Adaptive Biotechnologies Q3 2026 Earnings Call Transcript

Adaptive Biotechnologies (NASDAQ:ADPT) 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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Summary

Adaptive Biotechnologies achieved profitability ahead of expectations with a 44% year-over-year increase in MRD revenue, driven by clinical testing volume and pharma sequencing revenue.

Total company gross margin reached 76%, generating $8 million in free cash flow and ending the quarter with $386 million in cash.

The company raised its full-year 2026 MRD revenue guidance due to stronger clinical volumes and pharma sequencing performance.

Significant strategic advancements include expanded commercial coverage and Medicaid coverage in additional states.

The company is actively engaged with MolDX for a maintenance testing bundle in multiple myeloma and anticipates further ASP growth with potential new reimbursement strategies.

Adaptive Biotechnologies’ MRD pharma business delivered strong results, with 55% year-over-year revenue growth excluding milestones and a backlog increase to approximately $270 million.

The updated NCCN guidelines and a new definition of cure in multiple myeloma are expected to further drive clonoSEQ’s adoption.

Management remains confident in the long-term growth trajectory, emphasizing the expansion of real-world data, AI-driven processes and customer experience enhancements.

Full Transcript

OPERATOR

Adaptive Biotechnologies Third Quarter 2026 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Karina Calcadilla, Head of Investor Relations. Please go ahead.

Karina Calcadilla (Head of Investor Relations)

Thank you, Daniel, and good afternoon, everyone. I would like to welcome you to Adaptive Biotechnologies’ third quarter 2026 earnings conference call. Earlier today, we issued a press release reporting Adaptive’s financial results for 3Q26. The press release is available at www.adaptivebiotech.com. We are conducting a live webcast of this call and will be referencing a slide presentation that has been posted to the Investors section on our corporate website.

During the call, management will make projections and other forward-looking statements within the meaning of federal securities laws regarding future events and the future financial performance of the company. These statements reflect management’s current perspective of the business as of today. Actual results may differ materially from today’s forward-looking statements depending on a number of factors which are set forth in our public filings with the SEC and listed in this presentation.

In addition, non-GAAP financial measures will be discussed during the call, and a reconciliation from non-GAAP to GAAP metrics can be found in our earnings release. Joining the call today are Chad Robins, our CEO & Co-Founder, and Kyle Piskel, our Chief Financial Officer. Additional members from management will be available for Q&A. With that, I’ll turn the call over to Chad. Chad.

Chad Robins (CEO & Co-Founder)

Thanks, Karina. Good afternoon, and thank you for joining us on our third quarter earnings call. Q3 was a breakthrough quarter for Adaptive Biotechnologies. We achieved profitability at the total company level ahead of expectations while continuing to deliver rapid MRD growth. MRD revenue, excluding milestones, increased 44% year over year, driven by clinical testing volume and pharma sequencing revenue. We achieved total company gross margin of 76%, generated 8 million in free cash flow, and ended the quarter with approximately 386 million in total cash.

These results demonstrate that we have been building toward a business that combines rapid growth with a strong financial profile. Achieving profitability reflects years of disciplined execution, thoughtful capital allocation, and targeted investment in sustainable growth. The opportunity ahead continues to expand. Updated guidelines and a new definition of cure in multiple myeloma strengthened the clinical foundation for clonoSEQ. With clinical volumes and pharma revenue exceeding our expectations, we are again raising our full year 2026 MRD revenue guidance. On the immune medicine front, we are working closely with Morgan Stanley to advance the separation process and remain on track to announce the path forward by year end.

This quarter, the business also earned a milestone payment from Pfizer following the successful delivery of rheumatoid arthritis data under our agreement, an important accomplishment for the team. Let’s take a closer look at the MRD clinical business on slide 4. Clinical testing volume was a standout in Q3, growing 46% year over year and driving 41% growth in clinical revenue. We delivered nearly 40,000 clonoSEQ tests, up 10% sequentially, or approximately 3,500 additional tests. Every reimbursed indication contributed to growth. DLBCL led with 20% sequential growth, while multiple myeloma, contributing 45% of volume, grew 11%. Our commercial team is executing across several fronts to drive and sustain this growth.

