NeoGenomics, Inc.

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 Viduraman, 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 of 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 know 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 investor 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 expenditure, 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. These 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 file 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 investor 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 referentialized 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 investor section of our website. I will now turn the call over to Tom.

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 selections. 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 re-entered the MRD space with RadarST, 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 RadarST, 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 percent growth year-over-year, exceeding our guidance. Adjusted EBITDA of $9 million increased 27 percent 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 a 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 staying 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 RadarST.

Thank you, Tony, and good afternoon, everybody. Our primary focus is the community setting, where approximately 80% of patients seek treatment so that they're close to their support structure. Additionally, all Initially, most patients live an hour or more from the nearest NTI-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 confidence treatment decisions. Secondly, our leadership in hematology where we hold greater than a 25% market share, provides trusted access and creates 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 one and a half times 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've developed over 330 interfaces, including the recently announced Epic Aura, which for published third-party research 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, also 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 RadarST, a circulating tumor DNA assay with exceptional sensitivity for early detection of molecular residual disease. In late February, we announced the full clinical launch of RadarST, 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 Maldix for reimbursement in two additional cancer indications, which, if granted, would more than double our market opportunity. Early insights from the Radar SD launch to date are very encouraging. Approximately 29% of customers who previously used Radar 1.0 have ordered Radar SD 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 times. RADAR-ST represents a very important advancement in MRD testing, and with its clinical launch, we now offer a comprehensive solid tumor solution spanning diagnosis 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 heme. 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 non-clinical portfolio to meet the evolving needs of the pharma. This includes expanding our MRD offerings with an off-the-shelf single-tube AML flow panel designed for broader applications across CLL, BAL, and multiple myeloma, as well as enhancing our AHC 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, deliver confident, actionable insights for real-time treatment decisions. Pantracer Liquid is a non-invasive blood-based test that analyzes circulating tumor DNA to identify key genomic alterations that inform treatment decisions in patients with advanced stage tumors. With Moldex reimbursement received, we expect revenue contributions to ramp throughout the year. The expansion of Pantracer Family with Pantracer Pro turns a very fragmented tumor physician, sorry, tumor physician workup 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 a more timely clinical decision making. Slide 13 illustrates a typical Pantracer workflow. After the test requisition is received, the pathology report is reviewed and ovarian cancer diagnosis is confirmed. The Oncotree then identifies the guideline relevant add-on tests. In this case, five medically necessary assays, including the recently launched PD-L1-22C3-FBA for ovarian carcinomas are included. The slides are prepared and the test is performed. The add-on results are reported to the physician by day four, and the NDH results reported on by day eight. As part of our go-to-market strategy, we've expanded our sales force to increase reach and frequency and accelerate accretion in therapy selection and MRD markets. The commercial expansion coupled with the only Moldex-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 SDN2 new indications, which we have submitted to MoldeX. In summary, we are very pleased with our performance, both financially and strategically in the first quarter, and we are excited for the business levels that are available for us to drive improving 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. The 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 pathline, 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 clinical test volumes and AUP growth were found at the higher end of our expectations, despite the anticipated impact of strategically exiting a high-volume, low-value contract. Most encouraging is the ongoing next shift towards the high-value testing given 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 business. Further, this favorable mixed 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 RCEP initiatives, including managed care pricing gains and improved pull-through. Turning to our non-chemical 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 FODMAP. 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 the 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 given by the diluted impact of fabmine acquisition and the launch of fan-facer liquid prior to molding approval. Together, these factors represented approximately 150 basis points of headwind in Q126. In addition, we were impacted by high freight costs and future charges due to the geopolitical situation. These headwinds were partially offset by the 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 initiative, which includes strategic sourcing, distal 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 GNA, 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 goal continues to be free cash for positives this year. Turning now to our 2026 guidance. Considering our strong first quarter revenue performance and earlier than assumed Molyneux approval of Antraise and Liquid in March, we have been freezing our full-year revenue guidance to a range of 797 to 803 million, up from 793 to 801 million previously. The key assumptions underlying the midpoint of our revenue guidance are as follows. First, no change in radar ST revenue assumptions, which remains in the mid-single-digit millions. Second, We expect fan trace and liquid revenue to be in mid-single-digit millions following Moldix's approval in early March. Third, no change in revenue assumptions for our non-clinical business, which we expect to be down low to mid-single-digit year-over-year in 2026. Regarding the quarterly cadence, we now suggest modeling approximately 9% year-over-year growth in the second quarter, up from 8% to 9% range previously discussed. followed by 9% to 10% growth in the third quarter and above 10% in the fourth quarter of 2026. Turning to growth margin, no change in our guidance, and we expect approximately 100 basis points of growth margin expansion in 2026, given by a combination of factors we discussed earlier. We're maintaining and reiterating our full-year 2026 urgent individual guidance of 55 to 57 million, representing year-over-year growth of approximately 27 to 31%. As discussed previously, adjusted beta was impacted by high freight costs and fuel surcharges due to geopolitical environment. We have taken actions to offset these pressures by remaining committed to our previously communicated adjusted beta 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 RadarST in head and neck in a subset of breast cancers. and we see mold DX reimbursement for Pantracer liquid biopsy, and we continue to drive NGS growth well ahead of market growth rates. Looking out for the remainder of the year, we anticipate mold DX reimbursement decisions for two additional radar indication, 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 discipline and execution across our key business leaders. The launch of RadarST and MoldyX 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.

