Earnings Call Transcript - CAI Q1 2026

Operator, Operator

Good afternoon, everyone, and welcome to the Caris Life Sciences, Inc. Q1 2026 Earnings Call. My name is Steven, and I will 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. To ask a question during the session, you will need to press *11 on your telephone and you will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded. I would now like to hand it over to J. Denton at Caris Life Sciences, Inc. Please go ahead.

J. Denton, Investor Relations

Thank you. Earlier today, Caris Life Sciences, Inc. released financial results for the quarter ended 03/31/2026. Joining from Caris Life Sciences, Inc. today are David Halbert, our Founder, Chairman and CEO; David Spetzler, our President; Brian Brille, our Vice Chairman and EVP; Bobby Hill, our Chief Commercial Officer; and Luke Power, our CFO. Before we begin, I would 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 annual report on Form 10-K filed with the SEC. Except as required by law, Caris Life Sciences, Inc. disclaims any intention or obligation to update or revise financial projections and forward-looking statements, whether because of new information, future events, or otherwise. The information discussed in this conference call is accurate only as of the live broadcast. This call will also include a discussion of non-GAAP financial measures, adjusted to exclude certain specified items. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is available in the press release Caris Life Sciences, Inc. 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 Brille, Vice Chairman & EVP

Thanks, J. Denton, and thank you all for joining our first quarter 2026 earnings call. This is a strong start to the year, and we are pleased to report continued growth, profitability, and cash generation, which will continue to support our investment strategy focused on MCED launch, the broader product pipeline, and commercial platform expansion. As illustrated on Slide 3, our platform continues to expand across technology, scale, and commercial breadth. We are now supporting more than 6,100 ordering oncologists with approximately 70% of orders coming through our EHR and portal channels. In the first quarter, we completed 52,800 cases, up 15% year-over-year. We are very excited about the initiatives that our CCO, Bobby Hill, is driving, and we began to see the benefits of these in February and March. With this clinical activity, our dataset has surpassed 1.07 million profiled cases, including more than 677,000 whole exomes, 728,000 whole transcriptomes, and roughly 790,000 matched profiles. We also reached another important milestone with the recent addition of the 100th Precision Oncology Alliance member, UC San Francisco. We have launched two exciting products, Caris ChromaSeq and Caris MI Clarity. ChromaSeq is a therapy selection assay for hematological cancers which expands the breadth of our offerings and features a cutting-edge whole-genome technology. ChromaSeq was launched on April 1. In addition, we launched Caris MI Clarity, an exciting prognostic test designed to deliver insight into both early and late distant recurrence risk for breast cancer via digital pathology. Finally, and importantly, we are making progress with Caris Detect multi-cancer early detection and we are getting ready for commercial launch with Everlywell, with plans to add additional channel partners. Our philosophy is a long-term strategic orientation to develop the best offerings on the market and to pursue this innovation while generating profitable growth and maintaining financial strength. We had a strong first quarter with total revenues increasing 79% year-over-year to $216 million. As demonstrated on Slide 4, this result was driven primarily by strong performance from clinical profiling. Molecular profiling services revenues increased to $211 million in the first quarter, representing an increase of 85% year-over-year. In summary, across the board, we had a very productive first quarter, illustrated by the quarter highlights on Slide 5. This strong revenue performance, combined with the operating leverage inherent in our business model, has produced continued positive financial results while we ramp up investments, including revenue growth of 79%, which was driven by volume growth of 15% and a 61% increase in clinical ASP. This revenue growth has led to improved gross margins of 65% on a GAAP basis, up from 47% in the first quarter last year. We have invested significantly this quarter while maintaining financial discipline. This approach has produced positive adjusted EBITDA of $26 million as well as positive free cash flow of $22.5 million. This is our fourth straight quarter of positive adjusted EBITDA and positive free cash flow, and provides us with valuable strategic flexibility for ongoing investment in our tech platform for new products as well as the ability to develop new channels such as MCED. In addition, our balance sheet continues to strengthen with cash on hand growing to slightly above $825 million, an increase of $23.4 million in the quarter. Finally, as a result of this profitability profile, we were able to proactively refinance our credit facility. The new $400 million debt facility led by Blue Owl and Blackstone offers many advantages: lower costs, saving approximately $6 million in annual interest; an extension of the maturity date three years, from January 2028 to April 2031; and a committed delayed draw term loan of $300 million on the same terms for any potential strategic acquisition. We believe that our financial performance gives us unique strategic flexibility which supported our investment program in the first quarter. We are continuing to invest in our product pipeline, importantly in our MCED business, which Dr. Spetzler will describe in detail, as well as the expansion plan for our sales organization. We believe that our commercial channel is highly differentiated and has many strategic edges. Bobby Hill is bringing enhanced discipline and alignment to the overall platform. We are committing new resources to expand the commercial footprint with important hires across the platform, expanding the number of territories covered, and building product-focused sales teams. As stated previously, our strategy is to maintain financial strength through a strong balance sheet and profitability. These financial pillars of strength will allow us to realize our mission of making precision medicine a reality to benefit patients and support physicians. I will now turn the presentation over to Bobby to provide an update on our commercial business and related strategic initiatives. Bobby?