Among those priorities are expanding blood-based testing, increasing community adoption, and embedding clonoSEQ into clinical workflows. We advanced all three this quarter. Blood-based testing grew 68% year over year and 12% sequentially, representing 51% of total clonoSEQ volume in myeloma. Blood-based tests now represent 31% of MRD testing, giving physicians a more accessible option for monitoring patients over time. Community volume grew 14% sequentially, outpacing academic centers.

Community practices now account for 37% of total volume, up from 31% a year ago, extending clonoSEQ’s reach to more patients. We are also making testing easier to order and repeat. Nearly half of our orders now come from EMR-integrated accounts, where our team is focused on both adding integrations and increasing utilization. In Flatiron-integrated community accounts, 78% of serial monitoring orders received due have now been fulfilled, demonstrating follow-through on planned patient monitoring.

Our clinician base is expanding across both community and academic settings. Approximately 5,600 clinicians ordered clonoSEQ in Q3, up 37% year over year and representing about 40% of U.S. hematology-oncology providers. That reach underscores MRD’s growing role in clinical care. As adoption expands and physicians monitor patients more frequently, we are advancing our reimbursement strategies to support that use. Let’s turn to slide 5. U.S. ASP was 1,380 in Q3, up 3% year over year and relatively flat sequentially. We continue to expect approximately 1,400 average ASP for the full year and have clear catalysts to advance our longer-term goal of 1,700 to 1,800 per test. Let me start with this quarter’s coverage gains. We expanded commercial coverage in DLBCL and MCL, two indications with substantial reimbursement opportunity. In DLBCL, we added Avalon and Concert.

In MCL, we added Avalon, Blue Cross Blue Shield, and United. We also expanded Medicaid coverage into Illinois and Ohio and have now established coverage in states representing approximately 62% of our Medicaid testing volume. While Medicaid represents about 10% of our payer mix and remains our lowest-paying segment, coverage gains are delivering results. Medicaid ASP increased 26% year over year. The largest opportunity ahead is Medicare and Medicare Advantage, which now represent approximately 45% of our payer mix, up from 39% a year ago.

Here, increasing testing frequency is an important part of the ASP story. The current Medicare episode rate covers a bundle of up to four tests over a patient’s lifetime. As physicians monitor more patients more frequently, a growing proportion is moving beyond those four tests, putting pressure on realized ASP. We saw this dynamic in Q3, particularly in multiple myeloma, our largest indication. That said, supporting this testing also enabled us to generate the evidence to pursue expanded coverage.

We have now submitted our technical assessment to MolDX for an additional maintenance testing bundle in multiple myeloma, and we are in active discussions. This is our priority catalyst, with recent NCCN guideline updates further strengthening the clinical rationale for our submission. In addition to the maintenance bundle for myeloma, we are also pursuing recurrence monitoring coverage in several indications. Recurrence monitoring is already covered in MCL, and we expect to submit for CLL in the first half of next year.

We are also generating data now in multiple myeloma. Our conviction in the 1,700–1,800 ASP opportunity remains strong. Clinical use is expanding, and we have specific coverage initiatives underway to translate that use into broader reimbursement. Now let’s turn to slide 6 and the advances in multiple myeloma that support both this strategy and clonoSEQ’s longer-term potential. Two major developments this quarter strengthened the foundation for MRD testing in multiple myeloma, our largest indication in both clinical testing and in pharma. First, the updated NCCN guidelines give MRD testing greater prominence and incorporate more specific direction. For the first time, the guidelines include a dedicated page on the principles of MRD testing.

They recommend using an FDA-approved assay such as clonoSEQ, which is specifically named, and identify 10 to the minus 6—which is one cancer cell in a million cells—as the preferred sensitivity because of its higher prognostic value. clonoSEQ is, in fact, the only assay that can deliver 10 to the minus 6 sensitivity with the scale required for broad clinical use. This is meaningful recognition of the rigor that clonoSEQ brings to MRD assessment. The guidelines also specify testing time points during maintenance and surveillance, reinforcing MRD’s role beyond the initial treatment response. For community oncologists in particular, clear direction on when and how to test can help translate clinical evidence into more consistent use. Importantly, the guidelines now address MRD-guided therapy, stating that MRD negativity can inform shared decisions on treatment intensity, while rising MRD may prompt increased vigilance and monitoring.

