NeoGenomics Q3 2026 Earnings Call Transcript

NeoGenomics (NASDAQ:NEO) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Access the full call at https://www.webcaster5.com/Webcast/Page/1219/54667

Summary

NeoGenomics reported a strong third quarter with clinical revenue growth of 13% year over year, NGS revenue up 29%, and adjusted gross margin expansion of over 300 basis points.

The company increased its full-year 2026 revenue guidance to $807-$809 million, representing approximately 11% growth, and raised its adjusted EBITDA guidance to $60 million.

CEO Tony Zook announced his transition to Executive Chair, with Warren Stone, the current President and COO, taking over as CEO in January 2027.

NeoGenomics is focusing on expanding its NGS and MRD offerings, with the NGS business expected to grow over 25% for the full year, driven by new product launches and increased market penetration.

The company achieved significant milestones, including MolDX coverage for RaDaR immunotherapy treatment response monitoring, and continued investments in its Lab of the Future initiatives.

Full Transcript

OPERATOR

Good afternoon, and welcome to the NeoGenomics third quarter 2026 financial results conference call. Please be advised that today’s conference is being recorded. I will now turn the call over to Andrew Brackman, Vice President of Investor Relations.

Andrew Brackman (Vice President of Investor Relations)

Thank you, Sylvie, and good afternoon, everyone. Representing NeoGenomics here today are Tony Zook, Chief Executive Officer, Warren Stone, President and Chief Operating Officer, and Abhishek Jain, Chief Financial Officer. This call is being simultaneously webcast, and a recording will be available following the conclusion at ir.neogenomics.com. During this call, we will make forward-looking statements regarding our future financial and business performance, our planned leadership transition, planned future operations and related expectations with respect to timing and performance, future financial position, future revenues, growth potential and expected growth drivers, projected costs and capital expenditures, prospects and plans, estimates of market size and position, the implementation of our new revenue cycle management platform and its anticipated benefits and effects on the timing of our collections, 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 Annual Report on Form 10-K and our subsequent quarterly reports on Form 10-Q and current reports on Form 8-K 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 will also refer to certain non-GAAP financial measures that involve adjustments to our 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 the 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 earlier today and in the slide deck available in the Investors section of our website.

I will now turn the call over to Tony.

Tony Zook (Chief Executive Officer)

Thank you, Andrew, and good afternoon, everyone. We’re excited to report another strong quarter, which shows we have the right strategy in place, the right team to execute it, and we’re delivering consistent results. Because of this, our business is continuing to gain momentum, and our third quarter results show it. Clinical revenue grew 13% year over year, NGS revenue grew a strong 29%, and our adjusted gross margins expanded by over 300 basis points, all of which allow for us to increase both total revenue and adjusted EBITDA guidance for the year.

We made a lot of progress on key initiatives this quarter and are well positioned to deliver a strong finish to 2026 and a continuation of these trends into 2027. Before I walk through the quarter highlights in more detail, I want to acknowledge that this will be my last earnings call as CEO of NeoGenomics. As we announced earlier this month, effective January 4, 2027, Warren Stone, our current President and Chief Operating Officer, will become Chief Executive Officer of NeoGenomics and join our board. I’ll support his transition and remain actively involved as our new Executive Chair. We shared three messages at the time of transition announcement that I want to reinforce.

First, these roles cement our leadership team well into the future. Warren, Abhishek, and the broader leadership team in place have helped drive our recent progress and will continue to do so. Second, this change comes from a position of strength. Succession is best done when the business is performing at or above expectations, which is exactly where we are. Warren has earned this promotion, and I’m confident that he’s the best person to lead NeoGenomics well into the future.

Finally, with our strategy firmly in place and not changing, now is the time to accelerate execution and advancement of that strategy. Warren will remain focused on the same value drivers that our team has been fixated on, and he’ll speak to that in a moment. As I step into the role of Executive Chair, I see great opportunity for NeoGenomics over the coming years as our business shifts to higher-value advanced testing modalities. Today, NGS represents about a third of our clinical revenue and only 10% of our clinical volumes. Over time, we expect NGS and MRD together to ultimately approach two-thirds of our revenue. With that inversion, we see the potential for durable and accelerating revenue growth, which will also drive disciplined margin expansion.

Just as we saw in the third quarter, we’ll continue to seek ways to remove operational complexity, upgrade our infrastructure, and invest where we see the highest ROI, namely in our clinical business across the NGS and MRD franchises. Now let’s get into the third quarter highlights. Total revenue grew to $209 million, up 11% year over year and ahead of our expectations of approximately 10% growth. Our entire clinical business, which makes up roughly 93% of our revenue, is gaining momentum and exceeded our expectations. This is driven in large part by strength in NGS, with this higher-margin revenue growing 29% as strong trends across both heme and solid tumor continue. On the much smaller non-clinical side, quarterly results met our expectations, though still represented a modest headwind to total revenue growth, declining approximately 10%, or $1.5 million, year over year.

