Kyle Mikson

Kyle Mikson asked for more detail on clinical growth drivers, specifically which applications (oncology vs. genetic diseases) are expected to grow faster in 2026. He also inquired if BioInsight is expected to be a significant revenue contributor in the current year.

Answer

CEO Jacob Thaysen stated that clinical growth is broad-based across applications, regions, and customer types, with oncology remaining the main driver and growth driver for 2026, while rare diseases also show healthy growth. He noted BioInsight is in early days, but the Billion Cell Atlas has been well-received by pharma partners, and it's expected to contribute 1-2% growth in 2027 alongside multi-omics, with accelerating momentum.

Kyle Mikson with Canaccord asked for a breakdown of clinical growth drivers for 2026, specifically which applications (oncology vs. genetic diseases) are expected to grow faster, given their respective revenue contributions in 2025. He also inquired if the BioInsight business is expected to be a significant revenue driver ("needle mover") in 2026.

Answer

CEO Jacob Thaysen stated that clinical growth is broad-based across applications, regions, and customer types, with oncology remaining the main growth driver, followed by healthy growth in rare diseases. He indicated that BioInsight, while showing strong momentum and interest from pharma partners for the Billion Cell Atlas, is still in early days and is expected to contribute 1-2% growth in 2027, accelerating thereafter, rather than being a "needle mover" in 2026.

Kyle Mikson from Canaccord Genuity asked for a breakdown of the projected 20-30% volume growth between clinical and research segments and questioned if Illumina has the flexibility to lower prices in response to competitive pressures.

Answer

CEO Jacob Thaysen confirmed that clinical volume growth outpaced research in the quarter and is expected to be the stronger long-term driver. Regarding pricing, he stated that current declines are within the expected range. He confidently asserted that Illumina's superior cost structure provides the ability to compete on price if the company chooses to do so.

Kyle Mikson from Canaccord Genuity asked two questions: First, if the conclusion of the SEC's GRAIL investigation would free Illumina to pursue larger M&A, such as in the MRD space. Second, whether the GRAIL divestiture, nearly a year prior, has tangibly helped accelerate the core Illumina business.

Answer

CEO Jacob Thaysen expressed pleasure that the SEC investigation closed with no findings and confirmed Illumina continues to look at value-added bolt-on acquisitions, but stated MRD is likely not a space they would pursue via M&A. CFO Ankur Dhingra highlighted the strong balance sheet and over $1B in cash generated since the divestiture, noting the focus is on bolt-on M&A and opportunistic share repurchases.

Kyle Mikson from Canaccord inquired about where street estimates for 2026 might be underappreciating Afirma's potential. He also asked about the net need for Decipher's molecular features, such as PORTOS and PTEN, and if there's a pipeline of additional signatures beyond these.

Answer

CFO Rebecca Chambers stated that Veracyte's early look at 2026 revenue is above the average street estimates for both Afirma and Decipher, but declined to specify for individual products. Chief Commercial Officer John Leite explained that molecular features like PORTOS and PTEN address the growing heterogeneity in managing high-risk and metastatic prostate cancer patients, meeting a high need for predictive biomarkers. CEO Marc Stapley added that this is a repeatable formula enabled by the whole transcriptome approach, with new signatures added when clinical utility evidence and unmet customer needs are present.

Kyle Mikson asked for insights into where street estimates for 2026 might be underappreciating Afirma's potential, and the strategic importance, pipeline, and monetization of Decipher's molecular features.

Answer

CFO Rebecca Chambers stated that Veracyte's early look at 2026 revenue is above average street estimates, but did not provide specific Afirma details. CEO Marc Stapley and Chief Commercial Officer John Leite explained that molecular features like PORTOS and P10 are a response to emerging evidence and unmet needs in high-risk and metastatic prostate cancer, providing predictive biomarkers. Chief Medical and Scientific Officer Phil Febbo added that these features, while not directly monetized, enhance Decipher's value by informing complex treatment decisions and are part of a repeatable formula for adding clinical utility.

