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Biodesix, Inc. delivered a powerful first quarter in 2026, with revenue jumping 42% year-over-year to $25.6 million. The growth was spearheaded by a 37% increase in lung diagnostic testing revenue and a 99% surge in development services. A key highlight was the successful penetration into the primary care market, which now contributes 15% of total test volumes. The company's adjusted gross margin improved to 82%, reflecting enhanced operational efficiency and better pricing realization. Management demonstrated strong fiscal discipline, as revenue growth significantly outpaced the 18% increase in operating expenses. The net loss narrowed to $7.8 million, and the company ended the quarter with a bolstered cash position of $25.6 million. Furthermore, Biodesix published significant clinical validation data for Notify Lung, reinforcing the test's utility in early cancer detection. Consequently, the company raised its 2026 revenue guidance to $108 million - $114 million. During the analyst call, management expressed high confidence in their sales force productivity and the scalability of their multi-omic platform. The company remains on a clear trajectory toward adjusted EBITDA profitability while continuing to expand its commercial footprint and clinical pipeline.

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Biodesix, Inc.: Dilution Machine Masking a Half-Billion Dollar Deficit

Full Earnings Call Transcript — Q1 • 2026-05-04

Operator: Name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Biodesix, Inc. First Quarter 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. To ask a question, simply press star 1 on your telephone keypad. It is now my pleasure to turn the call over to Christopher F. Brinzey, Investor Relations. You may begin.
Christopher F. Brinzey: Thank you, operator, and good afternoon, everyone. Today, Biodesix, Inc. released results from the first quarter of 2026. Leading the call today will be Scott Hutton, Chief Executive Officer. He is joined by Robin Harper Cowie, Chief Financial Officer. An audio recording of today's call and the press release announcement with the quarterly results can be found in the Investor Relations section of the company's website at biodesix.com. As today's call includes forward-looking statements, we encourage you to review the statements contained in today's press release and the risks and uncertainties described in our SEC filings which identify certain factors that may cause the company's actual events, performance, and results to differ materially from those contained in the forward-looking statements made on today's webcast. In addition, we will discuss non-GAAP financial measures on this call. Descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release. I would now like to turn the call over to Scott Hutton, Chief Executive Officer.
Scott Hutton: Thank you, Christopher F. Brinzey, and thank you all for joining today. Biodesix, Inc. delivered an exceptional start to 2026 with first quarter results that demonstrate continued momentum across our commercial, operational, and strategic priorities. Revenue growth accelerated, margins expanded, and we continued to demonstrate operating leverage as we progress towards profitability. As a reminder, our focus in 2026 centers on three objectives: driving top-line growth, improving operational efficiency and leverage, and advancing our pipeline to support long-term expansion. In the first quarter, we made meaningful progress across all three objectives. Total revenue for the quarter was $25.6 million, representing 42% growth year over year, accompanied by strong operating discipline and execution. Starting with our diagnostic testing business, revenue grew 37%, driven by accelerating test volume growth and improved ASPs over 2025. Total test volumes grew 29% year over year due to increased adoption from both pulmonology and primary care, with test volumes from primary care now representing 15% of total tests delivered in the quarter. In support of both healthcare provider and payer adoption, we continue to present and publish clinical data for our on-market test. Specifically, Notify Lung testing is used by pulmonologists and primary care providers to triage patients by risk of lung cancer, helping determine who needs intervention versus surveillance, and allowing higher-risk patients to be prioritized for prompt follow-up. In February, we announced the publication of the largest lung nodule biomarker clinical validation study that included over 1.1 thousand patients leveraging our ongoing real-world evidence study, Clarify. The study demonstrated consistently strong NotifyCDT test performance with high specificity, or low false positive rates, regardless of nodule size or other patient risk factors. Recent data on patients without biomarker testing reported that 40% of malignant nodules had progressed in tumor size between the time of the first detection and the time of initiation of definitive treatment, underscoring the urgent clinical need for tests like Notify Lung to expedite diagnosis and enable earlier intervention when outcomes are most favorable for the patient. Turning to development services, revenue in the quarter nearly doubled year over year. This reflects execution on contracted programs, as well as continued success securing new agreements, reinforcing the strength and differentiation of our development platform. The depth and breadth of our offering was recently highlighted with several presentations at AACR in April. It is especially exciting to see our multi-omic technologies, combined with advanced data informatics, translating into meaningful clinical impact on our pipeline product concepts and fueling strong interest in our development services offering. Additional data on our pipeline products, including our genomic and proteomic MRD and ROR test, the Veriskrat test clinical utility in prostate cancer, and our new AI-based digital diagnostic test will be shared at upcoming conferences and events throughout the course of the year. Gross margin for the quarter was 84% on a GAAP basis and 82% excluding a one-time sales and use tax recovery, representing a 300 basis point improvement year over year. Margin expansion continues to be driven by scale in diagnostic testing, improved pricing realization, and ongoing workflow optimization in the laboratory resulting in decreasing cost per test. We are encouraged by the consistency of these trends and strong revenue growth and operating leverage, and believe they reinforce the scalability of our model. As a result of the performance across both diagnostic testing and development services in Q1, and our continued progress towards profitability, we are raising our full-year 2026 revenue outlook. With that, let me turn it over to Robin to review our financial performance. Robin?