The second development is equally significant: a new definition of cure presented on behalf of the International Myeloma Working Group at the International Myeloma Society Annual Meeting. The definition describes five years off treatment with sustained MRD negativity, demonstrated by at least four negative assessments with no positive MRD results. Testing must use next-generation sequencing or next-generation flow at a sensitivity of 10 to the minus 6.

Again, clonoSEQ is the only assay that can deliver at this scale. The implication is powerful. Repeated, highly sensitive MRD assessment is central to determining which patients meet this definition. clonoSEQ is directly aligned with the cure definition requirements, further supporting our recurrence monitoring strategy. Together, these developments reinforce how MRD should be measured and why it should be followed over time. We are excited to see systematic MRD assessment becoming more central to how the field evaluates treatment success.

The focus on deeper, sustained responses is also shaping drug development. Let’s turn to slide 7 and our MRD pharma business. Our MRD pharma business delivered one of its strongest quarters in several years, driven by accelerating adoption of MRD in drug development, particularly in multiple myeloma. The underlying sequencing business generated 55% year over year revenue growth, excluding milestones, and we now expect pharma sequencing growth for the full year at approximately 25%. We added 27 new or amended studies during the quarter, bringing our portfolio to 191 active global studies.

Backlog reached approximately 270 million, up 34% year over year, providing visibility into future revenue and underscoring continued demand from our biopharma partners. Multiple myeloma represents approximately 60% of active studies and 65% of backlog. It accounted for 79% of new bookings this quarter. There are several key trends driving this outsized growth in multiple myeloma. First, FDA’s January draft guidance around use of MRD as an accelerated endpoint was a clear signal of regulatory acceptance.

We now have 19 multiple myeloma studies using MRD as a primary endpoint, up from 12 a year ago. Additionally, the new definition of cure adds another dimension to that opportunity. We are already seeing multiple myeloma trials incorporate more testing time points to enable assessment of a cure fraction, contributing to higher bookings per study. Our partners are also evaluating how MRD can guide treatment itself. clonoSEQ is now used in 23 interventional studies, including multiple myeloma, CLL, and ALL, helping build the evidence for MRD-directed treatment decisions.

For our pharma business, this creates opportunities through more studies using MRD as an endpoint, more assessments over time, and an expanding role in guiding therapy across clinical and pharma. Q3 demonstrated the commercial strength of clonoSEQ. The advances in evidence, guidelines, and trial design reinforce our conviction in the opportunity ahead. I’ll now turn it over to Kyle to review our financial results. Kyle.

Kyle Piskel (Chief Financial Officer)

Thanks, Chad. I’ll start on Slide 8 with our third quarter results. As a reminder, amortization of Genentech payments within Immune Medicine is excluded from all prior period comparisons. Total revenue was 83.9 million, up 39% year over year, driven by MRD growth and revenue from our Pfizer Rheumatoid Arthritis agreement. In Immune Medicine, MRD represented 86% of total company revenue. MRD revenue was 72.6 million, up 28% year over year, excluding 6.5 million of milestone revenue recognized in the third quarter of last year.

Core MRD revenue grew 44%. Clinical and pharma represented 75% and 25% of MRD revenue, respectively. Immune Medicine revenue was 11.3 million, primarily reflecting the revenue from our target discovery agreement with Pfizer. Turning to margins, sequencing gross margin, which excludes MRD and Immune Medicine milestones, increased to 73% from 66% a year ago. MRD sequencing gross margin was 74%. The expansion reflects lab efficiencies following our NovaSeq X transition and operating leverage from higher testing volumes. Total operating expenses, including cost of revenue, were 84.4 million, up 1% year over year. Continued investment in our commercial infrastructure, including reimbursement and EMR integration initiatives, was partially offset by lower R&D spend in Immune Medicine.

At the segment level, MRD adjusted EBITDA increased to 15.1 million compared to 7 million a year ago, reflecting the combination of strong revenue growth and continued operating leverage. Immune Medicine adjusted EBITDA for the quarter was 3.2 million. Total company adjusted EBITDA was positive at 14.3 million, a significant achievement reflecting growth and spending discipline. GAAP net income for the quarter was 2.8 million. While this is another significant accomplishment, we do not currently anticipate GAAP net income or positive EPS for Q4 or the full year.