As a reminder, our non-clinical business is made up of two parts: one, our high-margin Oncology Data Solutions business, or ODS, which is an emerging opportunity for us selling proprietary real-world evidence to pharma customers; and two, our pharma services business, which supports customers through drug development and clinical trials and historically has been comprised of legacy, lower-value tests. Looking ahead, as we have done in all parts of our business, we continue to evaluate the low-margin, commoditized contracts in our legacy pharma testing which are not strategic to our business.

However, we remain committed to more high-value services which move us up the pharma value chain. On the margin front, this quarter we again saw significant improvement. Adjusted gross margins expanded by over 300 basis points, driven by mix shifts, strong AUP growth of 11%, and Lab of the Future initiatives. Together with operating expense discipline, this drove adjusted EBITDA to $19 million, well above our expectations. Beyond our financial results, we achieved several important business milestones in the third quarter. In August, RaDaR received MolDX coverage for immunotherapy treatment response monitoring, our third Medicare-covered indication and a cornerstone of our MRD launch. We continue to expect two additional indications to be granted reimbursement by MolDX, one potentially by year-end and the other by mid-2027. Warren will discuss recent customer feedback and other payer successes shortly.

Separately, we continue to advance Lab of the Future initiatives and investments in digital transformation, including upgrades to sequencers and our revenue cycle management system. Lastly, our pipeline continues to advance, and we expect several tests and upgrades to move closer to clinical availability in the coming quarters and years. In the third quarter, we upgraded our flagship NGS test, our NEO Comprehensive Heme panel, to include U2AF1 and to detect variants at allele fractions as low as 3%. These additions, along with turnaround times as fast as eight days, further differentiate the test. In MRD, our next-generation whole-gene assay remains on track, with data generation expected next year and a potential clinical launch in 2029.

In sum, this was another strong quarter for NeoGenomics, with our team of over 2,400 individuals delivering the consistency that investors expect. And as Warren takes over as CEO in January, I expect that he and the team will continue to execute on the objectives in front of them. With that, let me turn it over to Warren.

Warren Stone (President and Chief Operating Officer)

Thank you, Tony, and good afternoon, everybody. I want to begin by thanking Tony, our board, employees, and the shareholders for their confidence in me as I take over the CEO role early next year. I’m excited and grateful for the opportunity to lead NeoGenomics, something I have prepared for during my time with the company. Let me start by sharing a bit about what inspires me about the opportunity ahead. At NeoGenomics, we’re a pure-play precision oncology company focused on the community where approximately 80% of patients seek treatment.

Today, we estimate roughly 60% of patients are still not receiving advanced comprehensive genomic profiling, which could lead to improved treatment decisions and outcomes. We have the opportunity to be the company that brings these tests to more patients through our leadership in hematology, a trusted position in the community providers, a broad test menu that spans diagnosis to recurrence monitoring, and our growing oncology field force. Now is about leveraging our strength and momentum to advance the execution of our strategy and accelerate value creation.

Our focus areas remain consistent: delivering durable NGS growth, driving MRD uptake with RaDaR ST, and investing in our business while driving profitability through operational excellence. I’ll briefly touch on each of these today. First, let me begin with NGS, which we view as our key value driver. In the quarter, NGS grew 29% and volumes grew 17%, with large-panel volumes growth above 25%. We view these trends as durable based on new product launches, mix shifts to higher-value tests, and our integrated portfolio offerings. In hematology, new therapies are driving demand for our tests, and we have upgraded our flagship near-comprehensive heme panel as we continue to deliver industry-competitive turnaround times.

In solid tumor, the PanTracer family, inclusive of Pro Tissue and LBx, are seeing strong uptake while driving halo effects across the entire portfolio. LBx, in particular, is seeing increasing utilization and managed-care reimbursement tailwinds following the MolDX reimbursement decision earlier this year. In total, we estimate large-panel therapy selection penetration in the community setting to be around 35% to 40%, leaving substantial room for our business to grow as we drive more wins with commercial payers and deliver more integrated testing solutions across the entire testing journey.

Our momentum should grow as we view it. Our NGS therapy selection and expanded portfolio provide us a unique opportunity to differentiate ourselves. This becomes even more true now that we’re promoting RaDaR ST for immunotherapy, or IO, monitoring. A recent customer experience highlights the power of our comprehensive offering. A community oncologist in Texas, frustrated by ordering from multiple vendors for a single patient, worked with our team to standardize testing on NeoGenomics given our breadth of primary diagnosis through surveillance.