Robin Harper Cowie: Thanks, Scott, and good afternoon, everyone. Total revenue for the first quarter was $25.6 million, representing a 42% increase over the prior-year period. Diagnostic testing revenue was $22.3 million, an increase of 37% year over year. The increase in lung diagnostics revenue was driven by growth in volumes and higher average revenue per test. Test volumes were approximately 17.8 thousand, an increase of 29% year over year, supported by an average of 100 sales representatives in the field in the quarter, and we expect to continue our commercial expansion, as described in prior calls, at a cadence of about six representatives per quarter through 2026. Improvements in average revenue per test over the prior year are primarily driven by additional payer coverage and improvements to revenue cycle management, continuing a trend that began in 2025. We believe recent improvements in average revenue per test reflect durable changes in payer coverage and revenue cycle execution rather than discrete or one-time effects. Development services revenue for the first quarter was $3.3 million, an increase of 99% year over year, driven by delivery of our contracted program and the addition of new development services agreements. We finished the quarter with approximately $10.4 million in contracted business, following accelerated revenue conversion velocity in the quarter. We continue to see strong demand and visibility across our development services pipeline and do not expect the timing of these completions to impact our full-year expectations. Gross margin for the first quarter was 84%, which included a one-time recovery of 400 thousand related to previously paid sales and use taxes. Excluding the one-time recovery, gross margins were 82%, representing a 300 basis point improvement over the prior-year period. Year-over-year margin expansion was driven by growth in lung diagnostic testing, improvements in average revenue per test, and decreases in average cost per test. Gross margins continue to reflect Biodesix, Inc.’s strong operational efficiency and execution. Operating expenses, excluding direct costs and expenses, were $27.6 million, an increase of 18% year over year supporting the 42% revenue growth delivered during the quarter. The increase in operating expenses is driven by a 19% increase in sales, marketing, and general administrative expenses due to our planned commercial organization expansion. The company expects continued operating leverage as our expanded sales team advances along the productivity curve and converts growing experience into sustained performance. R&D expense for the quarter was $3.3 million, representing a 14% increase over the prior-year period. R&D investment reflects continued clinical studies supporting adoption of our lung diagnostic tests and progress across our pipeline. Net loss for the quarter was $7.8 million, a 30% improvement compared to the prior-year period. Adjusted EBITDA, which excludes non-cash and other one-time items, was a loss of $4.1 million, representing a 35% improvement over 2025. We also strengthened our balance sheet, ending the quarter with $25.6 million in unrestricted cash and cash equivalents, a 35% increase compared to the fourth quarter, providing solid runway to support our growth initiatives. The change in cash balance includes $16.8 million of at-the-market net proceeds raised during the quarter, partially offset by planned cash outflows that occur annually during the first quarter. Looking ahead to the remainder of 2026, and in addition to our planned headcount expansion, we expect sales productivity to continue to improve as our various sales cohorts gain experience and tenure, which remains a key driver of operating leverage through 2026. Following the strong first quarter performance and improved visibility into demand and execution, we are raising our full-year revenue guidance to $108 million to $114 million. The increased midpoint represents 25% growth over 2025, which reflects the strength of the first quarter while remaining consistent with our full-year planning assumptions. We also expect continued progress towards sustained adjusted EBITDA profitability, driven by increasing sales productivity, expanded clinical evidence supporting the Notify Lung test, growth in the development services pipeline, and demonstrated operating leverage. With that, I will turn it back to Scott for some closing thoughts before we begin the Q&A. Thank you, Scott.