Turning to Slide 9 on updated guidance, we’re raising our full year MRD revenue guidance to a range of 276 million to 286 million, up from our prior range of 268 million to 278 million. This increase reflects stronger than expected clinical volume and pharma sequencing performance in the third quarter as well as higher year over year clinical volume growth expected now at approximately 42% versus our prior guidance of 38% to 40%. Our guidance continues to include 9 million of MRD milestone revenue which was all recognized in the first quarter with no additional milestone revenue assumed for the remainder of the year.

At the midpoint, our updated guide represents 32% year over year MRD revenue growth or 41% excluding milestones. We now expect full year operating expenses of approximately 350 million at the lower end of our prior range of 350 to 355 million and approximately 5% above last year. We are delivering higher growth while maintaining spending discipline. With that, I’ll turn the call back over to Chad.

Chad Robins (CEO & Co-Founder)

Thanks, Kyle. We enter Q4 with broad-based growth, profitability ahead of expectations, and a higher full year revenue outlook. Our maintenance bundle submission is now with MolDx and we are in active discussions on this potentially significant catalyst to expand reimbursement for ongoing testing. At the same time, advances in guidelines, the definition of cure, and drug development are elevating the role of MRD and expanding clonoSEQ’s long-term potential.

Profitability represents an exciting inflection point for our business, enabling us to reinvest in deepening our competitive advantages and to capture the significant growth opportunities that lie ahead. With that, operator, we’ll open it up for questions.

OPERATOR

As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Subu Namby with Guggenheim. Your line is open.

Thomas (Analyst at Guggenheim)

Hi, guys, this is Thomas on for Subu. Thanks for taking our questions. In regard to the CMS rates drafted for 2027, can you just talk about exposure to clonoSEQ based on your current split of Medicare and non-Medicare volumes and how that might impact ASP in the near term, or if you have any levers to help offset any pressures and remain on track with ASP targets?

Kyle Piskel (Chief Financial Officer)

Yeah, let me address the CMS, the PLA code, and the PAMA legislation. Maybe just as a reminder, at the beginning of the year we determined we were not an applicable laboratory under the PAMA regulations and, as such, we did not submit any private payer data to CMS. As part of this, when CMS published the preliminary rates, we identified that erroneous data was submitted on the clonoSEQ PLA. And the reason we know that is because we are the only laboratory that can perform the test.

And a quick reminder of why we are not an applicable laboratory is because of the episodic billing structure with Medicare. The vast majority of our Medicare revenues comes from the bundled structure. And again, when we talk about the insulation related to business, we don’t believe the PLA rate-setting process should have any pull-through into the episodic framework. And separately with CMS, we are engaged in rectifying and correcting the erroneous data, which we do not believe—and have made clear with CMS—that they should not be relying on any erroneous data to set a price point for the clonoSEQ PLA code. So we’re anticipating getting that result prior to the finalized rates, which should go live sometime in November as we understand with CMS. And we remain confident in kind of the long-term pricing strategies that we have in play.

And that’s only further supported by the advances we’re having with our contracted payers, the rates we have in place, and our structure with MolDx.

Thomas (Analyst at Guggenheim)

Great. And then this year, another great quarter. You’ve had a combination of a lot of key growth drivers working together. Just curious as you think to next year and 2027, what’s going to be the biggest lever you have to reach that next phase of growth for clonoSEQ? Is it blood? Is it the EMR pull-through? Just how to think about the most crucial pieces to growth next year as people start to underwrite that growth? Thank you so much.

Chad Robins (CEO & Co-Founder)

Thanks for the question. You know, even though we’re not providing guidance on 2027, I certainly don’t see any reason not to believe that we’ll continue to grow at a very high rate in 2027 and beyond. We have a high ceiling remaining. We intend to continue focusing on many of the same drivers that have gotten us to the place we are today. I think that the foundations of that growth in 2027 will really be the data and the guidelines. The guidelines have been very favorable for MRD and for clonoSEQ specifically over the last 18 months.