Bobby Hill, Chief Commercial Officer

Thanks, Brian. I will provide a brief update on our molecular profiling business along with our progress on the initiatives for the commercial teams in 2026. On Slide 6, this shows our strong molecular profiling revenue performance for this quarter, with revenues increasing 85% to $211 million. This revenue growth was driven by a 15% year-over-year growth in clinical case volumes, to approximately 52,800 profiles, and a 61% increase in ASP for our comprehensive profiling tests, reflecting our market access and billing teams’ continued excellent execution. We continue to see the benefits of ASP driven by our successful launch of MyCancerSEQ last year, and these benefits are reflected on the slide. Our tissue ASP increased by 70% to over $4,300 and our blood ASP increased by 14% to just under $2,500, driven by billing, our PLA code, and improved payment for Caris Assure. Luke will discuss the breakdown of this further during the financial update. Moving on to Slide 7, I will spend a minute on the commercial changes we made at the beginning of the quarter and why we feel good about the trajectory coming out of the quarter. We completed the realignment of the sales teams in January 2026 that included expanding our territory structure from 82 to 146 territories and continuing to build out the field organization. We made those changes deliberately to improve coverage, sharpen accountability, and create a stronger footprint for execution across both MyCancerSEQ and Caris Assure, along with setting us up well for product launches. January was a transition month, as expected, given the scale of the realignment and expansion. Following the realignment, activations in February and March grew approximately 20% year-over-year compared with the same two-month period last year, and full quarter activations increased 17% year-over-year. That reinforces our confidence in the underlying demand trajectory and, based on the completion cadence in February and March, supports a quarterly exit run rate of roughly 56,000 completed cases. For Q1 overall, we completed approximately 52,800 therapy selection cases, up 15% year-over-year, including approximately 43,600 tissue cases and approximately 9,200 Caris Assure cases. The key point is that demand accelerated as the quarter progressed due to the great work of the sales team, while completed case recognition reflected normal timing between activation and completion. Beyond overall volume, the broader commercial engine continued to perform well. Caris Assure volume grew 58% year-over-year. More than 70% of orders were submitted electronically. Over 3,000 physicians are using EMR integrations. And we ended the quarter with more than 270 sales representatives, progressing toward our approximately 300-person goal. Overall, we feel very good about how the team has performed with the initiatives, and I will now turn it over to Dr. Spetzler to continue with our progress on our product pipeline, in particular around Caris Detect.