Scott Hutton: In April, Biodesix, Inc. was recognized as a top workplace for the third consecutive year. This recognition reflects who we are at our core: a team built on trust, collaboration, growth, and shared ownership of results. Our culture here at Biodesix, Inc. is not aspirational; it is operational. Our first quarter performance reflects that discipline and reinforces our confidence in the scalability and durability of our business model. We continue to see significant opportunities ahead as adoption expands, clinical evidence grows, and our commercial organization continues to mature. We remain focused on executing with discipline, improving capital efficiency, and delivering meaningful value to patients, providers, partners, and shareholders. In closing, I want to thank the entire Biodesix team for their continued focus, discipline, and commitment to our mission and culture. We will now open the call for questions. Operator, let us start the Q&A session.
Operator: At this time, I would like to remind everyone, in order to ask a question, simply press star 1 on your telephone keypad. Our first question is from the line of Andrew Frederick Brackmann with William Blair. Please go ahead.
Andrew Frederick Brackmann: Hi, Scott. Hi, Robin. Good afternoon. Thanks for taking the questions. I wanted to focus on the commercial team. I think you called out about 15% of volumes were coming from the primary care channel there, so clearly something is working. I guess as you think about some of the learnings, the successes, and some territories that are driving a lot of that volume growth, how transferable are those to other territories? And where are we in the process of amplifying these learnings across the entire salesforce?
Scott Hutton: Thanks, Andrew. Great question. It has been about three quarters since we brought on that first sales cohort focused on primary care physicians, so you nailed it. We continue to learn, but we had some immediate learnings that we have been able to apply. We had our national sales meeting in February, which is a great opportunity for us to share best practices and to roll that out. What we have learned is that starting with the pulmonologist, building a really strong relationship, and allowing them to help us with introductions into their referral network really aids in a smooth transition. It allows the pulmonologist to track those patients through that referral process, and we are continuing to see that growth across the United States. We really started more in the Northeast when we first had our initial hires, and we are seeing that transition and progress more westward. So it has been transferable. We feel good about the progress we have made. I think we knew with a high level of confidence, based upon our early pilot experience, that this was the right decision, and this confirms that we have made the right decision. We still have a lot of opportunity to grow, and I will just remind everybody, what it really did was open up the addressable market that was serviceable to us. We knew that about 49% of those patients with incidentally found nodules are stuck in primary care, so we think that we have begun tapping into that, and we are really confident that over time it will start to show that we are getting to patients earlier. We know in this scenario earlier detection and diagnosis is going to lead to better outcomes.
Andrew Frederick Brackmann: Perfect, appreciate all that color. And then just on the evidence front, you called out the publication of the validation study in February. Can you talk about what impact it has had on the field? In particular, you mentioned across that study there are low false positives regardless of the nodule size. Are you seeing an increase in the use of Notify in those smaller nodules? And how big of an opportunity is that for you in the grand scheme?
Scott Hutton: Thanks. For us, it really is about data development. I think there is a continued opportunity for us to educate and empower pulmonologists and primary care physicians to utilize Notify testing. The more we can publish and present, it gives us opportunities to put new data out in front of healthcare professionals, and that is what this did. You nailed it. We know that not only do physicians want to get to these patients earlier, but they want to be bolder than they have been in the past. Something has to change because we have not seen a significant change in screen detection over the last 10 to 15 years. We are seeing an increase in addressing smaller nodules, but that goes hand in hand with the advent of robotic bronchoscopies, where interventional pulmonologists feel more confident that they can get to some of the smaller nodules that they would not have been able to get to easily and successfully in the past. The time was right, we are excited to get that data out, and I would add that whenever we see strong performance in a real-world environment, it really starts to show that these tests are durable, that our growth is sustainable, and that we are going to continue to have a significant impact with the healthcare professionals that we serve.