Now, new patients at this practice start with PanTracer Pro and PanTracer Liquid for therapy selection followed by RaDaR ST for MRD. A single vendor also allows for faster turnaround time and better tissue preservation. It’s a strong example of how an integrated menu sets us apart in the community oncology channel and drives multi-product adoption. Next, in MRD, we are confident in the opportunity and the foundation that we are setting. Early launch indications are encouraging. Over 30% of RaDaR ST orders are accompanied by other NeoGenomics tests. Approximately two thirds are in-indication, and about 20% are in-indication orders for patients on Medicare. Clinical RaDaR ST volumes continue to improve on a month-over-month basis following the August decision by MolDX to reimburse RaDaR ST for IO monitoring in late-stage cancer patients.

IO monitoring is a critical piece of our foundation for a successful RaDaR ST launch, what we estimate to be a U.S. market opportunity of just under $4 billion, including several hundred thousand stage-four patients, of which approximately 40% are on Medicare. Looking ahead, we expect further progress on the reimbursements with two additional indications for RaDaR ST currently under review by MolDX. If approved, these additional indications would expand our access to over 40% of the total addressable market for tumor-informed MRD testing.

Moreover, a leading regional commercial plan has informed us that, effective December 15th, it will cover RaDaR ST for all MolDX-reimbursed indications. While clinical revenue will take time to ramp as we further unlock commercial opportunities over time, we are encouraged by the recent volume trends and oncologist receptivity to the test and expect growing momentum in 2027 to support more meaningful revenue contributions in 2028 and beyond. Finally, we’re instilling operational excellence initiatives across our enterprise that will free up dollars for growth investments. These efforts will help fuel investments into high-ROI areas like commercial, Lab of the Future initiatives, and product pipelines. In commercial, we ended the quarter at over 160 sales resources, consistent with prior commitments. Given the strength of our NGS business and recent reimbursement wins for RaDaR ST, we plan to further expand our sales force in a disciplined manner in the fourth quarter and into 2027.

In addition, we’re investing in our vision of delivering a differentiated customer experience. This quarter we released the real-time order status tracker, which provides improved visibility to expected completion timing of test results to support downstream workflows and patient scheduling. We also continue to improve EMR connectivity through Epic Aura integrations and, in the near future, integrations with Flatiron. Progress on our Lab of the Future initiatives also continued this quarter.

We remain on track to transition our heme NGS portfolio, the largest revenue component of our NGS business, to the NovaSeq X platform in the first half of 2027. Separately, we recently expanded our digital pathology partnership with Indica Labs to prepare for AI’s growing role in cancer diagnosis and therapy selection. In closing, I’m excited about the future. We have a tremendous opportunity ahead to deepen the penetration of precision oncology in the community setting while delivering consistent, durable, profitable revenue growth.

And with that, I’ll hand the call over to Abhishek.

Abhishek Jain (Executive Vice President, Chief Financial Officer)

Thank you, Warren, and good afternoon, everyone. In my remarks today, I will discuss our third quarter financial results and our updated 2026 guidance. We reported total revenue of $209 million, up 11% year over year. Clinical revenue grew 13% to $195 million, driven by a 2% increase in test volumes and an 11% increase in AUP. NGS revenue grew a strong 29% year over year, driven by 17% volume growth and above 25% volume growth of our large-panel NGS tests.

As Warren noted, we are pleased with the consistent, durable growth in our NGS portfolio and are excited about the opportunities ahead driven by product upgrades across both heme and solid tumor as well as growing adoption of our large-panel tests. This mix shift towards high-value testing is also the primary driver of the increase in AUP, with the balance coming from RCM initiatives, including managed-care pricing gains with payers. Turning to our non-clinical business, we reported revenue of $15 million in line with our expectations, representing a decline of approximately 10% year over year. We continue to see compelling opportunities across our high-margin ODS business, though legacy pharma remains a headwind for us as we evaluate low-margin, commoditized contracts while staying committed to offering high-value pharma services. Adjusted gross margin for the third quarter was 49%, an expansion of over 300 basis points versus the prior-year period.

Adjusted gross profit increased by $16 million, or 19%, to $102 million. This was driven by AUP growth, a higher mix of NGS revenue, and continued lab efficiencies driven by our Lab of the Future initiative. We continue to invest in the areas that will help us drive the gross margin expansion. We bought new sequencers and data servers for over $5 million in capital expenditures as part of the NovaSeq X transition in this quarter. Also, we upgraded our revenue cycle management platform to XIFIN.