David Spetzler, President

Thanks, Bobby. I wanted to start with an important milestone for the quarter for Caris Life Sciences, Inc., which is the final readout for ACHIEVE-1 for Caris Detect, described on Slide 8. At a high level, these data points serve as our CLIA validation clinical accuracy study and reinforce our conviction that our whole-genome sequencing approach to early detection is fundamentally differentiated. In the ACHIEVE-1 data, Caris Detect delivered a 60.3% stage I and stage II sensitivity, with a 99.2% asymptomatic specificity across a 3,014-subject high-risk cohort. This is a meaningful result in early detection, particularly when you consider both the size of the evaluable cohorts and the complexity of the underlying biology we are trying to detect. What gives us confidence in these results is not just the top-line numbers, but the platform underneath them. Caris Detect is built on the foundation of Caris molecular profiling data which now includes more than 1 million processed cases and over 50 billion molecular markers. That breadth and depth of data matters. It is what allows our AI models to identify difficult-to-detect biological signals associated with early-stage cancer with a level of resolution that we believe is differentiated in the field. When you look at performance by stage, the pattern is exactly what you would see in a high-performing assay: sensitivity increases consistently with stage—56.8% in stage I, 67.7% in stage II, 79% in stage III, and 98.6% in stage IV. We also reported 96% benign tumor and high-risk patient specificity alongside the 99.2% asymptomatic specificity results. We split the population of patients without cancer into two different groups because a false positive in a patient with a benign tumor or precancerous lesion should have a very different implication than a false positive in a healthy person. Taken together, those data show a strong balance between sensitivity and specificity across clinically relevant populations. Importantly, the cancer-type readouts were also encouraging in the total stage I and II data sets: we saw sensitivity of 53.7% in breast, 74.1% in prostate, 73.4% in lung, 60.6% in uterus, 61.8% in bowel, 81.3% in head and neck, and 70% in pancreatic cancer. And maybe the most important strategic point on this slide is that these results were generated using only one of nine potential pillars. In other words, we believe there is still room to improve from here, as additional pillars may further strengthen overall performance over time. We have been doing a beta launch the last few weeks and still anticipate commercial launch later in Q1 with Everlywell. Moving to Slide 9, this reflects the status of our robust pipeline. First, as Brian mentioned, Caris ChromaSeq is now launched with MolDX coverage. This is a whole-genome heme therapy selection solution designed for AML, MDS, MPN, and suspected myeloid malignancies. The assay is differentiated by greater than 200x depth of coverage across the whole genome, the ability to detect the full range of clinically relevant genomic alterations, and approximately 1.6 billion reads per patient. Second, we have also launched the digital AI-only version of Caris MI Clarity. Caris MI Clarity is designed for postmenopausal patients with HR-positive, HER2-negative, node-negative early-stage breast cancer at the time of diagnosis. We see this as an important extension of our platform into recurrence risk assessment designed to support better decision-making and reduce unnecessary therapy. Third, in MRD tumor-naïve, we continue to focus on colorectal cancer. This solution uses the Caris Assure platform as tumor-naïve by its design and is intended to support minimal residual disease detection from a whole-blood sample. We are currently compiling additional data for the MolDX technical assessment. Fourth, in MRD tumor-informed, development and launch planning have made progress. This is a pan-tumor opportunity intended for stage I, II, and III disease. It uses tumor-normal whole-genome sequencing to identify trackers, with a proprietary approach designed to minimize false negatives and maximize tracker counts to achieve ultra-low sensitivity. Finally, we recently completed our submission to New York State for Caris Assure, and we will provide an update once we hear back. We have had a very productive few months so far in 2026 with newly launched solutions and are continuing to generate additional data and multiple avenues to extend the same molecular and AI foundation across therapy selection, recurrence risk, early detection, and MRD. With that, I will turn it over to Luke for the financial update.