Certainly. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. And once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from David Westenberg from Piper Sandler. Your line is live.

Hi, thanks for taking the question and 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 know 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 mixed 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 NGS, I appreciate the question, right? I mean, 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 the quarter of Q4, and we did 22% for the year. And at the time, we said, we thought that we were able to be able to sustain that at a minimum, if not even beat it with the addition of Pantracer LDX. And so we look at where we sit right now, Dave, and 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 LBX, but even Pantracer Pro, which was introduced in the mid of February, you know, we're seeing it now almost cover 10% of Pantracer volume, which is exciting because it's captured 15% of new users' data. So, you know, 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. And with that, maybe I'll turn it over to the morning to a little bit more color on LDX, and then we'll get to the AUP.

But you've covered a lot of ground. And I'd say that 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 QNS TMP that might take place on tissue or as a standalone. So it is really, really versatile. And we are encouraged by the attractive growth that we've seen from the category overall, including liquid. And if you look through, you would have seen a graph in the presentation which showed a 16% volume growth and a 26% revenue growth. And that acceleration in revenue growth is coming because we're moving towards these larger CGP panels. That's driving the growth, and that's also helping the AUP. So to your question on the sustainability to stay above those sort of, The 20% mark is certainly Pantrace and Liquid, but Pantrace as a family as a whole is going to be a key driver for us.

And Dave, on AUP, again, very, very strong performance there. We were up 8% year over year, and I would say that's indicative of the strategy, right? We've been very purposeful saying that we are going to drive growth with that NGS portfolio of ours. And so, you know, increasing it as a percentage of our business, which is now up to a third of our business when 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. Like, you know, we talk about the 300 contracts, but, you know, we look at those contracts all the time, and every opportunity we have to, you know, increase price there, to do, you know, 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 mixed and the increased volume in NGS. And about half is just the good work behind the scenes. And maybe one final point, just as kind of the icing on the cake with AUP, while NGS is the big driver there, David, I know that's how you were focused in question. Good news is we're seeing AUP increase contributions across all of the modalities, and so it's not just NGS that's contributing, it's the portfolio.

Got it. Actually, that was a really long answer, so I'll just hop off. Thanks so much.

All right. Thank you, Dave. Thanks, Dave. Your next question is coming from Tycho Peterson from Jefferies. Your line is live.