As Tony noted, XIFIN is one of the leading RCM platforms for its ability to streamline and automate workflows, improve collection rates, and reduce bad debt. With a platform transition of this size, we saw a temporary impact on our receivables that we expect to normalize throughout the fourth quarter and into early 2027. Over time, we believe XIFIN will help us continue to drive AUP improvement and greater efficiencies. Moving down the P&L, total operating expenses in the quarter were $105 million. Sales and marketing expenses grew 27% year over year as we continue to invest in our sales team to help accelerate growth, and R&D increased 13% year over year as our team works to upgrade our on-market tests and advance next-generation products. These increases were funded in part by decreases in G&A spend, which declined by 4% year over year. This decline reflects our commitment to reduce G&A expenses as a percent of revenue and an intentional shift in capital allocation within operating expense lines.

Adjusted EBITDA was $18.7 million for the quarter, up 53% year over year, reflecting strong operating performance and disciplined investments. Turning to the balance sheet, we ended the quarter with $139 million in cash and cash equivalents, down $6 million as compared to the last quarter. Cash flow in this quarter reflects three discrete items: the payment of roughly $10 million for the DOJ settlement that we reserved for and discussed last quarter, transient effect from the XIFIN implementation, and our continued investment in modernizing and scaling our infrastructure.

Now turning to our 2026 guidance, given our strong third quarter, we are raising our full-year 2026 revenue guidance to a range of $807 to $809 million, up from $802 to $806 million discussed previously and representing full-year revenue growth of approximately 11% at the midpoint. The key assumptions underlying the midpoint of our revised revenue guidance are as follows. First, our clinical business to grow in the low teens for the full year, reflecting strong Q3 performance.

Second, we expect NGS revenue to grow more than 25% for the full year, approaching approximately $250 million in 2026. Third, no change to our PanTracer Liquid or RaDaR ST revenue assumptions. Finally, we now expect our non-clinical business to be down low double digits year over year for the fourth quarter. This implies revenue growth of approximately 11%, slightly ahead of our prior commentary. Turning to gross margin, we now anticipate well over 150 basis points of adjusted gross margin improvement for the full year, implying fourth quarter gross margin of approximately 48%.

Finally, we are raising our full-year 2026 adjusted EBITDA guidance to approximately $60 million versus $56 to $58 million discussed previously, representing year-over-year growth of approximately 40%. With that, let me turn the call back over to Tony.

Tony Zook (Chief Executive Officer)

Thanks, Abhishek. We’re making great progress in 2026 and expect a strong finish to the year. Four of the five growth catalysts we outlined for 2026 are now behind us, and the fifth, expanded RaDaR ST reimbursement, is well underway with IO monitoring secured and two additional submissions pending. Our priorities from here are clear: deliver a strong fourth quarter, drive durable NGS growth, uptake in MRD, and disciplined margin expansion through operational excellence.

We’re looking forward to exiting 2026 with momentum, and we’re excited about 2027. Thank you for your continued interest in NeoGenomics, and with that, operator, this concludes our prepared remarks, so you can please open up the line for questions.

OPERATOR

Thank you. The floor is now open for questions. If you wish to join the queue to ask a question at this time, please press star one, and if listening on speakerphone, please pick up your handset while asking your question. To provide optimal sound quality, we also ask that, out of consideration to other callers on the line today and time allotted, to please limit yourself to one question and one follow-up. Thank you. Once again, please press star one on your phone at this time to join the queue to ask a question.

And your first question will be from Dave Westenberg at Piper Sandler. Please go ahead.

Dave Westenberg (Analyst at Piper Sandler)

All right, thank you for taking the question, and congrats to Warren on taking over. And congrats to Tony on being the new board member—well, sorry, Chairman of the Board. I think I just want to ask broadly about the management transition here. I think all of us that follow NeoGenomics very well think that Warren is the obvious successor, and clearly this is 100% who we would all want to be CEO. Now, saying that, I think NeoGenomics’ transition and leadership haven’t always been seamless.

The business doesn’t appear to be broken. So can you just talk about some of the timing on this, why this is a natural fit, why we made this decision now? And then just some of the questions directly for Warren. Can you talk about some of the things that you’ve been involved with in terms of the management decision over the last couple years? And as you step into the role, how you’re going to kind of communicate the long-term ambition versus keeping things in check? I know during the transition from Chris to Tony, there’s a little bit of maybe not the best communication of the long-term ambition of the company.

And then last, was there any lessons from that transition from Chris to Tony? I know there’s a lot, but I think a lot of us want to know about this Tony to Warren transition.

