Neogenomics Inc Q1 FY2026 Earnings Call

Good afternoon, and welcome to the NeoGenomics First Quarter 2026 Financial Results Call. Please be advised that today's conference is being recorded. I will now turn the call over to Priya Vedaraman, Senior Vice President of Finance.

Thank you, Matthew, and good afternoon, everyone. Welcome to NeoGenomics First Quarter 2026 Financial Results Call. With me today to discuss the results are Tony Zook, Chief Executive Officer; Abhishek Jain, Chief Financial Officer; and Warren Stone, President and Chief Operating Officer. Additional members of the management team will be available for the Q&A portion of our call. This call is being simultaneously webcast. You will note that we will be advancing through a brief slide presentation to accompany today's call, and we have also made the presentation available on the Investors tab of our website at ir.neogenomics.com. During this call, we will make forward-looking statements regarding our future financial and business performance, planned future operations and related expectations with respect to timing and performance, future financial position, future revenue, growth potential and expected growth drivers, projected cost and capital expenditures, prospects and plans, estimated market size and position and objectives of management and financial guidance. We caution you that the actual events or results could differ materially from those expressed or implied by the forward-looking statements. The forward-looking statements made during the call speak only as of the original date of this call, and we undertake no obligation to update or revise any of these statements. Please refer to the information disclosed on the safe harbor statement slide in the deck posted on our website as well as the information under the heading Risk Factors in our most recent Forms 10-K, 10-Q, 8-K that we filed with the SEC to identify important risks and other factors that may cause our actual results to differ materially from the forward-looking statements. These documents can be found in the Investors section of our website or on the SEC's website. During this call, we also refer to certain non-GAAP financial measures that involve adjustments to GAAP results. The non-GAAP financial measures presented should not be considered an alternative to the financial measures required by GAAP, should not be considered measures of liquidity and are unlikely to be comparable to non-GAAP financial measures provided by other companies. Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable GAAP financial measures in a table available in the press release we issued this afternoon and in the slide deck available in the Investors section of our website. I will now turn the call over to Tony.

Thank you, Priya, and welcome, everyone. For those of you who are relatively new to the NeoGenomics story, let me review our investment thesis. We're a pure-play oncology solutions company, leveraging our strong heritage in hematology with pathologists and community hospitals, where we enjoy a leading 25% share across diagnostics and therapy selection. We believe we're highly differentiated from large reference labs as well as specialty diagnostic companies in two regards: the depth and breadth of our portfolio and a relentless focus in the community setting. We believe in the power of our portfolio and see it as a point of competitive distinction and advantage. We reentered the MRD space with RaDaR ST, which we will discuss momentarily, allowing us to address a $20 billion market opportunity where we will continue to leverage our ambition to be a partner of choice among community practices. And importantly, we believe we're well poised to deliver consistent double-digit revenue growth. As mentioned, it's our desire to be a partner of choice in the community from diagnosis to recurrence monitoring. Our foundation and strength in hematology and diagnostic testing affords us a strong platform for growth. We have and will continue to be purposeful with our portfolio transformation as evidenced by our product launches, enabling our penetration into the $13 billion therapy selection market. And now with RaDaR ST, we've reentered the $20 billion MRD market, both of which are enjoying robust growth but are still relatively modest in penetration rates. This portfolio transformation is evident in our selling performance. The five NGS products we launched in 2023 that we have consistently tracked contributed 25% of our clinical revenue in Q1. So with that, let's highlight some of our key performance metrics for Q1. During the first quarter, we again delivered double-digit revenue growth, reflecting our ability to generate consistent and predictable sales. Total revenue for Q1 was $186.7 million, representing 11% growth year-over-year, exceeding our guidance. Adjusted EBITDA of $9 million increased 27% over the first quarter of 2025, and the adjusted EBITDA margin increased approximately 60 basis points year-over-year. Our clinical business continued its robust growth with revenue increasing 14% year-over-year to $171 million. Clinical performance was driven by effective execution of our commercial strategy, enabling volume growth and share gains in all segments of our business. In this quarter, we again saw an improvement in AUP, which reflected an 8% year-over-year growth and volumes growing 6% year-over-year. Turning to NGS. Revenue grew 26%, well ahead of the NGS market growth rate, driven by strong volume and AUP growth. Our NGS business now represents about one-third of our total Clinical revenue. Moving forward, we believe the addition of PanTracer Liquid biopsy to the PanTracer Family, combined with ongoing investments in our field force size and capabilities will help us to sustain above-market growth for this part of our portfolio. The momentum with which we exited 2025 continued into the first quarter. As we have shared, we continue to see above-market growth with our non-NGS clinical business, which should continue to grow in the mid-single-digit range as we take share across all modalities. Importantly, and in line with our overall strategy, our NGS business is scaling at a rate that is three to four times faster than our core clinical business. We're often asked, how do we win in the community setting and is the growth sustainable. I'm going to ask Warren to step you through our commercial strategy and give you some insight into our early launch experiences with the PanTracer Family and RaDaR ST.