And there are many opportunities to pull through those updates in the clinic, and they also will be favorable for our pharma business. As a side note, because the definition of cure in multiple myeloma will help to drive increasing long-term testing time points so that pharma companies can assess their drugs’ efficacy in the context of cure. The data will continue to develop. We’re very excited about the data you’ll see at ASH in just a month and a half. We can talk more about that later. And beyond those two foundations, the real enablers of growth that we focus on are the same things that we’ve been talking about: EMR integration, blood-based testing, expansion in the community. These are synergistic with one another in many ways. We started working on EMR a few years ago and we’ve integrated many of our key accounts.

But it doesn’t stop there because the big focus going forward is optimizing how integrations are being used, particularly to enable serial testing. And we’ve seen high rates of pull-through on serial testing with our Flatiron implementation in OncoEMR. We continue to see increases in blood; we’re investing in product development in that regard to enhance the performance of the product in blood. And community is now contributing 37% to our volumes.

And the guidelines will strengthen our ability to educate and promote the use of consistent testing across community practices. So we do continue to expect strong growth in 2027 and beyond. And it’ll be a combination of all those factors.

OPERATOR

Thank you. Our next question comes from Casey Woodring with J.P. Morgan. Your line is open.

Casey Woodring (Analyst at J.P. Morgan)

Great. Thank you for taking my questions. I guess the first one, it looks like the strongest clinical volume sequential growth was in DLBCL. There’s been some competitive noise there. Just can you talk about what you’re hearing from customers and your competitive moat in DLBCL going forward, and if you would expect that to continue to be the strongest sequential kind of growth driver in volumes moving forward?

Chad Robins (CEO & Co-Founder)

Yeah. In our DLBCL, sequential growth has continued to be very strong and fairly consistent quarter over quarter. And my expectation is that we will continue to deliver consistent double-digit growth rates on an ongoing basis. You know, we do hear about competitors in the field, but we have a very strong position from which to continue to grow. And that includes the test itself—it’s custom built for blood cancers, including lymphomas—the reimbursement that is already established broadly for our test in lymphomas, the ability to continue to leverage our real-world experience, and now about 9,000 patients who have been tested with clonoSEQ.

For all these reasons, as well as the fact that we have these established relationships with our key customers and continue to delight them, I’m very confident in our position in this field. And in the end, this is a very underpenetrated market. So, you know, the noise that is being created by additional companies talking about MRD in DLBCL is beneficial and disproportionately beneficial to us as the market leader. We are excited about the data that we will continue to advance in this space. And I think you’ll see a good amount of that at ASH this year. And we believe that we are in a good position, both in the short term—leveraging our moats, leveraging the sort of noise around MRD—and also in the longer term, where we believe the performance of our technology will really win the day.

Casey Woodring (Analyst at J.P. Morgan)

Got it. That’s helpful. And then I think you alluded to it in an earlier question, but, you know, 64% of your MRD pharma backlog increase was from multiple myeloma. Is that related to guideline updates or the new cure definition, or just more generally speaking, you know, kind of what’s driving the momentum in multiple myeloma right now?

Chad Robins (CEO & Co-Founder)

Yeah, there are several reasons that we’re seeing improvement in our MRD—in our myeloma pharma business. And I think one thing is that earlier this year, the accelerated endpoint that was adopted by ODAC back in 2024, the FDA actually issued draft guidance to really sort of cement the use of that endpoint. And I think a number of pharma companies saw that as an important signal to move forward with new primary endpoint studies. And we’ve seen quite a number of new primary endpoint studies in 2026.

The second, the definition of cure that was issued by the IMS just about a month ago—many of our pharma clients have been anticipating that. It’s been talked about among KOLs for a number of months. And so studies being designed today are incorporating more time points, as I alluded to earlier, to be able to make that cure claim for the therapeutics that are being evaluated in the study, and that’s resulting in higher bookings, more time points. And then lastly, just the increase in regulated and interventional use. You know, we now have 23 additional studies, including eight multiple myeloma. The number of regulated studies is now—the majority of our trials are regulated. And so we’re seeing that overall MRD is just becoming a standard of how studies are being done in multiple myeloma. And that will continue, we believe, to contribute to strength for our pharma business going forward.