Kyle Mikson asked about the potential ASP and gross margin headwind from the Medi-Cal impact, and how long it would take for this dynamic to stabilize and approach core rates. He also inquired about the longer-term data business, specifically the Infinity database, AI, and Multiscore gene ranker, asking for context on the competitive moat it provides and its future potential. Mikson further questioned the criticality of longer-range sequencing data (medium and long-read) in advancing the Infinity asset.

Answer

Kevin Feeley, CFO, clarified that Medi-Cal is a tailwind, as existing volumes previously uncompensated will now be paid, and expects payment rates to be in line with other states. Bryan Dechairo, COO, explained that the Infinity database's power lies in its massive reservoir of variants, constantly validated by new patient data, which AI tools like Multiscore enhance for accuracy, speed, and efficiency. He noted that these AI tools also add value for pharma partners. Dechairo emphasized that integrating medium and long-read sequencing technologies improves diagnostic yield in difficult-to-sequence regions, converting more patients from panels to exome and genome as the best answer, while GeneDx's scale helps drive down COGS despite these innovations.

Kyle Mikson asked about the nature of new clinical Revio placements, questioning if PacBio is displacing legacy technologies head-to-head. He also inquired if the strong Q2 instrument placements included any pull-forward from future quarters and what a sustainable placement run-rate might be.

Answer

President and CEO Christian Henry clarified that new clinical labs are using Revio to replace legacy molecular biology techniques and, in some cases, other long-read technologies. He highlighted Revio's favorable economics and informatics. Regarding future placements, he expects Vega to continue growing with a fast sales cycle, while Revio placements are forecasted to be relatively flat, contingent on NIH funding but supported by strong international demand.

Kyle Mikson questioned why Revio shipments are expected to decline in 2025 after a significant drop in 2024, asking if it was due to macro factors, market dynamics, or cannibalization from Vega. He also requested a quantification of the NIH headwind baked into the guidance.

Answer

President and CEO Christian Henry attributed the Revio forecast to the "unprecedented macroeconomic times" and persistent funding challenges for high-cost capital equipment, not cannibalization or product fading. He stated that the guidance is responsible and considers these headwinds, but did not provide a specific dollar amount for the NIH impact. He highlighted that strong growth in Europe, demand for Vega in Asia, and scaling clinical customers are expected to offset some of the U.S. academic market challenges.

Kyle Mikson of Canaccord Genuity asked about the potential for cannibalization between the new Vega platform and the existing Revio system. He also questioned the timing and rationale behind the recent debt exchange with SoftBank, noting the market's initial negative reaction.

Answer

CEO Christian Henry stated he doesn't expect significant cannibalization, as Vega's lower throughput targets different use cases and creates an on-ramp to Revio. Regarding the debt exchange, Henry and CFO Susan Kim explained it was a strategic opportunity to reduce debt by $259 million, extend maturity to 2029, and gain operational flexibility amid market uncertainty. Kim added the deal was more favorable now than it would likely be in the future.

Kyle Mikson asked if the Scale Biosciences acquisition implies that 10x's droplet-based architecture cannot scale sufficiently and questioned when Scale's products might become a material part of the portfolio.

Answer

CEO Serge Saxonov refuted the premise, affirming strong conviction in the value of an instrument-based workflow for data quality and precision. He stated the acquisition's value lies in integrating Scale's complementary technologies to enhance the existing portfolio and push scaling further. He clarified that near-term revenue from Scale products is expected to be minimal.

Kyle Mikson inquired about the expected performance of instruments versus consumables for the year, whether an NIH pull-forward occurred in Q1, and the market dynamics behind the 50% decline in spatial instrument revenue.

Answer

CFO Adam Taich confirmed there was no NIH pull-forward and stated that Q2 is expected to mirror Q1's trends, with pressure on capital expenditures and solid consumables performance. CEO Serge Saxonov attributed the decline in spatial instrument sales primarily to the challenging macro and CapEx environment, not a material shift in competitive dynamics, emphasizing strong customer feedback on the Xenium platform.

Kyle Mikson followed up on biopharma spending assumptions within the 2025 guidance and asked if a recent PTAB decision against some patents would create more competitive headwinds in the single-cell market.

Answer

CEO Serge Saxonov asserted that the PTAB decisions do not impact the overall protection of their products and technology, expressing strong confidence in their competitive position and value proposition. He also confirmed that the growth trajectory and impact from the biopharma segment are factored into the 2025 guidance.