Tony Zook (Chief Executive Officer)

Sure, sure, Dave. I’ll kick it off and then, Warren, turn it over to you. I would say there were a lot of lessons learned, Dave, and I think that’s benefited us as we’ve done. I would say first and foremost, relative to the timing of the transition, this was the result of what I thought was actually really good succession planning. There were no guarantees given to anybody. And if you recall, when I came on board, the first thing I did was appoint Warren to his current role, where he would move from leading just the commercial organization to also include lab operations and demonstrate enterprise leadership across multiple functions, and as well representing almost 75% of our employee population. And I will tell you, David, that Warren did a marvelous job there. The degree of innovation and change within the labs today is literally amazing.

And we continue to gain momentum in what we’re doing across the commercial front. So I would say without any hesitation, through my eyes, as well as the board, Warren earned the opportunity. And so once we knew that we had the right person for the future, then it became a question of what’s the right time. And we just believe that, you know, we’re doing this from a position of strength. By making the transition now, we get continuity for me going back to the board as executive chair. So there’s not going to be—with Lynn stepping out and not seeking reelection—there won’t be a new chairperson coming in that might challenge strategy.

So it just seemed a perfect opportune time for us to do it. Second, by doing it when we did it earlier in the month, it gave us the opportunity to get in front of all of our leaders because we already had a senior leaders team scheduled. And there we were able to guarantee that there would be no disruption from the change, and everybody is fully aligned internally around what we’re doing. And so I would say the key lessons learned as well is that Warren and I have been working closely together over the last few years, and we continue to do so.

You know, we’re joined at the hip relative to the strategy. We’ll be very, very much aligned as we go through the budget process and the final quarter. And I think those were the big, big lessons learned. I was basically handed a budget that I didn’t have the same insights that I would have liked to have had. Warren will be able to own this budget himself due to the timing. So that’s kind of the macro whys. And then, Warren, you can give your own perspectives.

Warren Stone (President and Chief Operating Officer)

Yeah, thanks. First, thank you for the kind words. Appreciate that. I think to your question, sort of how involved have I been? I think that’s a critical question. And I’ve just come up on sort of four years in NeoGenomics, and I’d say my first two years have—I was very involved in most things. And over the last two years since Tony transitioned into CEO, I’d say I was acutely involved in practically all decisions, certainly those that related to people and strategy. So I already consider myself as sort of one of the architects of the strategy, and I say that because it’s important. I think we have momentum in the business right now, and I hope the results that we just reported here in the third quarter actually demonstrate that.

And what we want to do is not only maintain that momentum, but obviously accelerate that momentum. So continuity in the strategy is critically important, and maintaining continuity within the leadership is important as well. So the fact that I’ve been heavily involved in that process, I feel very confident we’re able to achieve that. To that point, I think in terms of sort of what is changing, I think maybe the ambition, in terms of the value that we can deliver from the strategy as we transition into this next chapter. And I think lastly, your point is how are we going to keep the community sort of informed around our ambitions and the future? I think what we certainly are planning on doing, outside of investor comps like JP Morgan, is to have an investor day in the first half of 2027.

A lot of exciting things to share from a portfolio perspective, from a commercial expansion point of view, operational excellence. And we feel it’s been four years since the last opportunity. It’s time for us to do the same again.

Dave Westenberg (Analyst at Piper Sandler)

Got it. Thank you very much. Since that was a long answer, I’ll keep it kind of short. Abhishek, I just wanted to know about what MRD and liquid contribution would be in Q4, if you have any. Just given the fact that you gave it on the year, there’s technically only one quarter in the year. Honestly, we’re just trying to get kind of a run rate for 27. I know you’re not going to give 27 guidance, so I’m going to try my best with kind of looking at that.

Tony Zook (Chief Executive Officer)

Thank you. We would expect nothing less from you, David.

Abhishek Jain (Executive Vice President, Chief Financial Officer)

Yeah, no, again I think we’re not breaking it down at the quarter level for now, Dave. Sorry to disappoint you on that one. We’ll provide more color in our Q4 call for that one. But overall for both liquid and the MRD, our guidance that we gave in the beginning of the year, we are tracking well to those numbers.

Andrew Brackman (Vice President of Investor Relations)

Operator, let’s go to the next question.

OPERATOR

Next question will be from Pumitsuda at Learn. Please go ahead.

Puneet (Analyst)

Yeah, hi guys, thanks for the questions. And, Warren, congrats, well deserved and excited to have you on the spot. And Tony, really solid job as you came into the seat and executed. First one from my side is really—again AUP growth is a very important part of the story. Came in again slightly even ahead of the pre-announcements as we looked at it. Maybe could you elaborate just how should we think about that and the sustainability of that into 2027?