Casey Woodring (Analyst at J.P. Morgan)

Great. Thank you so much.

Chad Robins (CEO & Co-Founder)

Thanks, Casey.

OPERATOR

Thank you. As a reminder to ask a question, please press Star 11 on your telephone. Again, that is Star 11 to ask a question. Our next question comes from David Westenberg with Piper Sandler. Your line is open.

David Westenberg (Analyst at Piper Sandler)

Hi, thanks for taking the question. I too wanted to jump on. The DLBCL strength grew 20% sequentially in the quarter and remains a pretty underpenetrated opportunity. So what really were the biggest drivers of DLBCL up 20%? And then how should we think about that as a contributor growth over the next few years? Should we think about DLBCL as really being the predominant accretive to growth driver in 27 and 28?

Chad Robins (CEO & Co-Founder)

Yeah, I mean, David, thanks for the question. As you said, we’ve been really pleased with the DLBCL growth which has continued to outpace all other indications. And the growth is broad based. It’s coming from both community and academic accounts. We’ve been particularly successful of late driving increased adoption in some of the largest community practice networks. Some of our largest DLBCL growth this past quarter came from one of the largest networks in the country.

And all of this is a result of continued focus on market development. We have to educate on the role of MRD, how it can augment and improve upon PET scans and other more traditional ways of thinking about disease burden and how it can inform treatment. And there are now a number of studies in motion and a few that are even reading out at ASH showing different ways that MRD can be useful in informing treatment selection and escalating or de-escalating therapy in DLBCL.

So we continue to expect it to be a top growth driver for the next few years, particularly given the investments we’re making in data and the potential for pharma to expand its investment in MRD-guided therapy trials in the future. But David, even though multiple myeloma has been a large grower, it’s going to still be a major contributor to our growth, especially with updated guidelines and a new definition of cure. And just to kind of up-level this a minute, I mean, it’s hard to understate how big a deal this is. We believe that this is the first definition of cure based on an NGS test. Basically they’re saying if you’re MRD negative using clonoSEQ for four different tests, then you’re cured of a disease.

Just as an anecdote, we had investigators, when they found this out, crying in the hallway. They’ve been working on this for over a decade. So multiple myeloma is going to continue to accelerate.

David Westenberg (Analyst at Piper Sandler)

Gotcha. And then I was going to jump on. I appreciate that. It added some color. I want to jump on the 1400 ASP target. I think you came in—I think you said 1386. How much of this is blocking and tackling versus some of the new adds that you mentioned, new coverage adds that you mentioned. We are in November at this time. So in order to get to that 1400, do you need any kind of timing specific to get you there in terms of timing coverage? And I’ll stop there.

Thanks again.

Kyle Piskel (Chief Financial Officer)

Yeah, appreciate the question. David, this is Kyle. You know, certainly blocking and tackling plays into every quarter. I think blocking and tackling is a contributor even in the fourth quarter. You know, certainly, as we think about the guide and year, one of the factors is frequency uptake as it relates to Medicare and the pressure we’re seeing there, which ultimately is a good thing. So, you know, I think there are some timing dependencies that could move the needle in either direction.

But foundationally I think we’re in a good place, and there are some timing considerations, but we’ll see how those play out. But we’re confident in the long-term trajectory here and continue to be confident in getting to that 1400 at some point.

Chad Robins (CEO & Co-Founder)

Yeah. And David, maybe if I could just add a little bit of color and context. A little bit of the ASP pressure that you’re seeing is actually what is beneficial and what we’re using for our MolDX resubmission. And if you think about kind of our overall strategy, think about this in three different phases of a patient’s treatment continuum. The first is active treatment phase, which we’re already reimbursed by Medicare for four tests. Okay. The second, and this is what we’ve already submitted and are in active, very positive discussions with MolDX on, is what we call the maintenance treatment phase.

And we’ve submitted for an additional bundle of five tests. So this is the first time I’ve kind of said that, but that we’ve submitted for an additional five tests during the maintenance setting. And then the third is the recurrence monitoring. And we also mentioned during this call in multiple myeloma that the second half of this year we believe we have data for the recurrence monitoring. So that really hits all three phases of a patient’s care continuum.