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

Yeah, sure. Be happy to. And then, again, I'll let Abhishek jump in on the details. Relative to the guidance, Taika, you're right. We want to maintain the philosophy that we shared with you. Right? 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, but making sure we could get to the upper end of that guide at a minimum. And we've taken those factors into consideration with this guide. You know, what are the positives? What do we look towards? Well, again, 11% 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. 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 LBX, getting another quarter of opportunity to drive revenue, getting out in front with commercial payers. You know, if we can plow that field well, we think there is probably upside opportunity associated with the guide relative to Pantracer LBX. We think that there is potential opportunity as well in our non-clinical business. You know, it's way too early to spike the football 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 kind of that low single-digit erosion on the non-clinical side. So, you know, 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 would be even better uptake with Radar SP. But again, we're playing this one right down the middle, Tyco, with the 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 non-clinical 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. You know, another question is you lapped Pathline next quarter, I guess. How do we think about the volume growth as you lapped that? You know, you grew volumes 2.8% ex-Pathline. Is that kind of the right run rate for the business? You're rolling off the big lab contract. So how do we think about just lapping Pathline?

But I think the most important element, and then I'll ask Abhishek, you can get into his very specific question on volumes. You know, I've gotten 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 one and a half times 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 path lines in the Northeast region is absolutely increasing on plan, albeit the actual volumes might be down just a little bit because they're not on call. You know, let Abhishek take some of that.

Yeah. Let me also kind of talk about the overall volume picture there, Taiko, right? Because we basically are in 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 that the second quarter is going to be flat-ish year-over-year growth standpoint. But what will start to happen from now onwards, that we'll start to see a sequential growth in our volume due to onwards. So that's a good part, right? But a lot of the work that for the revenue growth is going to come from the AUP in our remaining quarters for the year. We are basically trying to kind of absorb exiting this high-volume, low-value contract as we kind of look into Q2 and Q3. Q3.25 was the peak quarter for this particular one contract, and that's the reason we have those headwinds in Q2 and Q3. But overall cases from the overall revenue growth standpoint, as Tony pointed out, on the typical revenue, we are growing a strong 14% in the current quarter, and our guide basically still keeps us about 11% above growth for our clinical business for the rest of the year. Okay.

Just one last quick one. As you said, maybe just on the convert, you've earned $14 million in cash. You have $146 million in cash and $342 million convert due January 2028. Can you maybe just quickly touch on plans for that, and then I'll hop off?

Absolutely. 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, 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, kind of come back to a level where we feel that this is the right time for us to kind of 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 for fairly late in the game.

Okay. Thank you.

Thank you. Your next question is coming from Puneet Soda from Lear Inc. Your line is live.

Hi, guys. Thanks for the questions here. So first one, just wanted to see if there was any weather impact in the quarter and if you're expecting any, as a result, expecting anything into queue for that. And also on the NGS side, how should we think about the ceiling? It's a third of your business. It's growing rapidly in the community setting. Just trying to understand, you know, overall NGS, what's the ceiling there? And I assume that NGS is all of the solid tumors that 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 rightfully 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 and relative to the NGS question?

Yeah. So, I mean, how we're defining NGS today, Praneet, is simply it's NGS for our heme cancers and it's NGS for our solid tumor, largely fitting within the therapy selection vertical. At the moment, even though MRD runs on an NGS backbone, we're probably going to carve that out. So the 26% growth that you see, that excludes any MRD. In terms of the outlook, I mean, I'd say we'd be disappointed that if in the midterm this is not more than 40% is 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 feel that growth in the sort of 20% mark.

Got it. And then just to follow up on, there's obviously a lot of discussions about repeat use of CGP liquid. There's trials, ad cons, other things are 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 just given sort of the timing it takes for your test to be recognized by the market you're serving?

Yeah, so I think interesting enough, we've already seen some repeat testing on liquid biopsy already. So that's encouraging. And I think as the scale continues to grow in the second half of the year, as we outlined, we expect to see some repeat testing here as well, which is encouraging. And we also anticipate that as we put more and more patient programs in place to support RAID RST, then we can obviously also layer some of those workflows and those applications into liquid biopsy as well. So this is certainly part of that growth assumption that you asked about earlier that'll help to continue the momentum.

Got it. Okay, I'll hop back in the queue. Thank you. Thank you.

Thank you. Your next question's coming from Bill Bonella from Craig Hallam. Your line is live.

Hey, guys. Thanks a lot. I want 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, you showed a little illustration where you showed one example, but can you give us a sense of comparison in maybe value when physicians are ordering that option versus when they're just you know, selecting a straight-up panel.