Thank you, Tony, and good afternoon, everybody. Our primary focus is the community setting where approximately 80% of patients seek treatment so they are close to their support structure. Additionally, most patients live an hour or more from the nearest NCI-designated cancer center. To start, we believe that community oncologists prioritize historic patient management and prioritize certainty over possibility. Guidelines drive their decision-making and ensure actionability. With large patient volumes and resource constraints they choose partners that reduce friction and support confident treatment decisions. Secondly, our leadership in hematology, where we hold greater than a 25% market share, provides trusted access and creates a strong foundation to expand adoption of our broader portfolio. Third, rapid test results directly impact patient outcomes. And our balanced lab network enables industry-leading turnaround times. The Pathline acquisition strengthened our Northeast presence and grew at 1.5x our national average, demonstrating the power of local scale to drive service and growth. Finally, our portfolio spans over 500 tests across diagnosis, therapy selection and MRD, positioning us as a true partner in patient management. We have developed over 330 interfaces, including the recently announced Epic Aura, which published third-party research suggests could drive a 20% to 30% increase in test adoption per site. This position is also supported by a broad commercial payer network of more than 300 contracts, minimizing friction for both providers and patients. In summary, we simplify the complexity of oncology diagnostics so physicians can focus on delivering the best possible patient care. Turning now to RaDaR ST, our circulating tumor DNA assay with exceptional sensitivity for early detection of molecular residual disease. In late February, we announced the full clinical launch of RaDaR ST, which has detection as low as 1 ppm. The launch targets two approved indications, HPV-negative head and neck cancer and a subset of breast cancer. In addition, we have submitted to MolDX for reimbursement in two additional cancer indications, which, if granted, would more than double our market opportunity. Early insights from the RaDaR ST launch to date are very encouraging. Approximately 29% of customers who previously used RaDaR 1.0 have ordered RaDaR ST since launch. Additionally, 34% of RaDaR ST orders received include additional Neo tests. All test results to date have been delivered faster than our published turnaround time. RaDaR ST represents a very important advancement in MRD testing. And with its clinical launch, we now offer a comprehensive solid tumor solution, spanning diagnostic profiling, therapy selection and MRD. Looking ahead, we are focused on targeted R&D investments in whole genome sequencing, including our next-generation MRD assay and whole genome solution for hematologic cancers. The strengthening of our pipeline increases durability and positions us effectively to address future market needs. Our next-generation MRD platform is progressing well, with data generation expected next year and a potential launch as early as 2028. In parallel, we're advancing our nonclinical portfolio to meet the evolving needs of the pharma sector. This includes expanding our MRD offering with an off-the-shelf single-tube AML flow panel designed for broader applications across CLL, B-ALL and multiple myeloma as well as enhancing our IHC menu with five new CDx-relevant markers. Turning to our PanTracer portfolio, our integrated solution for solid tumor therapy selection, designed to combine tissue and liquid testing to deliver confident actionable insights for real-time treatment decisions. PanTracer Liquid is a noninvasive blood-based test that analyzes circulating tumor DNA to identify key genomic alterations that inform treatment decisions in patients with advanced-stage tumors. With MolDX reimbursement received, we expect revenue contributions to ramp throughout the year. The expansion of the PanTracer Family and PanTracer Pro turns a very fragmented tumor physician workflow into a coordinated and accelerated workflow from a single sample. It fully integrates the therapy selection workflow by combining comprehensive genomic profiling with immunohistochemistry and other auxiliary tests, allowing oncologists to manage the entire cancer diagnostic workflow from a single requisition and sample. This allows for faster test turnaround and more timely clinical decision-making. Slide 13 illustrates a typical PanTracer workflow. After the test requisition is received, the pathology report is reviewed and an ovarian cancer diagnosis is confirmed. The oncologist then identifies the guideline-relevant add-on tests. In this case, five medically necessary assays, including the recently launched PD-L1 22C3 FDA-approved assay for ovarian carcinomas, are included. The slides were prepared and the test is performed. The add-on results are reported to the physician by day 4 and the NGS results are reported by day 8. As part of our go-to-market strategy, we have expanded our sales force to increase reach and frequency and accelerate penetration in therapy selection and MRD markets. The commercial expansion, coupled with the only MolDX-approved HPV-negative test currently available, positions us to accelerate adoption. We plan to add roughly 25 sales resources by the third quarter of this year to support the launch and penetration of RaDaR ST in two new indications, which we have submitted to MolDX. In summary, we are very pleased with our performance, both financially and strategically in the first quarter, and we are excited for the business levers that are available for us to drive improved and accelerated financial performance in the future. With that, I'll hand over to Abhishek to further discuss our results for the quarter.