And again, I think it’s not a matter—we believe it’s not a matter—of if, it’s a matter of when. And we’re, I would say, highly encouraged based on these discussions that we have, that we will have an upcoming catalyst when we get this maintenance bundle. We can’t be—I just want to be clear though—we can’t guarantee the number of tests in the bundle. We can’t guarantee timing. What I can tell you is the discussions have been very, very positive. It’s recognized that this is necessary and it fits really perfectly with the new NCCN guidelines and the new definition of cure. So all of these factors are converging to say that you need to monitor a patient more frequently at all phases during this care continuum.

So I just want to provide perspective on how this is all working together and our broader base reimbursement strategy so that we’re not thinking short term. We do believe we’re going to be approximately at $1,400 this year. And timing-wise, we may see some very slight variation or fluctuation. But what we have seen is we have more confidence than ever, based on these discussions that we’re having, that our ASP targets of $1,700 to $1,800—that we will not only hit them, that we believe that we will hit them, that we could potentially even accelerate that time frame in some cases.

David Westenberg (Analyst at Piper Sandler)

Thank you.

OPERATOR

Thank you. Our next question comes from Dan Brennan with TD Cowan. Your line is open.

Dan Brennan (Analyst at TD Cowen)

Great, thank you. Thanks for the questions. Congrats on the quarter. Maybe just on the pharma side—really good pharma numbers. Again, just can you give us a flavor of what’s happening on the pharma side of the business, like what’s baked in for the fourth quarter and just kind of update us again on the milestone opportunities? We look ahead maybe not this year, but just beyond—just what type of milestones, say next 12 months, might be realistic.

Kyle Piskel (Chief Financial Officer)

Yeah, Dan, appreciate the question. I mean we’re really excited about the bookings and backlog growth we’re seeing in the pharma business as well as the print from the third quarter. As you know, quarter to quarter can be lumpy from a revenue perspective. But I think when we think about the longer-term opportunity and the growth we’re seeing in that business—backlog at the end of Q3 was 270, up from 200 million a year ago—really setting us up for some strong growth.

We’re now looking at 25% year-over-year growth in the pharma business, excluding milestones. So it’s setting us up for a good position heading into 2027. With respect to milestones, we said we don’t have any visibility into Q4 into any milestones, and again we think about that—when we get line of sight we’ll update our guidance with respect to that. We don’t necessarily control that timing, but we still have a healthy backlog of milestone opportunities that could read out. It’s just really difficult to model and predict the timing of that. But still expect to see some of those over the course of the next coming years as well.

And we’ll provide more color at the next earnings call around that.

Susan Bobulsky (Chief Commercial Officer, MRD)

Yeah, and just to chime in a bit on the dynamics that are really sort of important—again I think reiterating the fact that the FDA draft guidance that was issued earlier this year, the definition of cure, which is encouraging companies to do longer studies, more time points, the interventional nature of many of the study designs—all these things, combined with the fact that we have the only FDA-cleared assay and a strong reputation and relationship with these companies for delivering registrational-grade data over many years, I think we continue to be in a really strong position to support the needs of the myeloma drug development programs for years to come.

Dan Brennan (Analyst at TD Cowen)

Great. And then the volume is terrific. Volume again—you’ve been running in 30s and low 40s for a while now. Penetration still seems like it’s not that high of the market and you have all these drivers ahead of you. How do we think about as we get to 4Q and then we lap into 27—most of us naturally have volumes coming down. You’re not guiding for 27 right now, but it seems like there’s still just so much momentum in the business. Any way to think about what volumes could be, say, as we look out beyond 26 into 27—what’s a framework we could use?

Chad Robins (CEO & Co-Founder)

Obviously, Dan, we’re not in a position yet to guide on 27. I can just tell you that there’s a tremendous amount of internal excitement from our team in the conversations they’re having with clinicians regarding the new definition of cure. The updated NCCN guidelines has given a great call point, particularly in the community where doctors are much more apt to follow guidelines. And we expect—I just say we expect—the momentum to continue. We see nothing that’s slowing this down.

On the contrary, I think there have been kind of two meaningful updates overall in the industry which further support and give us confidence in the growth trajectory ahead. Awesome. Thanks, Dan. Thank you.

OPERATOR

Thank you. Our next question comes from Mark Massaro with BTIG, your line is open.