Luke Power, Chief Financial Officer

Thanks, David. Turning to Slide 10, we delivered another strong quarter financially with total revenue of $216 million, up 79% year-over-year. The main driver remained molecular profiling, which grew 85% versus Q1 of last year on continued ASP improvement and volume growth. Therapy selection completed volume was up 15% in the quarter, and as Bobby discussed, we were very pleased with how we exited the quarter. While completed cases came in modestly below our initial expectations due to timing, activations improved sequentially for the quarter for both tissue and blood following the January realignment, and that stronger case intake we saw exiting the quarter gives us great confidence in Q2 and the balance of the year. Turning to Pharma and Research revenue, this was $5.4 million versus Q1 2025 revenue of $6.8 million and was due to the deliverable movement of our Discovery and Data businesses under contract, which will flow through over the balance of the year and is supported by improved contract activity. Overall, our revenue continued to translate into a strong bottom line, with positive adjusted EBITDA and positive free cash flow for the fourth consecutive quarter, reflecting the disciplined approach we continue to take as we invest in the business. As I stated on the last earnings call, we intend to utilize this financial strength to fund the pipeline and commercial investments throughout 2026. You can start to see that in the numbers. Operating expenses were $130 million in Q1, up from $132 million in Q4, as we continue to prepare for pipeline launches, including early detection, and purchases of property and equipment for just over $10 million, up from $5.1 million in Q4, while still delivering positive adjusted EBITDA of $26 million in the quarter and positive free cash flow of $23 million in the quarter, which also included our annual bonus payments of $30.5 million. Turning to Slide 11, Q1 continued to validate the strength of our molecular profiling business with molecular profiling revenue of $211 million in the quarter, up 85% versus Q1 of last year. Reported revenue and ASP continued to benefit from favorable collections across both MI Profile and Caris Assure. As the chart on the right shows, we have seen a meaningful buildup in the underlying revenue base over the last seven quarters, with additional upside where collections have exceeded prior accrual assumptions as we continue to have collection success from the excellent work via our billing and market access teams. At the assay level, MI Profile base ASP was $4,091 in Q1, and Caris Assure base ASP was $4,421, showing the benefit from payer contracting in progress and stronger collection experience. With regards to our ASP, I also want to spend a minute on the reimbursement framework because there has been some confusion on this point recently. For us, both assays are CDLTs and not ADLTs. That means these are reported under PAMA, and the 2026 PAMA reporting window runs from May 1 through July 31, based on data from 01/01/2025 through 06/30/2025, with any related fee schedule update becoming effective 01/01/2027. As an update, we submitted our PAMA data on May 1 and do not expect any downward adjustments from that. We also continue to support the broader CRUSH efforts and do not view that as changing our underlying reimbursement position. Turning to Slide 12, this highlights the key commercial and reimbursement tailwinds supporting the business in Q1 and demonstrates our approach of always focusing on the technology first. Starting with MI Profile, we continue to benefit from MyCancerSEQ and the steady improvement we have seen through 2025 and into 2026. That progress has been supported by our contracting and payer collection experience, as demonstrated on the previous slide. At this point, we are above 225 million covered lives for MyCancerSEQ, which we expect to continue to increase throughout the course of this year, and the assay represented more than 75% of our tissue volume in Q1. As touched on before, we also delivered about 9% completed volume growth in MI Profile in the quarter compared to 2025, including a record February and March period following the sales realignment that also drove stronger sequential activations versus Q4, achieved by the great work done by our sales team following the realignment. On the Caris Assure side, this came in line with our expectations, with Assure’s volume growing 58% year-over-year, and importantly, volume also increased 7% sequentially. We continue to see traction in blood as we grow our penetration there with a differentiated solution. This continued leverage resulted in molecular profiling services gross margin of 65% in Q1 compared with 47% in Q1 of last year, an improvement of over 1,800 basis points year-over-year. Finally, moving to guidance on Slide 13, you can see we are reaffirming our guide from February, and I will address two key components prior to opening up the call to questions. Starting with volume, based on the February and March trends, we remain confident in the full-year volume framework. We continue to expect tissue growth in the low teens and blood growth in the high 50s to low 60s. The stronger activation trend exiting Q1 supports our guide view, and the timing gap between activations and completed cases should normalize as we move into Q2 and throughout the year with the realignment completed. With respect to the pipeline, we have launched Caris ChromaSeq, which was approved by MolDX and priced at $3,228, and also MI Clarity. After Q2, we will evaluate and incorporate the contribution from those launches along with any incremental impact from our continued sales strategies and commercial expansions. On revenue, while Q1 performance points us toward the higher end of the range with a beat on our expectations for the quarter, we are reconfirming guidance today and will evaluate after Q2 with the additional history of the new launches and continued execution. I will stop there and turn it back over to the operator for questions.

Operator, Operator

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 *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. Please standby, we will compile the Q&A roster. Our first question comes from the line of Michael Ryskin of Bank of America. Your line is now open.

Alexa Chan (Bank of America), Analyst

Hi. This is Alexa Chan on for Mike. Thank you so much for taking our questions. I just have a couple here. Maybe to start, can you talk about the impact that the sales realignment might have had on tissue volumes this quarter? And then as a follow-up, can you discuss your confidence in achieving the 20% volume growth target for the year given the softer start? We appreciate that the sales force is realigned and that trends improved in February and March, but it still appears to require a significant ramp from here. Thank you.