Thank you, Warren, and good afternoon, everyone. In my remarks today, I will discuss our first quarter financial results and revised 2026 guidance. We reported total revenue of $186.7 million, up 11% year-over-year, driven by clinical revenue of $171.2 million, which grew a strong 14%. This performance was driven by healthy underlying demand with volumes up 6% and AUP increasing 8% as compared to the same quarter last year. Same-store revenue, excluding acquisitions, was $167.9 million, representing 12% growth versus the prior year period, driven by a 3% increase in test volumes and a 9% increase in AUP. Importantly, both test volumes and AUP growth performed at the high end of our expectations despite the anticipated impact of strategically exiting a high-volume, low-value contract. Most encouraging is the ongoing mix shift towards high-value testing driven by strong performance in our NGS business that was up 26% year-over-year and now represents approximately one-third of our Clinical revenue. Our targeted investments in the sales team are delivering tangible results and supporting this continued momentum in our NGS. Further, this favorable mix shift towards high-value testing is also contributing meaningfully to drive AUP growth of 8% year-over-year. AUP increase was also supported by our RCM initiatives, including managed care pricing gains and improved pull-through. Turning to our nonclinical business. We reported $15.5 million in revenue, a decline of 15% year-over-year, primarily driven by expected softness in pharma. Our ODS business delivered double-digit growth that helped partially offset the declines in pharma. We believe that we are near the bottom for this business and expect to see sequential growth in the back half of the year. Adjusted gross profit improved by $7 million or 9% over the prior year and adjusted gross margin was 46%, down 80 basis points as compared to last year. As expected, the decline in the gross margin in the first quarter was primarily driven by the dilutive impact of the Pathline acquisition and the launch of PanTracer Liquid prior to MolDX approval. Together, these factors represented approximately 150 basis points of headwind in Q1 '26. In addition, we were impacted by higher freight costs and fuel surcharges due to the geopolitical situation. These headwinds were partially offset by gross margin expansion primarily driven by AUP increase and lab efficiency. Looking ahead, we continue to expect gross margin expansion of approximately 100 basis points year-over-year in 2026, driven by our Lab of the Future initiatives, which include strategic sourcing, digital pathology, lab automation and platform upgrades. We also expect margin progression to benefit from easier compares in the coming quarters. Total operating expenses in the quarter were $99 million, a decrease of $2 million or 2% from prior year. We plan to make targeted investments in our sales and R&D functions to drive clinical test volumes and higher AUP while continuing to improve leverage in G&A, which we expect to continue to decline as a percentage of revenue. Adjusted EBITDA was $9 million, up 27% year-over-year and the adjusted EBITDA margin expanded 60 basis points. This margin expansion was driven by operating leverage in our G&A function that more than offset the headwinds from adjusted gross margin reduction. Cash used in operations was $8.1 million in the quarter, down from approximately $25.3 million in the same quarter last year. We ended the quarter with total cash of $146 million. Our growth continues to be free cash flow positive this year. Turning now to our 2026 guidance. Considering our strong first quarter revenue performance and earlier-than-assumed MolDX approval of PanTracer Liquid in March, we are increasing our full year revenue guidance to a range of $797 million to $803 million, up from $793 million to $801 million previously. The key assumptions underlying the midpoint of our revenue guidance are as follows: First, no change in RaDaR ST revenue assumption, which remains in the mid-single digit millions. Second, we expect PanTracer Liquid revenue to be mid-single-digit millions following MolDX approval in early March. Third, no change in revenue assumptions for our nonclinical business, which we expect to be down low to mid-single digits year-over-year in 2026. Regarding quarterly cadence, we now suggest modeling approximately 9% year-over-year growth in the second quarter, up from the prior 8% to 9% range, followed by 9% to 10% growth in the third quarter and above 10% in the fourth quarter of 2026. Turning to gross margin, no change in our guidance, and we expect approximately 100 basis points of gross margin expansion in 2026 driven by a combination of factors we discussed earlier. We are maintaining and reiterating our full year 2026 adjusted EBITDA guidance of $55 million to $57 million, representing year-over-year growth of approximately 27% to 31%. As discussed previously, adjusted EBITDA was impacted by higher freight costs and fuel surcharges due to the geopolitical environment. We have taken actions to offset these pressures while remaining committed to our previously communicated adjusted EBITDA guidance. With that, let me turn the call over to Tony.

