP side and on pricing as well as reimbursement. I just wanted to ask a clarifying question about the one hundred and seventy million lives. I think you’re referring to MyCancerSEQ CDx.

And I just want to confirm that that is the FDA cleared, one hundred and seventy million lives that, you know, is that at a at, you know, the higher ASP, certainly above the three thousand five hundred rate towards the newer Medicare rate?

Luke Power, CFO, Caris Life Sciences: Yes. So that’s my cancer seat mark.

Narendra Chokshi, Unspecified, Caris Life Sciences3: Okay, great. Yeah. And that’s at, you know, approaching the Medicare rate? Okay. Thanks, guys.

Kevin, Conference Call Coordinator: One moment for our next question. Our next question comes from Jack Meehan with Nephron Research. Your line is open.

Narendra Chokshi, Unspecified, Caris Life Sciences5: Thank you. Good afternoon. Wanted to talk about Carus Assure, good progress on volume. Can you just give us your latest thinking on timing for FDA approval and kind of the importance of that, what you’re thinking in terms of reimbursement? Thanks.

Luke Power, CFO, Caris Life Sciences: Yeah, we guide, Jack, obviously, we’re being very careful there, especially things that are outside our control around timing of FDA approval. But definitely is an opportunity for us from an ASP standpoint. Our strategy there is to pursue kind of a similar path that we did with tissue. Obviously, with blood, what we would do is we would pursue FDA approval, then go try and get ADLT and kind of price it there. But again, we don’t have that in any of our numbers for the remainder of the year.

So we’ll give updates as we progress there, but no expectation around timeline.

Narendra Chokshi, Unspecified, Caris Life Sciences5: Okay. And then, you mentioned a few times during the call, your view the TAM continues to expand. One of the updates that came out around ASCO was in breast cancer and this idea of running multiple tests per patient in breast cancer. I was curious what opportunity you think that might mean for your test and what you’re seeing in the real world in terms of that dynamic.

David Spetzler, President, Caris Life Sciences: Yeah, I think as we start to understand how you can utilize molecular information to not only guide therapy decision, but also understand the patient’s response to it. We’re gonna see an increase in the number of tests per patient throughout their treatment courses, which will naturally expand the number of tests per year.

Kevin, Conference Call Coordinator: Thank you. I’m not showing any further questions at this time, and as such, this does conclude today’s presentation. You may now disconnect, and have a wonderful day.

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