Bobby Hill, Chief Commercial Officer

As anytime when you realign a sales organization and put them into new territories, we saw a little bit slower start at the very beginning of the year. The beginning of the year is sometimes slower; that is why we chose to do it then. But what we saw with tissue volume each month after that, and what we are trending at, gives us confidence.

Luke Power, Chief Financial Officer

One of the reasons why we also disclosed the exit rate on the completions for February and March is that it gives us confidence. You can see based on those numbers we have improved dramatically on the tissue front from where we were running on a monthly rate last year, with over 15,500 on average from February and March. We believe that continued trend is going to benefit us as we go into Q2. So we feel good about the low-teens guidance.

Operator, Operator

Thank you. Our next question comes from the line of an Analyst at TD Cowen. Your line is now open.

TD Cowen Analyst, Analyst

First question is on clinical volumes in the first quarter. Did weather hold back clinical volumes at all? And if so, by how much? And could you discuss traction in blood testing—what has been the strategy impact, and where are you having the most success in types of accounts?

Luke Power, Chief Financial Officer

Weather was not a factor. We have gotten the cases in the door. The reason we are reaffirming the guide from a volume standpoint is that you will see an improvement in sequential growth from Q1 to Q2. We were initially expecting about 7% sequential growth from Q1 to Q2; now that is going to be 10%. Those cases will flow through in the second quarter, and it will be caught up by the end of the second quarter as we progress into the second half of the year.

Bobby Hill, Chief Commercial Officer

We expanded our liquid product specialist team before Q1—individuals highly skilled at helping the appropriate patients get blood testing. We saw 135% growth in their targets quarter-over-quarter. Because of that growth, we are going to double the size of that team again in Q2. Tissue profiling was our base business, and now we are getting good at selling blood profiling. For the right patients, we will continue to do that and take those learnings to the rest of the sales force. It is also worth noting that the version of Assure that we submitted to New York State significantly increases the amount of RNA profiling we are doing, going up to about 600 million reads from 5 million reads.

Operator, Operator

Thank you. Our next question comes from the line of Vijay Kumar of Evercore. Your line is now open.

Vijay Kumar (Evercore), Analyst

Hi, thank you for taking my question. A big-picture question. Luke, you brought up the CRUSH initiative. The space has been under pressure and investors are nervous about reimbursement. Is there risk to the space on the reimbursement front? If so, how is Caris Life Sciences, Inc. differentiated when it comes to reimbursement?

Luke Power, Chief Financial Officer

It is the reason we called it out in our script—there has been some confusion. We went through the CDLT process. Our codes are CDLT, not ADLT. We submitted our PAMA submission last week based on the timeframe. We feel good about it. There are already mechanisms in place outside of CRUSH for pricing review, and PAMA is the key one for us. Based on our submission, we do not expect any downward adjustments. We are supportive of CRUSH. We have been at this a long time and feel we are set from a pricing standpoint.

Vijay Kumar (Evercore), Analyst

Just to be clear, are you making a distinction between CDLT and ADLT—maybe CDLT having more visibility on pricing if there is any risk to the space?

Luke Power, Chief Financial Officer

The way we priced both MyCancerSEQ’s PLA code and Caris Assure’s PLA code did not go through the ADLT pathway. MyCancerSEQ was priced through crosswalk, and Caris Assure through gap-fill. Because we did not do ADLT, we are subject to the three-year PAMA cycle. As I said, we put our data into PAMA on May 1 and feel very good about price stability.

Vijay Kumar (Evercore), Analyst

On guidance, you mentioned 10% sequential growth for Q2. Was that volume or revenue? And can you clarify what were true-ups in Q1, what was underlying gross margin ex-true-ups, and how to think about gross margin progression?

Luke Power, Chief Financial Officer

Gross margin came in exactly in line with our expectations in the mid-60s. Our focus this year is more on investment. As we progress later this year and into next year, we will focus more on improving margins. From a true-up standpoint, that was very minimal compared to last year. We continue to execute and appeal on the reimbursement front and have success. As we progress through 2026, those true-ups will get smaller as we see the uptick in underlying ASP. The 10% is a volume comment. About 2.5% that would have completed in Q1 will flow into Q2. Our expectation for Q2 is over 58,000 cases, which would be 10% sequential growth from Q1.