Thanks, Abhishek. Reviewing the significant catalysts for the year, I'm very pleased with our progress to date. We launched RaDaR ST in head and neck and in a subset of breast cancers and received MolDX reimbursement for PanTracer Liquid Biopsy, and we continue to drive NGS growth well ahead of market growth rates. Looking out to the remainder of the year, we anticipate MolDX reimbursement decisions for two additional RaDaR ST indications, which, if granted, would double the population of patients eligible for this advanced MRD test. We're also advancing plans to expand our sales force by the third quarter to capture these additional opportunities that are emerging in advanced cancer testing. Taken together, I believe these catalysts form a solid foundation from which to drive future growth. I'll close by outlining how we're driving accelerated financial performance through disciplined execution across our key business leaders. The launch of RaDaR ST and MolDX approval for liquid biopsy have opened up large addressable markets, and we're focused on driving adoption alongside continued expansion into new indications and advancement of our next-generation MRD programs. Commercial initiatives across sales, pricing and payer coverage are improving access and monetization, while ongoing investments in automation, platform upgrades and lab optimization are enhancing efficiency and scalability. Together, these efforts position us well for sustained growth in 2026 and beyond. Thank you for your continued interest in NeoGenomics. And operator, this concludes our prepared remarks. So please open up the line for questions.

Your first question is coming from David Westenberg from Piper Sandler.

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

Okay, Dave. So thanks for the question. I'll kick us off and then Warren can fill in some color as well. First, on the sustainability of the NGS, I appreciate the question. We are showing really good growth in NGS, as we said, 26% revenue growth, and that was driven by 16% volume growth. If you turn back the hands of time, we closed last year, I think 23% in Q4, and we did 22% for the year. And at the time, we said we thought that we were able to sustain that at a minimum, if not even beat it with the addition of PanTracer Liquid. And so we look at where we sit right now, Dave, we feel very good. The early products that we mentioned before, they were up to 25% of our clinical revenue in the quarter. Early days of PanTracer are showing really good signs for us. Warren can go into a bit more detail on PanTracer Liquid. But even PanTracer Pro, which was introduced in mid-February, we're seeing it now almost cover 10% of PanTracer volume, which is exciting because it's captured 15% of new users. So we absolutely do think that it's sustainable. And with the addition of Liquid Biopsy to the Family, we think it can go even further.

You covered a lot of ground. I'd say this: the PanTracer Family for us—we really look at the category growth overall because the tissue and the liquid get used sort of concurrently or certainly as a reflex to tissue testing that might take place on tissue or as a stand-alone. So it is really versatile. And we are encouraged by the attractive growth that we're seeing from the category overall, including liquid. And if we look, you would have seen a graph in the presentation, which showed 16% volume growth and a 26% revenue growth. And that acceleration in revenue growth is coming because we're moving towards the larger comprehensive genomic profiling. That's driving growth, and that's also helping the AUP. So to your question on the sustainability to stay above those sort of 20% marks, insertion of Liquid into the Family is going to be a key driver for us.