Andrew Frederick Brackmann: Great. I will keep it at two. Thanks, guys.
Scott Hutton: Thanks, Andrew.
Operator: Our next question comes from the line of Thomas Flaten with Lake Street. Please go ahead.
Thomas Flaten: Hey, Scott and Robin. Just a question to follow up on the PCPs. I am curious what you are hearing anecdotally from the PCPs about their level of comfort at retaining these patients with this test result in hand. Do they feel comfortable with the referral networks? I get that having it come from the pulmonologist is probably helpful, but anything you can share on their experience that they have had? I know it has only been three quarters, but I am just curious if there is anything you can share.
Scott Hutton: Yeah, thanks, Thomas. It is a great question. Speaking on behalf of the healthcare professionals in the primary care setting, one of the things that we anticipated and we have confirmed is they have an abundance of patients that are eligible for Notify testing. They still have questions as to how to interpret those test results and defining who they refer on versus who they keep to monitor or surveil. What we have seen is that through our brochures and materials, and sharing of publications and data, they have become very comfortable with how those test results can better inform what they do with those patients, building that confidence. One of the things we have seen in primary care is they are very comfortable with diagnostic testing. It is what they do. They understand it. They have phlebotomy services on-site, and from a workflow implementation standpoint, we have actually found primary care to be really accessible and receptive to Notify testing. We are excited to continue to help educate them. One of the things that we really focus on is ensuring that when those patients are referred on, that they stay in contact with that pulmonologist. That primary care physician will always be that patient's primary care physician, so they, over time, will gain additional confidence as they see what ends up happening for those patients. Hopefully, we are able to see a stage shift, and we are starting to see patients live longer, which will build even more confidence within the primary care community.
Thomas Flaten: Sticking with this theme, you called out what the PCPs are going to do with the incidentally identified nodules, but you did not mention the screening nodules. I am curious what you are hearing from the PCPs—not necessarily that having access to your test is going to help them get more patients into screening—but have they shared anything anecdotal about pushing the high-risk patients into the screening programs, by that I mean low-dose CT? And more broadly, have you seen any change in the trends in the number of patients getting pushed into that screening protocol?
Scott Hutton: Yeah, it has been one of the challenges regardless of whether you talk to pulmonology or primary care physicians. Ten years ago, lung cancer screening compliance for those screen-eligible patients was low to mid-single digits. We have seen improvements in the last five to ten years, but most of the reports out there will still state that it is less than 15% to 20% of the screen-eligible patient population. We have come a long way, and we still have significant room to grow and improve. One of the beauties of Notify testing is our test works not only in incidentally found nodules but also in screen detection. As we see more support and compliance with screening programs, it will only increase this opportunity for us. We have seen that a little bit, but we are still not there. I do think the advent of blood-based screening tests in lung cancer will help, and we think this will benefit Notify testing and the Biodesix, Inc. team.
Thomas Flaten: Got it. Appreciate that. Thanks, guys.
Scott Hutton: Thanks, Thomas.
Operator: Your next question comes from the line of John Wilkin with Craig-Hallum. Please go ahead.
John Wilkin: Hi, guys. Thanks for taking the questions. Just a couple questions on the guide. Can you break out how much is baked into the guidance for development services versus testing revenue? I know Q1 came in really strong, and I am trying to get a sense of what you are expecting with that business for the remainder of the year.
Robin Harper Cowie: Yeah, absolutely. We are anticipating that development services revenues for the full year remain consistent with where we had expected them to be. We had a little bit of a pull-forward in the quarter, so we were able to recognize more revenue earlier in the year. We expect the services business to remain consistent with those expectations, and the majority of the increase is included in the lung diagnostics revenues.
John Wilkin: Perfect, that is super helpful. And then on the lung side, how much, if any, additional ASP expansion are you factoring in for the remainder of the year? Is that something we should expect to see continued progress on, or is growth embedded in the guide more skewed towards the volume side?