Operator, Operator

Thank you. Our next question comes from the line of Subhalaxmi Nambi of Guggenheim. Your line is now open.

Ricky (Guggenheim), Analyst

Hi, this is Ricky on for Subbu. Thank you for taking our question. Maybe one for Bobby. You ended the quarter with over 270 sales reps, and earlier in the year you said you would increase headcount by 20% to 25%. It sounds like you still have more reps left to hire. Could you give us some color on how that hiring is progressing and how the 20 or so new reps you have brought on year-to-date have been ramping up? Thank you.

Bobby Hill, Chief Commercial Officer

We are progressing right on track. We made territories smaller, going from 82 to 146, and we will continue to grow. We have the first wave hired, they are through training, already out making calls, and we have significantly revamped our training program. We are on track to hit the approximately 300 number and hire them all in Q2. We feel very good about the ramp and the changes made.

Operator, Operator

Our next question comes from the line of Casey Woodring of JPMorgan. Your line is now open.

Martha Zrambat (JPMorgan), Analyst

Hello. This is Martha Zrambat on for Casey. Thank you for taking my question. How should we think about 2Q volumes for tissue and blood—any color you can share there? Also on the Pharma R&D revenues? And on the initial MCED test uptake—are you assuming any contribution this year? Thank you.

Luke Power, Chief Financial Officer

Our expectation is for a 10% sequential improvement from Q1 to Q2 in volume, which gets you above 58,000 cases. You will see tissue cases flow into Q2—we would expect roughly 47,500 tissue cases and approaching over 10,000 blood cases. We feel confident about those for Q2. From a revenue standpoint for Q2, our expectations based on the initial guide we put out in February was for about 32% growth in total revenue. On contribution from Caris Detect, we still plan to launch in Q2 and are progressing nicely; we will assess the contribution as we get into the Q2 earnings and the second half of the year.

Operator, Operator

Thank you. Our next question comes from the line of Patrick Donnelly of Citi. Your line is now open.

Albert Hu (Citi), Analyst

Hey. This is Albert Hu on for Patrick. Thanks for the 2Q color. On profitability for both 2Q and for the year—you previously had noted a certain cap for EBITDA, and it has been updated to positive. What can you share on the EBITDA assumption for 2Q and for the full year? I know you have some investments—perhaps share what those are as well.

Luke Power, Chief Financial Officer

From an EBITDA and free cash flow standpoint, we will utilize the financial profile we have. We will get pretty close to neutral free cash flow in Q2. With the early detection launch, there will be an increase in Q2 CapEx—we are expecting about $30 million of property and equipment purchases, including NovaSeq Xs that we are ramping up. We also started to ramp up inventory purchases ahead of the detection launch. You are going to have additional spend there. Our goal in Q2 is to utilize the free cash flow we are generating to fund preparation for the Detect launch, along with pushing MI Clarity and Caris ChromaSeq. We are not guiding to EBITDA because the key focus is pushing the pipeline and commercial activities. For Q2, we have about 32% revenue growth and expect gross margin in the 60%–65% range. We will also ramp up OpEx from $136 million to over $140 million, which would get you a small EBITDA, but it is not our primary focus for Q2.

Albert Hu (Citi), Analyst

And on MRD—you mentioned it is still in preparation for launch. What is the priority in the pipeline? Is that something you aim to launch late this year or next year? What can you share on MRD and timeline?

David Spetzler, President

Now that we have these other product launches done and behind us, MRD is the next priority, and we will be focusing on that quite heavily.

Operator, Operator

Our next question comes from the line of Mark Massaro of BTIG. Your line is now open.

Mark Massaro (BTIG), Analyst

Thank you for taking the question. On ChromaSeq—now that you have MolDX approval and it is launched—can you speak to the unmet need in myeloid?

David Spetzler, President

Today, those patients get a lot of small panel tests across a combination of different technologies. It is not comprehensive, and they often miss things. Those tests are also not designed to pick up resistance components. With our approach, we are able to, in one fell swoop, identify all of the components that allow optimal therapy selection and also identify when that therapy is no longer effective. It is a truly comprehensive approach to hematological malignancies, not the hotspot testing that is being done today, and with a turnaround time that gets patients a complete answer faster than they would get with multiple different tests.