Dave, on AUP, again, very strong performance there. We were up 8% year-over-year. And I would say that's indicative of the strategy. We've been very purposeful saying that we are going to drive growth with that NGS portfolio of ours. And so increasing it as a percentage of our business, which is now up to one-third of our business and we're growing it, that's going to have a big contributing factor to AUP. But I would say as well, about half of it is driven by the great work that the team does behind the scenes on the RCM initiatives. So like we talk about the 300 contracts. We look at those contracts all the time, every opportunity we have to increase price there, do direct price increases and all of those initiatives add up. And so we believe the AUP is also sustainable this year. And again, about half of that is driven by mix and the increased volume in NGS and about half is just strong work behind the scenes. But maybe one final point as kind of the icing on the cake with AUP: while NGS is the big driver there, David, and I know that's how you were focused the question, good news is we're seeing AUP increase contributions across all of the modalities. So it's not just NGS that's contributing, it's the portfolio.

Your next question is coming from Tycho Peterson from Jefferies.

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

Yes, sure. I'd be happy to. And again, I'll let Abhishek jump in on the details. Relative to the guidance, Tycho, you're right, we want to maintain the philosophy that we shared with you, and that is when we issue our guide, you asked us to only speak with a high degree of confidence, not just with the center point of that guide and making sure we can get to the upper end of that guide at a minimum. And we've taken those factors into consideration with this guide. What are the positives? What do we look towards? Well, again, 11% total revenue, but it was driven by 14% clinical revenue growth. And so that is certainly a driver and the NGS is a driver for us to be certain. And so based on the middle of that guide, where do we see potential opportunity and where is there some risk, I would say the opportunity is certainly with the NGS portfolio with emphasis on PanTracer Liquid, getting another quarter of opportunity to drive revenue, getting out in front with commercial payers. If we can plow that field well, we think there is probably upside opportunity associated with the guide relative to PanTracer Liquid. We think that there is potential opportunity as well in our nonclinical business. It's way too early despite the foothold there, which is why we still want to be relatively conservative. But we're seeing early signs that, in fact, we're planning and hitting what we said, which would be that low single-digit erosion on the nonclinical side. So there's some risk there, but we think that it's taken into account at this point. I guess the other area of opportunity for us could be even better uptake with RaDaR ST. But again, we're playing this one right down the middle, Tycho, with single millions in the middle of the guide. And I guess the additional indications were to come on board sooner than we thought, that could represent some upside. And so we do see some potential risk, which would be on the nonclinical side. That's not a new story to you. But we see the rate of decline of that business beginning to slow and activity beginning to pick up. And so on balance, we would say there's probably more opportunity than downside against what we've shared with you today. Does that help?

That does. That does. Another question as you lap Pathline next quarter, I guess, how do we think about the volume growth as you lap that? You grew volumes 2.8% ex-Pathline. Is that kind of the right run rate for the business? You're rolling off big lab contracts. So how do we think about just lapping Pathline?

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

Yes. Let me also talk about the overall volume picture there, Tycho. Because we basically guided low single digit for the full year, we came in at about 6% growth for the first quarter. And as for the guidance, what we are saying is that the second quarter is going to be flattish year-over-year from a growth standpoint. But what will start to happen from now onwards is that we'll start to see sequential growth in our volume from Q2 onwards. So that's a key part. A lot of the revenue growth is going to come from the AUP in our remaining quarters for the year. We are basically trying to absorb exiting this high-volume, low-value contract as we look into Q2 and Q3. Q3 '25 was a peak quarter for that contract, and that's the reason we have those headwinds in Q2 and Q3. But overall cases from the overall revenue standpoint, as Tony pointed out, our clinical revenue grew 14% in the current quarter. And our guide keeps us about 11% growth for our Clinical business for the rest of the year.

Okay. Last quick one, I'll let you go. Maybe just on the convert: you burned $14 million in cash. You have $146 million in cash and $342 million convertible due January 2028. Can you maybe just quickly touch on plans for that and then I'll hop off?

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

Your next question is coming from Puneet Souda from Leerink.

So first one, I just wanted to see if there was any weather impact in the quarter and if you're expecting any— as a result—anything in Q2 for that? And also on the NGS side, how should we think about the ceiling? It's one-third of your business. It's growing rapidly in the community setting. Just trying to understand overall NGS, what's the ceiling there? And I assume that NGS is all of the solid tumors. Can you clarify the boundaries of NGS? What is included in NGS and what is not?