Mark Massaro (Analyst at BTIG)

Hey guys, thank you for taking the questions. And some of us are hopping calls tonight, so pardon me if this has already been asked, but now that you’ve achieved company-wide profitability, should we think about any potential changes to capital deployment as we think about 2027? Also curious at a super high level how you’re thinking about the potential for exploring tuck-ins, assuming they made sense and were disciplined. Just wanted to get a sense for how you’re thinking about capital deployment now that you’re a profitable company.

Chad Robins (CEO & Co-Founder)

Yeah, I’ll have Susan start on the areas we’re investing in in MRD and then I’ll make some kind of broader comments as to some things we’re thinking about. Yeah, you know, we’ve been growing at a high rate over several years and we still have this big, big ceiling that we can continue to grow into. So, you know, as we become profitable, I think the best thing we can do is deploy those profits to continue to expand our moats and increase the trajectory of MRD adoption. So we’ve been very focused beginning this year on identifying strategic areas in which to invest.

This year our investment has been focused on capability building in a few key areas: real-world data is one, AI and AI-driven business process automation, specifically our revenue cycle management, and developing the next-generation customer experience with a focus on facilitating serial testing. We’ve made considerable strides in all four of these areas this year and we intend to continue those investments in 2027. I should also highlight that we have a robust R&D effort through which we’re investing both in current product enhancement and in advancement of new products in order to extend our leadership in the spaces where we already play, and also consider ways we can either leverage our channel or develop new applications of our proprietary platform.

Yeah, and one of the things to highlight—Susan mentioned kind of enhancing the performance of our existing clonoSEQ to deepen heme MRD and also kind of leveraging our heme channel to deliver kind of other things you could potentially do with that patient sample. But the third area which we’re actively in development on is new applications of our immunosequencing platform to address unmet medical needs beyond hematology. There’s some really interesting potential applications of our platform that we’re exploring and, again, not ready to talk about on this call, but I think could be really interesting, large opportunities to leverage our existing capabilities, both with our platform technology but also with the infrastructure that we built around how to deliver, how to get tests paid for, revenue cycle management, and all the things that you need to do as a diagnostic company.

Mark Massaro (Analyst at BTIG)

Okay, that’s fantastic. And then wanted to ask about the NCCN guideline recognition. What is your thinking in terms of, you know, you’re already the dominant market leader and so some of us are wondering how, you know, usually when you’re number one, you know, you can’t do better than number one. But perhaps you could perhaps accelerate. But it’s typically uncommon for market leaders that have been in the space for a while to accelerate. So I am curious what you think the benefits are from the NCCN recognition and clonoSEQ being called out in particular.

Susan Bobulsky (Chief Commercial Officer, MRD)

Yeah, I mean, as was mentioned earlier, the opportunity is most substantial in community oncology, where guidelines are particularly important. Clinicians are really looking for us to tell them how and when to test. And so we’re very actively engaged in promoting the guidelines updates now and are seeing a great deal of engagement from clinicians. And one of the things that’s important in the community to us is to find ways to help the practices align their practice with those guidelines to drive more consistent testing across all patients that they see.

So that interacts with our EMR integration strategy and thinking about ways we can develop standardized testing pathways and protocols, taking the accounts who are doing that successfully and bringing their stories to share across other accounts. So that’s the work that we’re doing right now. I do think it’s a potentially meaningful accelerator for the myeloma business and, importantly, also supports the maintenance bundle submission that’s currently with MolDX and which will be an important, important future driver of ASP.

So we have a number of opportunities folded in with these guidelines. It’s also notable that the guidelines combined with the cure definition are really underscoring the need for bone marrow testing. And I actually believe there’s an opportunity to increase community testing to use bone marrow as a complement to blood in areas where they may not be doing so today. We are eager to work with them to help ensure that they can deliver the potential of a cure to as many patients as possible.

And to do that, they need to incorporate clonoSEQ MRD testing in marrow as well as in blood.

Mark Massaro (Analyst at BTIG)

Awesome. Thanks so much for the time, guys.

OPERATOR

Thank you. I’m showing no further questions at this time. This concludes today’s conference call. Thank you for participating. You may now disconnect.

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