Kyle Mikson questioned the level of confidence in the stated mid-next-year timeline for the commercial reorganization to yield benefits. He asked if it was fair to assume a return to more satisfactory revenue growth rates in the second half of next year, considering the potential for ongoing macro headwinds.

Answer

CEO Serge Saxonov expressed confidence in the mid-next-year timeline for the commercial organization to be fully ramped and efficient. However, he cautioned that the company's baseline assumption is that the challenging macroeconomic situation will persist and not necessarily improve. Therefore, while internal execution should be on track, external pressures are expected to remain a factor.

Kyle Mikson asked about the duration of the new acquisition options, their potential application to the Proteus launch, instrument utilization trends, the target markets for new kits, the strategy behind PTM capabilities, and the potential for M&A or internal cost cuts.

Answer

President & CEO Jeff Hawkins stated that there are no current plans to offer Proteus under the new models, which are a reaction to current market conditions. He noted that consumable revenue was strong, supporting the new models. The new kits are designed to address specific needs in biopharma (barcodes) and broader research applications (library prep). Hawkins confirmed PTM development is a direct response to current customer demand. He emphasized that the priority is the core business, and while opportunistic, the bar for M&A is high. He sees no need for major cuts, viewing the current R&D and commercial teams as right-sized and productive.

Kyle Mikson of Alliance Global Partners inquired about Quantum-Si's confidence in the biopharma market amid budget pressures, early customer feedback on the new Platinum Pro system, the future gross margin profile, and the company's long-term cash runway strategy.

Answer

President and CEO Jeffrey Hawkins stated that R&D funding in biopharma remains stable and that the Platinum Pro launch has been successful with reliable performance. He also confirmed that U.S. academic customers continue to purchase consumables. CFO Jeffry Keyes added that gross margins are expected to remain in the 40-50% range, and the company is managing potential tariff impacts. Hawkins concluded that the company is capitalized into the second half of 2027 and is focused on creating value through innovation like the Proteus platform.

Kyle Mikson inquired about initial sales of the new Platinum Pro system, whether Q4 revenue included any pull-forward from Q1, and the expected contribution from the Avantor partnership. He also asked for feedback from recent genomics conferences, the company's confidence in its well-based approach versus nanopore technologies, and the development status of the next-generation Proteus platform.

Answer

President and CEO Jeffrey Hawkins stated that Platinum Pro shipments will begin before the end of Q1 2025, with no negative impact observed on legacy Platinum sales or consumables. He noted some minor year-end purchasing but not a significant pull-forward of revenue. Regarding Avantor, Hawkins explained that Q1 is a training and implementation phase, with revenue contributions expected to begin in Q2 and accelerate in the second half of the year. He also confirmed the key 2025 milestone for the Proteus platform is to demonstrate sequencing on a prototype system by year-end, stating that development is on track and derisked through key partnerships.

Kyle Mikson of Canaccord Genuity Group Inc. asked about the lack of revenue visibility in Q3, the confidence in reaching over $1 million in Q4 revenue, and the primary bottlenecks preventing faster customer adoption. He also inquired about the sales mix between direct and distribution channels, customer feedback on the new version 3 kits, and the company's long-term view on the clinical and therapeutic potential of its protein sequencing technology.

Answer

President and CEO Jeffrey Hawkins explained that the Q3 revenue shortfall was due to a small number of instrument deals being delayed by about a month. He expressed confidence in surpassing $1 million in Q4 revenue based on the commercial team's forecast and a potential year-end budget flush. Hawkins stated that adoption bottlenecks are not tied to a single issue but are related to the natural ramp-up period for the newly expanded sales team and the ongoing generation of customer proof points. He confirmed that sales have been a mix of direct and distribution channels and that the version 3 kits have seen rapid, smooth adoption due to performance improvements. Regarding clinical potential, Hawkins noted continued traction in biopharma but indicated that a true clinical diagnostic application is still further in the future, with more details to be shared at the upcoming Investor Day.

Kyle Mikson of Canaccord Genuity questioned the impact of the SCC reimbursement change on gross margin, the cash flow outlook for 2026, and the potential for synergies between TissueCypher and the recently acquired ProVise assets.