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

Yes. How we're defining NGS is simply NGS for our hematologic cancers and NGS for solid tumors, largely fitting within the therapy selection vertical. At the moment, even though MRD runs on an NGS background, we're probably going to carve that out. So the 26% growth that you see excludes any MRD. In terms of the outlook, I'd say we'd be disappointed if in the midterm this is not north of 40%—that's sort of how you need to think about that. This is definitely the growth engine of our business. You can see the trajectory since 2022. And the portfolio that we've added in 2023 and continue to add is going to continue to fuel that growth in the sort of 20% range.

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

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

Your next question is coming from Bill Bonello from Craig-Hallum.

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

You outlined the workflow pretty well. We try to take friction out of the system. We want to make that ordering experience as easy as possible. Whether you choose to do this through an electronic interface, a call or paper, it's a single test. The requisition will arrive in our lab. This is in the therapy selection vertical, so there's typically a diagnosis that's already been made; that's the pathology report that gets read and this algorithm then determines, based on guidelines and what's medically necessary, what additional add-on testing should be performed based on that specific diagnosis. What add-on testing will vary based on the diagnosis. The example I shared was ovarian and we add on five additional tests, including that new PD-L1 for ovarian carcinomas. The system does that automatically. We then cut the slides appropriately because the number of slides that you cut will depend on the number of add-on tests. We run the testing and report out the results for the add-on testing as soon as that is available, and that's typically before NGS. The reason that's valuable is you can get the first indication around what therapies you may want to put somebody on. And then once the NGS is available, typically three or four days thereafter, we'll submit the NGS results to the physician as well so they have a complete package and can make a more holistic informed treatment decision. In the past, a physician could have selected those add-on tests themselves. But in the community setting, physicians see so many different patients with different indications, they often don't know that level of detail. So they would typically send PanTracer tissue and potentially send additional tests later. That takes longer and exhausts more sample. This integrated approach has efficiencies and typically results in additional evidence-based add-on testing, which has a revenue component attached to it. I want to stress it's only what's driven by guidelines and what's medically necessary.

Your next question is coming from Mason Carrico from Stephens.

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

I will take that one, Ben. We grew our reported AUP by 8% year-over-year in the quarter. Excluding Pathline, the number was 9%. If you exclude the impact of the high-volume, low-value contract, it did not impact the AUP change as much because the number of tests for that contract became a smaller portion and there was a little bit of growth in AUP as we progressed through 2025 from Q1 onwards. So the impact from the high-volume, low-value contract was about one percentage point on overall AUP growth. Our AUP growth was primarily driven by the mix shift toward high-value testing, the NGS growth, and the impact of our RCM work.

Got it. That makes sense. And then on the two additional RaDaR MolDX submissions, has anything changed there in your confidence or the expected timing of when you could get those decisions? Is prior to year-end the right way to think about those?

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

Your next question is coming from Subbu Nambi from Guggenheim.

What percentage of liquid biopsy orders today are Medicare versus commercial? And what's the realistic timeline for getting meaningful private payer rates? The reason I ask is the $3,289 fully loaded cost to deliver—how accretive is the test to gross margins from day one? Or is there a scale threshold you need to hit first? And I have the same question for RaDaR ST as well—impact on gross margin from day one to when it ramps?

For PanTracer Liquid, because we have not seen all the volumes since our soft launch, I would say we are still building the payer mix. Broadly speaking, a meaningful portion will be Medicare; roughly I would expect about 40% Medicare coverage, about 10 percentage points Medicare Advantage, and the remaining roughly 50% commercial payers. We will start to get paid on the Medicare component initially, and on commercial this is a process that takes time as coverage policies and contractual negotiations proceed. Given that we already have contracts with about 300 payers, that gives us a foothold and should allow us to accelerate commercial contracting, but it will still take time. For RaDaR ST, the mix is slightly different; Medicare is about 20% to 25%, Medicare Advantage 10% to 15%, and the rest commercial with a small Medicaid tail. As for accretion to gross margin, tests that get paid at Medicare rates will be accretive to gross margin from day one relative to variable cost. Commercial rates generally are higher and will further improve gross margins as contracts are put in place. Scale will improve overall margin profile as well given fixed-cost absorption in the lab.

Abhishek, just to put all the numbers together, the low-value contracts that you rationalized—were those largely Pathline volumes or unrelated to Pathline?

No, those were not Pathline volumes. Our overall volumes in 2025 were roughly 1.35 million tests, and the high-volume, low-value contract represented about 3% to 4% of overall volumes. Pathline is much smaller in that context. So this was a different contract and unrelated to Pathline.