So, Bill, I think you've outlined the workflow pretty well. But I think coming back to you, one of the things that we try and do is we try to take friction out of the system. We want to make that sort of ordering experience as easy as possible. And whether you choose to requisition this through a bidirectional interface, a portal, or paper, it's exactly that. It's a one-tick, and that's it. And the requisition will arrive in our lab, And again, this is in the therapy selection vertical, so there's typically a diagnosis that's taken place already that's after reports that gets read. And this algorithm then determines, based on guidelines and what's medically necessary, this is a key aspect, what additional add-on testing should be performed based on that specific diagnosis. So what add-on testing will vary based on the diagnosis. And the example I shared was ovarian, and we added on five additional tests, including that new PD-L1 for ovarian carcinomas. So the system does that automatically. We then run the test. We cut the slides appropriately because the number of slides that you would cut would be dependent on the number of add-on tests. We will do the testing. We report out. the results for the add-on testing as soon as that is available and that's typically before NGS and the reason why 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 which is typically three or four days thereafter we'll submit the NGS results to the physician as well so that they have a complete package and they can make a more holistic informed decision from a treatment perspective. You know, in the past, a physician could have done that themselves. They could have figured out using that ovarian situation. They could have figured out that I want Pantracer tissue and I want these five markers. They could have done that manually. But the reality is in the community setting, very few actually have, they've seen so many different patients with different indications. They don't know that that well. So they would typically send Pantracer in and then potentially send their second requisition at a later stage to do some add-on testing. So that just takes longer, it exhausts more sample. So this really has a lot of efficiencies, and it also does typically result in additional add-on testing, which has a revenue component attached to it. But I want to stress, it's only what's driven by guidelines and what's medically necessary.

Okay. Thanks, Bill. Is there any... Oh, okay. Did you have a quick follow-up? That's okay.

Thank you. Your next question is coming from Mason Carrico from Stevens. Your line is live.

Hey, guys. Good afternoon. This is Ben on for Mason. Could you help us bridge Q1 reported AOP to the underlying core AOP 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.

Yeah, I will take that one question. So we basically grew our AUP by 8% year-over-year. Excluding baseline, the number was 9%, and if you were to exclude the impact of the high-volume, low-value contract, then I would say that it did not impact the AUP change as much because the number of tests basically became a smaller number, and there was a little bit of growth in the AUP that we had seen as we had moved away, like as we had progress in 2025 from Q1 onwards. So the impact for the high-volume low-value test, about a point or so in the overall AUP growth. The AUP growth was primarily driven by, as Pooni pointed out, because of the high mix of our high-value testing, which has been part of our strategy, the NGS growth, as well as the impact of the RRC work that we have done.

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

It is, yeah, and that's been a consistent assumption that we've shared with you. So, yeah, we submitted, you know, at the close of last year. We anticipate... Those can be available to us 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.

Great. Thanks for taking the questions.

Sure thing. Thank you. Your next question is coming from Subbu Nabi from Guggenheim. Your line is live.

Hey, guys. Thank you for taking my questions. What percentage of liquid biopsy orders today are Medicare versus commercial, and what's the realistic timeline to getting meaningful private payer rates? The reason I ask is the rate $3,289, fully loaded cost to deliver, how much would it – is it accurate to gross margins from day one, or is that a scale – scale threshold you need to hit first. And I have the same question for read RST as well, the impact on gross margin from day one to like when it ramps.

Yeah, sure. So let me take this question for the liquid because we have not like seen all the volumes since our like soft launch, I would say, in the second half of the year, last year. We are going to basically push on all cylinders now to push the volume. So I do stand with the tissue as a proxy to provide you that fair mix. So we basically have, between the Medicare and the client list, the direct client bill, about 40% that you will basically get paid, and then about 10 points of Medicare Advantage in the other 50 commercial payers. And to your point, what we believe that we will start to get paid on the 40% that I first talked about, about the client bill and the Medicare. And on the commercial, this is a process, right? As you know, what we have seen, how this process plays out, there will be a time which it will take some time as we start to get the coverage and the policy. My sense is that given the fact that we already have contracts with like 300 of these pairs, that will definitely give us a seat on the table and we'll be able to push through this one relatively faster, but this will take some time.