Answer

CFO Frank Stokes projected adjusted gross margins would settle in the low-to-mid 70s range in the second half of the year. Founder, CEO, & President Derek Maetzold explained the primary value of the ProVise acquisition is in combining technologies to create a more accurate test and developing a new sample collection device, not in near-term cross-selling.

Kyle Mikson of Canaccord Genuity asked for details on the Previse acquisition, its workflow relative to TissueCypher, the financial impact of discontinuing IDgenetix, and future pipeline plans for Previse's technology.

Answer

CEO Derek Maetzold positioned the Previse test as a potential enhancement to the TissueCypher franchise and noted its non-endoscopic technology could open upstream opportunities. CFO Frank Stokes stated that discontinuing IDgenetix would have a modest impact on revenue but would positively benefit EBITDA. Derek Maetzold added that while they can accelerate Previse's pipeline, specific timelines are not yet set.

Kyle Mikson asked about the underlying assumptions for DecisionDx-SCC revenue in the 2025 guidance, the potential for DecisionDx-Melanoma volume to accelerate as sales efforts are reallocated, and the remaining white space opportunities for the melanoma test.

Answer

CFO Frank Stokes clarified that the 2025 revenue guidance assumes DecisionDx-SCC coverage continues through the LCD effective date of April 24. CEO Derek Maetzold noted that while he expects some accelerated growth for melanoma with a refocused sales team, he was hesitant to quantify it. He detailed melanoma growth opportunities, including converting new clinicians, expanding usage within existing accounts, and reinforcing adoption with high-volume users.

Kyle Mikson inquired about the sequential revenue decline in the dermatology segment, the potential impact from Palmetto's non-coverage policy on DecisionDx-SCC, and the market opportunity and development timeline for the pipeline inflammatory disease test.

Answer

CFO Frank Stokes explained that the sequential volume step-down is due to normal seasonality and confirmed there was no business impact from the Palmetto policy in Q3. CEO Derek Maetzold stated that the inflammatory disease test update remains on track for year-end 2024, with a launch planned before the end of 2025. He described its use in guiding systemic therapy selection for conditions like atopic dermatitis to improve patient response.

Kyle Mikson from Canaccord Genuity asked why management is confident in obtaining Reveal Medicare reimbursement for breast cancer quickly, questioned the tangible impact of NCCN guidelines on Shield volumes, and asked if a less-trusted USPSTF panel would diminish that milestone's importance.

Answer

Chairman & Co-CEO Helmy Eltoukhy explained their confidence in a faster reimbursement timeline for Reveal in breast cancer stems from having a better understanding of Medicare's requirements after successfully navigating the process multiple times. Co-CEO AmirAli Talasaz added that while it's hard to isolate the NCCN's impact amidst strong overall growth, it's a positive milestone, and they remain confident in future guideline inclusions from ACS and USPSTF regardless of panel composition.

Kyle Mikson asked about the expected contribution from Guardant360 Tissue in 2025 and its long-term strategic importance. He also requested clarification on the expected patient demographic and insurance mix for Shield volumes in 2025.

Answer

Co-CEO Helmy Eltoukhy stated that a major upcoming upgrade to G360 Tissue will make it a highly competitive offering and an important pillar of the therapy selection business. Co-CEO AmirAli Talasaz clarified that the vast majority of Shield volume in 2025 is expected to continue to come from covered Medicare beneficiaries, similar to the mix in Q4 2024.

Kyle Mikson asked for a breakdown of the updated revenue guidance, seeking to understand the core organic growth versus the impact from prior period collections. He also inquired about the reordering rates for the Shield LDT, which has been available since May 2022.

Answer

CFO Michael Bell attributed the guidance increase to several factors: approximately $20 million from prior-year cash collections, a higher Guardant360 ASP now at $3,000, and stronger-than-expected biopharma revenue. Co-CEO AmirAli Talasaz addressed the reordering question, explaining that since the recommended interval for Shield is three years, the company has not yet reached the time window to observe reordering rates from the initial LDT launch.

Inquired about volume seasonality for the rest of the year, the ASP impact of upcoming new tests, the strategy for R&D ROI, and the progress of the biopharma partnership business.