I know you’re not giving 27, but just to—you know, the volume growth 17% NGS, really great; 25% large volume on the larger panels as well. But just wanted to get a sense of the AUP growth sustainability of that.

Abhishek Jain (Executive Vice President, Chief Financial Officer)

Sure, Puneet, I can take that question. So AUP growth came in at 11% for the current quarter as we reported in our numbers this quarter, and we had guided in the beginning of the year that overall AUP growth is going to be the high single digit and the volume growth is going to be in the low single digit. The reason for the AUP growth being higher and volume growth being lower was primarily because of this exit of the high-volume, low-value test—one particular customer that basically kind of had a run of pretty high volumes in 2025.

So what we are basically suggesting is that once we kind of stabilize out of this particular dynamic of exiting this high-volume, low-value contract, what we have guided is that the volume and the AUP should track back to the mid-single digit, which we have been in the past. So that’s the first piece of the question—that AUP growth should, in the normal environment, be around mid-single digit. Now, on the 11% AUP growth and from the durability perspective, I would say that we feel that there’s a lot of room for us to continue to deliver on the AUP numbers. The reason number one is the mix. Two-thirds of the AUP growth is coming from us driving the high-margin, high-value NGS product. And given the fact that our larger panels are even growing strongly within the NGS family, that is actually helping us drive the AUP growth. Now the second piece of the AUP is the RCM initiatives.

Now, RCM initiatives—as we kind of called out in our prepared remarks—we are actually encouraged by seeing some of the recent wins in the commercial payers, and that is basically helping us drive the RCM, the real AUP benefits that we are seeing now. So those two pieces kind of actually help us continue to drive the AUP growth.

Puneet (Analyst)

Got it. Super. And then just briefly on the NGS volume growth itself, wondering if you could qualify how much of that is sort of new store sales or same store sales? Essentially, what I’m trying to get to is, are you taking share, or how much of this is just market growth versus taking share? Again, competition in this space, as you know well, is there, but you have a very strong position in the community setting. So I just wanted to get a sense of how you’re winning there.

Warren Stone (President and Chief Operating Officer)

Yeah. Puneet, again, firstly, thank you for your kind remarks up front. I would say I don’t have the data specifically broken out. I can tell you that this is not just with regards to growth of existing customers. We’re certainly seeing robust new customer acquisition which is supporting this growth, as well as incremental volumes that are coming in from existing customers enabled by our bidirectional interfaces that we’ve put in place to support simpler workflow and better customer experience.

Andrew Brackman (Vice President of Investor Relations)

Thank you, Puneet.

OPERATOR

Next question will be from Bill Bonillo at Craig Hallam. Please go ahead, Bill.

Bill Bonillo (Analyst at Craig-Hallum)

Hey guys, thanks a lot. I want to come at the growth—maybe, hopefully I’m not asking the exact same question that everybody else has been asking—but obviously the NGS growth was especially strong this quarter. When I think about it, there’s a lot of drivers, including the expanded sales force you implemented, the specialized oncology sales team, and then obviously the new products. I’m just wondering if you can give us some sense of the relative importance of those factors.

What I’m really trying to get at is to what extent the new products are already truly kicking in and adding growth, or is most of the growth still coming from those other factors and the growth from the new products is largely in front of us. That 25% number you gave, it actually sounded a little bit low to me, and I don’t have a base to put it on. So anyway, I think you get the gist of what I’m asking, and then hopefully a follow-up.

Tony Zook (Chief Executive Officer)

Yeah, Bill, I’ll kick it off and then Warren, please drill down a little bit more. I think you were right in your initial talking about, you know, the sales force expansion and product introductions. All these things contribute. I think, you know, when you look across the spectrum, I think actually, you know, some of the product upgrades and new therapies certainly were additive to the overall growth rate. What is also nice is that we’re seeing it’s broad-based, it’s across heme as well as solid tumor.

You know, heme being a larger portion of the business, it’s still showing very good robust growth and solid tumor is beginning to kick in. It’s on a smaller number, but that does help fuel growth trajectory as well. You mentioned the mix shift to the larger panels and, you know, 25% volume growth is really, really strong, especially when you consider the mix shift effect. And then of course there is what you mentioned for the sales force expansion. But any other color. Warren?

Warren Stone (President and Chief Operating Officer)

Yeah, I think again I’d say, well, there’s no one single factor. If we go back to the five products that we launched in 2023, that’s contributing about 25% of our revenue today. And the actual growth of those five products was north of that, well north of that 25%. They were large panel that we introduced in 2023, well north of that 25% that we articulated. So there’s definitely still a lot of opportunity in the products. And then secondly, yes, certainly field force expansion is something that we continue to see as a really attractive investment. We’re getting good returns there. That’s substantiating the growth. And that’s why in my prepared remarks I indicated that we’re going to make further investments into the commercial organization supporting NGS and MRD that’s coming as well. And then just our work around customer experience, I will maybe just call that out both in terms of just taking friction out in our bidirectional interface.