Now, coming to the data...

Coming to the radar, the mix is slightly different. I would say that's where Medicare is about 20% to 25%, and then you have Medicare Advantage, which will be 10% to 15%, and the rest will be commercial and the Medicaid, a little bit of a tail there. So that's where this plays out. So the overall payment rate for radar, As in any other competitor that has seen this particular space, they're going to be starting to get paid on the Medicare and then will have to start to build the coverage for the commercial payers.

Got it. Thank you so much for that, Abhishek. And Abhishek, just to put all the numbers together, the low contracts that you guys had, the rationalized volumes, Were they largely pathline volumes, or this has got nothing to do with pathline volumes? These were just other contracts?

No, not pathline volumes, because what I've called out that of our overall volumes in 2025, roughly 1.35 million, we basically said that this high-volume, low-value contract was about 3% to 4% of the overall volumes. Pathline is much more smaller, right, from that standpoint. So this was a different contract.

Perfect. Thank you so much, guys.

Thank you. Your next question is coming from Dan Brennan from TD Cowan. Your line is live.

Thanks for the questions. Maybe first one, just on the guide, could you just speak to 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, kind of what are we expecting for Q2, and how does it look for the full year?

Yeah, so what we are guiding for the full year is $800 million at the midpoint. And for Q2, the revenue growth is going to be 9% year-over-year, that's compared to the 8% to 9% that we had guided the last time. We're basically adding more dollars in our Q2 because of the more DX approvals for liquid, and that's the reason the guide goes up for the second quarter. For MGS, what we have basically called out, excluding liquids, we are going to be in line with what we have been in 2025, which is about 22%. So that's the part in the NGS. Now, if I were to step back in what Tony was saying, that this is a prudent guide, this basically gives us a high degree of confidence to be able to kind of hit the midpoint of the guide. But at the same time, we believe that we should be able to come in better as compared to the mid-single-digit millions from the liquid. We'll be disappointed internally if we don't actually do better there. So there are some upsides there. as well as I would say on the NGS, that we have been growing at 25%, 26%, and our guidance is basically 22%, 23%. If you're able to kind of see the similar kind of growth on the NGS, then that could be another website. So again, my takeaway on this one is that from the guide midpoint standpoint, this is prudent, but it gives us the opportunity to be able to kind of come in ahead if what we are anticipating internally, what's going on there.

Got it. So 2Q NGS should be 22, just like it is for the full year. Okay.

I would say, yeah.

Okay. You called out in the prepared remarks about Epic Aura and the upside that other players maybe have seen, or I forget how you termed it, experience, the volume uplift. Mm-hmm. Just remind us where you are, what are you seeing so far, what's baked in, and what would get you to see that kind of uplift, like what needs to happen?

Again, thank you. We launched, we went live with our first customer earlier this month. So, and the beauty of Epic Aura, it allows for a significantly faster implementation with customers. So, we are targeting the Epic Aura implementations for therapy selection and MRD. And we've got a robust pipeline of accounts that we're looking to activate with Epic Aura in quarter two all the way through the year. So certainly hoping, expecting to see that uptick as the year progresses. And this is one of the key levels in terms of sustaining this high NGS growth rate that we've been talking about. And also will help to drive demand for Radar SD as well because the certified workflow that it'll bring

Got it. So some of the benefit is baked into the guide. It's not like there's potentially upside if you're successful with these account activations. Is that the right way to think about it?

I would say that if we're able to accelerate the implementations based on what we've put in the guide, there's upside there as well. We also, if the call-through is as significant as what was articulated in these independent calls, studies that were done, I think there's upside there as well. We didn't assume that we would see that radical uplift, but there certainly are studies that point to that.

Great. Thank you very much. Thanks, Dan.

Thank you. Your next question is coming from Michael Reiskin from Bank of America. Your line is live. Great.

Thanks. A couple of quick ones. One is maybe as part of your answer to Dan just now, sort of your comments on growth expectations through the year, both of NGS and non-NGS. What's the implicit contribution from some of the Salesforce expansion? I just maybe wonder if you could comment on the Salesforce addition more broadly. Is that playing a role in the second half? Is that more of a 27 benefit? Just have a think about that.