Robin Harper Cowie: Growth in the guide is absolutely weighted towards volume. We do anticipate that we will see a little bit better ASP versus the first quarter. I anticipate somewhere like what we saw mid-year last year; fourth quarter was skewed higher due to the one-time collections that we had in that quarter. While we anticipate a little improvement in ASP, we are very pleased with where we are right now and the improvements made both through coverage contracting and revenue cycle management. Volumes should be the growth driver.
John Wilkin: Perfect. That is all for me. Thanks so much.
Scott Hutton: Thanks, John.
Operator: Your next question comes from the line of Kyle Mikson with Canaccord Genuity. Please go ahead.
Kyle Mikson: Thanks for the questions. Congrats on the quarter. It looks like you did better on the pharma front this quarter. Could you talk about the pipeline funnel there? What is most attractive within your portfolio relative to prior years that is helping you succeed on that front?
Scott Hutton: Yeah, Kyle, great question. This was more of a cadence or timing scenario. We had a number of retro samples that came in earlier than we anticipated and forecasted. We were able to pull a couple of those contracts forward, so we do not see it changing our long-term performance. As a reminder, this has historically been about 8% to 10% of our total annual revenue. We continue to see great progress and momentum within the biopharma services and development services front, and you may have noticed that we exited the quarter with $10.4 million in contracted dollars to be recognized over the coming months and quarters. We have stayed above that $10 million mark for quite some time now, so that gives us a lot of confidence about what the future looks like. It really is not a shift or a change; this momentum has been building over the last few years. It is interest across our portfolio on the genomic side and the proteomic side—being a company that is focused on multi-omic solutions resonates with our biopharma services partners. Our team continues to do a great job on that front. We are excited about the rest of the year. We just finished AACR, and we have ASCO upcoming, and those two meetings usually set us up for a strong second half.
Kyle Mikson: Perfect. You had a great top-line beat, and margin has been really solid the past few quarters. Could you specify how you are going to reinvest those dollars—sales force, new products, new markets? How do you think about that? And with respect to EBITDA positivity going forward, how does that affect that pathway?
Robin Harper Cowie: We are obviously very pleased with the gross margins and the continued improvements that we have seen over the last several quarters. The team works very hard to not only improve our ASPs, but also gain real efficiencies and productivity improvements within our operations to drive down the average cost per test. The dollars that are coming in through those gross margins go to support the business, and our main focus is our commercial expansion, growing the top-line revenue, and then getting to sustained adjusted EBITDA positivity and cash flow positivity. So the dollars really are going towards commercial, and we are still on track. We are executing to plan and on the path to profitability.
Kyle Mikson: On that note, anything additional to pipeline investment? Salesforce expansion is kind of an obvious one that you are going to be consistent with—several reps per quarter—but anything on the pipeline going forward, maybe partnerships that you can accelerate with this extra money?
Scott Hutton: Yeah. We hope so. As we look toward the remainder of 2026, we think we have great opportunities to highlight progress being made, investments, and the return on those investments, and hopefully additional partnership and collaboration opportunities. We will look forward to sharing those when we get there. For us, it really is about controlling what we can control. We have worked long and hard to build what we believe is the strongest and best pulmonology-focused sales team in the market, and we want to continue to give them an opportunity to flex and demonstrate that we can continue to build this market. Last year, at the beginning of the fourth quarter, we had an R&D day. We will look forward to providing more on our R&D and development services front in the second half, but anything that happens between now and then, we are going to share that broadly and celebrate it.
Operator: Our next question comes from the line of Dan Brennan with TD Cowen. Please go ahead.
Analyst: Hi, Pradeep Ambrose on behalf of Dan Brennan. Can you quantify how much quarter one revenue was impacted by weather versus typical seasonality?
Robin Harper Cowie: Yeah, it is a great question. Like everybody else, particularly those in the areas of the country that were impacted by the series of storms, we were as well. It was a pretty significant impact to us in the late January, early February timeframe as the FedEx hubs across the country were impacted. But we were very pleased with how the team responded and clearly finished the quarter strong to end with a nice strong beat for the quarter.
Analyst: Awesome. Thank you.
Operator: With no further questions in queue, this does conclude today's conference call. You may now disconnect.