Your next question is coming from Dan Brennan from TD Cowen.

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

What we are guiding for the full year is $800 million at the midpoint. For Q2, the revenue growth is going to be about 9% year-over-year, up from the prior guide, because of MolDX approval for PanTracer Liquid in March, which adds some dollars in Q2. For NGS, excluding liquid, we referenced that we expect NGS to be in line with our 2025 level, which was about 22% growth. Internally we believe there's upside potential if PanTracer Liquid performs better than our conservative assumptions or if NGS growth continues at the 25% to 26% pace we've seen in recent quarters, but the guidance midpoint reflects a prudent view.

Got it. So 2Q NGS should be roughly 22% like the full-year assumption?

Yes.

You called out Epic Aura and the upside that other players have seen or that research shows. Remind us where you are, what you're seeing so far, what's baked into the guide, and what would get you to see that kind of uplift?

We went live with our first Epic Aura customer earlier this month. The beauty of Epic Aura is it allows for significantly faster implementation with customers. We're targeting Epic Aura implementations for therapy selection and MRD, and we have a robust pipeline of accounts to activate with Epic Aura in Q2 and through the rest of the year. We expect to see uptick as the year progresses. This is a key lever in sustaining the high NGS growth rate and will also help drive demand for RaDaR ST given the simplified workflow it brings.

So some of the benefit is baked into the guide but there's upside if you're successful with account activations—is that right?

Yes. We baked a reasonable amount into the guide, but if we're able to accelerate implementations and if pull-through is as significant as independent studies suggest, there is upside beyond the guide.

Your next question is coming from Michael Ryskin from Bank of America.

A couple of quick ones. One is, in your comments about growth expectations through the year, both in NGS and non-NGS, what's the implicit contribution from the sales force expansion? And is that playing a role in the second half or more of a 2027 benefit? How should we think about that?

I think about the sales force as being quite productive for us. If you look at the size of our sales force and our sales spend, we're probably relatively under-indexed versus many competitors. Our sales and marketing ratio is around the low double digits. The oncology sales team being in the 50s is a relatively small footprint, yet they have proven highly productive—so the share gains we've seen with the NGS portfolio are driven in large part by increased penetration into community oncology. We see the sales force as a lever to continue to drive growth and will be selective about expansion so as not to disrupt customer relationships. We do expect additional sales resources to contribute meaningfully in 2026 as we support RaDaR ST and PanTracer expansion.

Okay. And for my follow-up, on Pathline contribution—it's stepping down a bit this quarter. You called out the benefit in the Northeast and broader uplift to the portfolio. Anything specific to call out there? Should we expect that to continue?

It shouldn't be a surprise there might have been a slight step down in volumes associated with Pathline because we were exiting some non-oncology business, which affected volumes. We're also doing load balancing across our network; tests don't always have to run through Pathline. Load balancing can move tests to Fort Myers or Austin. So I don't put a lot of stock into what is directly attributed to Pathline alone. It delivered what we expected in revenue, but the strategic growth driver is the Northeast performance.

To add, the Northeast was probably the area most affected by weather in Q1, so that was a factor too. We also intentionally stepped away from non-oncology business that we have no interest in keeping. Lastly, we're leveraging our lab network to provide the best possible turnaround time while driving scale where possible. Overall, we're pleased with the 1.5x market growth in the Northeast, which is encouraging given historical trends.

Our next question comes from Mike Matson from Needham.

So I thought I heard you say that within the NGS business there is some price benefit. Obviously NGS is growing as part of the overall mix and driving AUP. But is there some positive pricing or mix happening within the NGS business itself, and what's driving it?

Yes. On NGS, the business grew 26% year-over-year. About 16 percentage points of that was driven by volume and the remaining roughly 10 percentage points came from AUP increase. The AUP lift is due to mix shift toward larger comprehensive genomic profiling panels versus smaller tests, along with managed care pricing gains and improved pull-through from our commercial initiatives.

Okay. And then the $20 billion MRD market—when you get the additional two indications covered and you're at four, you said that would double the available market to you. What portion of that $20 billion will you be covering?

Based on our analysis, we'd be addressing north of 45% of that $20 billion market across those indications. That's somewhat subjective, but it reflects the indication coverage and patient populations involved.

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

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

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