Well, I think about the Salesforce as being actually quite productive for us, Michael. I think if you look at The size of our sales force and the size of our spend were probably relatively under indexed versus many of our competitors. We got a sales and marketing ratio that's probably somewhere around 13%. And if we look to just the oncology, the OSS team, you know, being in the 50s, that is a relatively low number, but yet they have proven to be quite productive, right? So the share gains that you have seen with the NGS portfolios proven in large part by that increased penetration into the community oncology space. And so we do see the sales force as one of the levers for us to continue to drive growth. We also see it as an opportunity for us. You take a product like RadarST, and you see the relatively low market penetration rates. You know, we think we can contribute there. And so we do see the sales force as an ever-increasing opportunity for us to continue to drive growth. And we will be selective in how we continue to expand and grow that side of the business because we think it is a large revenue driver opportunity for us. What we always have to balance, Michael, is not overly disrupting the customer relationships that are established as well. So we tend to take kind of a very thoughtful process as to when we add them and how we add them, but they are clearly a growth driver for us. I don't think we'd be where we are today with a 26% growth had it not been for that investment that was made a year ago.

Okay. All right. And for my follow-up, I just kind of want to make sure I'm doing the math right. You know, we're kind of calculating, like, direct pathline contribution. You know, it continues to step down and kind of step down a little bit more this quarter. I heard what you called out on the call in terms of, you know, the benefit in the Northeast and the more broad, you know, uplift to the portfolio. But just anything specific to call out there, I mean – Do we expect that to continue, or is that the weather impact in the quarter? If I'm just sort of taking the, you know, path line and ESP path line volumes, if I'm doing the math right.

Well, listen, I'll start us off, and then Warren or Abhishek can jump in. Again, it shouldn't be a surprise that there might have been a slight step down in the volumes associated with that time, because, you know, we were exiting some of that non-oncology business, and so that certainly had an effect. And then, of course, we're doing a lot of work here on load balancing. We want to make sure that the tests go, not necessarily, they don't always have to go through Pathline. They can be ordered and be run down through Fort Myers or AV. And so load balancing comes into play. That's why, honestly, I don't put a lot of stock into what is directly attributed just to Pathline. It certainly delivered what we expected in its range of revenue, but the growth driver that we see in the Northeast, that is the catalyst. And so I'll Warren, you can maybe add a little bit more comment on that.

Well, the third aspect that I would say that you didn't touch on is the northeast was probably the area that was most affected by weather in the first quarter. So that's the third factor. So you've got weather, the non-oncology business that we have no interest in entertaining, so we're stepping out of that business. And then the third dynamic is we're leveraging our lab network to provide the best possible turnaround time, but also try to scale where possible. So some of the testing that was historically done in the Ramsey lab, the Pathline lab, has moved to other parts of our network. Overall, I'm very pleased with the development we're seeing so far. One and a half times market growth in the Northeast is really encouraging, particularly based on some of the trends we're seeing historically.

All right. Thank you. Thank you.

Thank you.

Thank you. Our next question comes from Mike Madsen from Needham. Your line is live.

Yeah, thanks. So I thought I heard you guys say that within the NGS business, there's some price benefit. So obviously, I mean, I know that the NGS is growing as a part of the overall mix and driving price, but is there some positive pricing mix happening within that NGS business and what's driving it?

No, absolutely. So only in just business, what we have called out that this business grew 26%, 16% of that was driven by volume and the other 10% came from the increase in the AUP. And as we were discussing that AUP increase has been on account of some of the RC initiatives that we have put in place. But at the same time, we are seeing the increase in the CGT panel in the NGS business as we move from the single panel gene test. So that is basically kind of again moving towards the high-value testing, which is helping us ride the AUV high.

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

Based on, again, this is obviously somewhat subjective, but based on the analysis that we've done, we'll be north of 45% of the market across those four indications.

Okay. Great. Thank you.

Thank you. Thank you. 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 NEO for their continued hard work and unwavering commitment to our mission. With meaningful additions to our therapy selection and MRT 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'll 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.