That channel continues to work very effectively for us. So that’s helping accelerate the growth. The only comment that I will make is it was late in the quarter and probably has very little to do with the results that we’ve actually articulated.

Tony Zook (Chief Executive Officer)

Bill, I guess maybe just a capstone on this. I guess as an organization you can do anything you want, you just can’t do everything you want. And this organization is focused relentlessly on driving our key growth drivers, which NGS is the biggest short-term driver that we have. And so it is an organizational focus point for all of us. And maybe the final thing is, and Warren’s made this apparent in previous conversations, moving from a product mindset to a portfolio mindset. We look for connectivity across the portfolio and that is certainly having an effect.

Bill Bonillo (Analyst at Craig-Hallum)

Thank you, that’s really helpful. And just as the quick follow-up, and I know that the focus is on NGS growth, but we have had a little bit of a drag from discontinuing the low-margin customer, the high-volume low-margin customer. Can you just remind us when we should start to see that annualized and maybe what a normalized growth rate for the non-NGS portion of the business is on a volume standpoint?

Abhishek Jain (Executive Vice President, Chief Financial Officer)

No, absolutely, Bill. And what we have currently called out, this high-volume low-value customer peaked in Q3 of ’25. So we basically had the toughest compare with one in this particular quarter and then this will start to taper off in Q4, which I would say that it will basically start to kind of get muted as we go in Q1 and Q2 of next year. But the whole idea here is that if we were to strip out basically this particular dynamic and a little bit of the Pathline, the non-oncology testing that we exhibit.

When I drew my math, the volumes are growing in the mid-single digit, very similar to how we have seen in the past. So my sense is that you will start to see the volume uptake. For example, the Q4 volume growth is anticipated to be about 3%. So we were at, say, 0 in Q2. We came in at about, like, 2% this quarter and we are going to be growing at 3%. So you will start to see that the volume will start to normalize in the back half of 2027.

Bill Bonillo (Analyst at Craig-Hallum)

Thanks, that’s super helpful. Thank you very much.

Tony Zook (Chief Executive Officer)

Thanks, Bill.

OPERATOR

Next question comes from Mark Massaro at BTIG. Please go ahead.

Mark Massaro (Analyst at BTIG)

Hey guys, thank you for taking the questions. And Tony and Warren, congrats on your new roles. In some of our recent doc call diligence we found that there were clinicians ordering RaDaR ST in indications that you don’t have reimbursement yet. Can you maybe talk about the strategy there? I recognize the volumes are probably small here, but maybe just remind us. I believe RaDaR is a pan-cancer test. So I’m just curious if you can speak to whether or not some of the indications that they’re ordering in, in your view, are close to reimbursement or is this perhaps part of a strategy to increase interest in the platform pan-cancer ahead of the reimbursement?

Warren Stone (President and Chief Operating Officer)

Yeah. Mark, thank you. And thank you for your kind words as well. I think a couple of points I’d like to highlight there. First and foremost, we are actively promoting RaDaR ST for in-indication volumes at this particular point. But, you know, the IO umbrella actually covers a lot of different indications where it’s relevant. So it actually has allowed us to proactively broaden our message in the market. Not that we’re taking all comers, so to speak, but we can take many more indications than we could before and that’s really helped to drive adoption.

We’ve seen a meaningful uptick there as well. And I think your other point is that we are taking orders for indications that we are anticipating because we obviously understand the timing for those, and we try to be starting to prime the pump there as well, even though we’re not actively promoting at this stage. And if you go back to the prepared remarks, two thirds of our volume today is in indication, one third isn’t. Yeah, yeah.

Tony Zook (Chief Executive Officer)

And Mark, again, this was a conscious effort on our part. You know, when we initially had the good opportunity to re-enter the market, you know, we basically had head and neck and a subset of breast. And so it. The reality is, while we were excited, it’s still onesies and twosies with an individual doc. They’re not going to start to embed you in workflows and broader use until you have a more expansive indication base. And that’s why IO was so important to us because for the first time we can start to position the product more broadly.

And as Warren said, with the other two indications that we anticipate, all of a sudden you’re now talking more to 40% of the TAM and we no longer have to settle for the onesies and twosies and go after workflow. And so that’s why it’s such an essential element to secure those as we then head into 2027 from a position of strength.