Mark Massaro (BTIG), Analyst

On early detection, breast cancer is one of the important indications. How should we think about the landscape progressing over time as you think about screening for various cancer types?

David Spetzler, President

Breast cancer is one of the more common types of cancer and is already highly screened for, but mammography has its limitations. It is important that we service that patient population very well. The performance we have shown in ACHIEVE-1 is already superior to mammography. It is inevitable that older technologies are going to be replaced by future superior technologies, and that is what is happening now.

Operator, Operator

Our next question comes from the line of an Analyst at Goldman Sachs. Your line is now open.

Goldman Sachs Analyst, Analyst

Thanks for taking my questions. On the quarterly run-rate you gave for February and March of 56,000 tests relative to the 52.8 you reported for the quarter—you said that was up 20% year-over-year relative to February and March last year. Can you talk through the split between tissue and blood, and how durable you think the acceleration in volumes is post the sales force realignment? Was there pent-up demand in the latter half of the quarter? And any update on M&A and capital allocation strategy?

Bobby Hill, Chief Commercial Officer

The split followed our normal pattern as we went from January into February and March. We saw ramp-ups in both products and are excited about the speed of the turnaround. As Luke discussed for Q2, we feel very confident we will achieve the guidance we set forth, and we expect both products to continue their growth.

Brian Brille, Vice Chairman & EVP

On M&A and capital allocation, there are no gaps—our strategy has been to pioneer organically and build our technology platform. There is nothing in particular we think we need. On the other hand, we are very strong financially, and our new debt facility gives us additional flexibility. We are in a position to be flexible and tactical if we see the need.

Operator, Operator

Thank you. Our next question comes from the line of an Analyst at Jefferies. Your line is now open.

Jefferies Analyst, Analyst

Thanks. On the Pharma R&D business, it came in a few million dollars light of consensus. How are you thinking about commercial investment in that business? Can you speak to orders or backlog performance that justifies maintaining the guide? And any thoughts on implications from a competitor’s recent ODAC outcome for a liquid biopsy-informed drug trial?

Luke Power, Chief Financial Officer

As we stated on the last earnings call, Q1 and Q3 are typically the lower quarters for Pharma; it is a natural cadence. The revenue delta from Q1 is based on contracts already in place. For example, the Genentech deal we publicly disclosed had revenue dollars move from Q1 into Q2, and the same with some of our data partners under contract. We will deliver that data in the next quarter or two. We feel confident maintaining guidance given that cadence—Q2 ramps up, Q3 comes down, and Q4 ramps up. Regarding ODAC, that was more about one specific mutation, not liquid in general. There is still strong clinical utility for liquid profiling. The lack of approval for an ESR1-targeted agent does not impact the broader utility of profiling.

Operator, Operator

Thank you. Our final question comes from the line of Kyle Mikson of Canaccord Genuity. Your line is now open.

Oscar Capo (Canaccord Genuity), Analyst

Hi. This is Oscar Capo on for Kyle. Congratulations again on the ChromaSeq approval and launch. What is the rate you got for this test? And from a dollars-and-cents perspective, what is the addressable market?

Luke Power, Chief Financial Officer

The price is $3,228 from MolDX.

Bobby Hill, Chief Commercial Officer

From a market standpoint, there are about 50,000 patients that meet the three indications set forth in MolDX for AML, MDS, and MPN. There are existing medical policies for commercial lines of business. We believe that when we submit to payers, we will gain coverage because of the depth and performance of our assay. We are already deploying the team to talk to payers, and where we are already contracted with MyCancerSEQ, it gives us the opportunity to add this coverage as well.

Oscar Capo (Canaccord Genuity), Analyst

Thank you. One more—you spoke to the expansion of your Precision Oncology Alliance and plan to host your summit on the eve of the ASCO conference. On ASCO, can you elaborate on what types of data you will be presenting for pipeline and recently launched products, including MCED and MRD?

David Spetzler, President

We have a lot of data that we will be presenting. It is embargoed until the conference, so we cannot discuss it now, but there is going to be a lot of it.

Operator, Operator

This does conclude the Q&A session and the program. I would like to thank you for your participation. You may now disconnect.