Andrew Brackman (Vice President of Investor Relations)

Mark, just one other thing I’d mention here is just the halo effect that we’re seeing. Right. One of the things that Warren said in his remarks was we’re seeing about a 30% attach rate from orders with RaDaR. I think that’s sort of what we’re seeing across the portfolio. Right. It’s less about the single product, single indication in these early days, but more about the broad portfolio effect that we’re seeing here with RaDaR as an interest marker.

Warren Stone (President and Chief Operating Officer)

I think maybe I’ll build on that. The greater majority of that attachment is actually NGS as well. So there’s a halo effect you’re starting to see come through very clearly.

Mark Massaro (Analyst at BTIG)

Okay, perfect. And then my follow-up: in your press release, you indicated that you expanded agreements with multiple commercial payers in some of your new techs. Are any of these with large national health plans? And can you speak to any progress either with PanTracer Liquid or with RaDaR ST?

Abhishek Jain (Executive Vice President, Chief Financial Officer)

Yeah, I can basically say, Mark, that we are not providing that level of detail. There had been a handful of wins in the last one quarter and I would say the majority of the wins that we are seeing, they are coming in the PanTracer Liquid and for RaDaR. But yeah, we are not providing more details other than that. But we are very encouraged to see these in stuff with many of these payers.

Tony Zook (Chief Executive Officer)

Thanks, Mark.

Mark Massaro (Analyst at BTIG)

Great, thanks. Thanks guys.

Tony Zook (Chief Executive Officer)

Thank you.

OPERATOR

Next question comes from Matt LaRue at William Blair. Please go ahead.

Matt LaRue (Analyst at William Blair)

Hi, good afternoon. You called out improving month-over-month RaDaR volumes following the MolDx decision. Just curious what you’re seeing from physicians that gives you confidence this is a sign of real early adoption perhaps versus initial trialing. And would be curious both Andrew and Warren’s comments around attach, just where you’re finding the most attach and kind of workflow. Senator Jenna—Warren, you briefly addressed it in your response there, but would love to hear a bit more.

Warren Stone (President and Chief Operating Officer)

Yeah, so maybe I think what gives us confidence is I think one of the things that we track is not only new physician adoption, that is how many new physicians are coming on board, how many people are coming back multiple times. And we’re in the past sort of looked at somebody who reorders a test five or six times creates a bit of a stickiness. We saw this when we were trying to drive adoption for NGS solid tumor previously, driving a similar sort of metric here on RaDaR ST, and we’re seeing more and more physicians, particularly now in IO setting, that actually seem to be sending to us on a regular occurrence.

So consider that as sort of sticky and adopted versus trialing would be what I would describe. In terms of the attach rate, I was actually doing some due diligence on this before the call and there isn’t a particular trend that’s linked to a certain indication or if it’s a specialist or a generalist oncologist. It’s pretty broad-based where a single oncologist may have an attachment one patient but not for the next two and then for the—so they seem to be using it very selectively at this stage but equating out to about 30%, which has remained consistent from when we reported it after the first quarter of launch.

At the end of the second quarter we were at about 30%. We’re still there and volumes increased meaningfully.

Tony Zook (Chief Executive Officer)

Matt, I think you were asking also something there on workflow integration too, across our portfolio. It might be interesting to talk sort of about from diagnosis through monitoring.

Warren Stone (President and Chief Operating Officer)

Yeah, I think great call. So I think one of the biggest values that we bring, particularly in the community setting, is that we have this sort of workflow that starts with the primary diagnosis where we actually get to see the patient or the patient sample first because they need the primary diagnosis. That kicks off all of the downstream work. So we get that first. And more and more of the work that we’re doing, particularly with PanTracer Pro, is trying to actually drive an automatic ordering of downstream workflow requirements.

So this is a lot of our philosophy—sort of trying to leverage the fact that we get to see the patient first from the primary diagnosis and how can we then attach other downstream testing from that initial testing that we do?

Matt LaRue (Analyst at William Blair)

Yep, that’s really helpful, and not to distract from the main stage here, but just on the non-clinical side, it sounds like you’re thinking about approaching that differently and there might be some decisions about areas that are worth pursuing versus those that are not. Just curious, do you think that’s a business that remains attractive for you long term and that you can be well positioned to grow in at some point, perhaps again after you’ve gone through some portfolio rationalization?

Tony Zook (Chief Executive Officer)

I think it’s a great question. I would tell you that again, where is our focus? Our focus long term has to be on what our growth drivers are. And our growth drivers are molecular. I mean they’re NGS, they’re MRD, they’ll be whole genome. We do think that the pharma segment overall longer term can be an enabler of the.

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