Answer

The company expects the recent sales expansion to provide tailwinds against typical seasonality. Upcoming new tests are anticipated to be a tailwind to ASP. The R&D strategy focuses on developing high-need diagnostics and securing reimbursement before launch. The biopharma business is growing, margin-accretive, and helps de-risk R&D, with revenue expected to expand in the second half of the year.

Kyle Mikson from Canaccord Genuity asked about expectations for volume seasonality in the second half of the year, the potential ASP impact of upcoming test launches, the company's pipeline strategy, and the performance of the biopharma business.

Answer

CEO John Aballi stated that while Q3 and Q4 typically see seasonality, the ongoing sales force expansion should provide a tailwind. He clarified that the next test launch (anti-PAD) should be a tailwind to ASP, not a headwind. He also detailed the pipeline focus on lupus nephritis and the strategy to secure reimbursement before launch. CFO Jeff Black added that the biopharma business contributes $100k-$200k per quarter and is expected to expand, providing margin-accretive revenue.

Kyle Mikson asked about full-year volume expectations, trends in tests per physician, and how the new biomarkers are driving volume growth. He also requested a breakdown of prior period revenue and questioned the path to adjusted EBITDA profitability, seeking clarity on future gross margin and operating expense trends.

Answer

President and CEO John Aballi explained that volume growth is driven by sales team stability, new marker excitement, and expansion into the RA market, with a focus on increasing tests per physician. CFO Jeff Black addressed the financials, noting that prior period cash collections were about $0.5 million in Q1. He attributed the temporary gross margin dip to pre-investment in lab operations and partial quarter impact of new marker pricing, projecting a step-up in the second half of the year and continued operating leverage to reach adjusted EBITDA positivity by Q4.

Questioned the drivers behind the strong implied Q4 revenue guidance, sought confirmation on the revenue run-rate needed for profitability, and asked about the marketing and reimbursement strategy for the new product launch.

Answer

The Q4 guidance is based on good visibility, with the sequential step-up appearing larger due to the Q3 onetime adjustment. The company confirmed a revenue run-rate in the low-to-mid $70M range with 60%+ gross margins is the target for cash flow positivity. The new product launch is supported by extensive market research, a major campaign kicking off at the ACR meeting, a new test report, and an evolved commercial team.

Kyle Mikson asked about the status of conversations with the UK's NHS regarding Galleri's commercialization post-2026 and whether the reported 'substantially higher' PPV was a modeled or concrete figure. He also inquired about the stability of the 20% repeat testing rate and strategies to improve it.

Answer

Executive Harpal Kumar confirmed the PPV figure is a concrete, not modeled, number. He stated that the NHS is awaiting the final results from all three rounds of the study in mid-2026 before making any decisions on a national rollout. An executive added that the company is pleased with the greater than 20% repeat testing rate for a non-reimbursed test, noting it favorably impacts the customer acquisition cost model.

An associate on behalf of Kyle Mikson asked how the company's cash burn profile might be affected if the FDA submission and approval timelines were significantly elongated or shortened. He also asked if the 'Stargate' AI initiative announced by Oracle, Open AI, and SoftBank had any impact on GRAIL's Q1 results.

Answer

CFO Aaron Freidin and Executive Robert Ragusa stated that the company's cash runway, extending into 2028, was intentionally structured with a buffer to provide flexibility for potential delays in the FDA timeline. Regarding the 'Stargate' initiative, Mr. Ragusa commented that while it's positive for the field, it represents a longer-term opportunity and had no impact on Q1 2025 results.

Kyle Mikson asked when management realized the sales force expansion would negatively impact the 2025 revenue outlook, what levers the company can pull to achieve EBITDA breakeven with softer revenue, how the treatment guidance tests like GeneStrat NGS are performing, and what the commercialization plan is for the MRD test.

Answer

CEO Scott Hutton described the realization as a fluid process during Q1 as the company absorbed learnings from its strategic shift. CFO Robin Cowie noted that reaching the EBITDA target involves balancing revenue growth with tight cost management. CEO Scott Hutton added that VeriStrat is the key driver in the treatment guidance portfolio and that the MRD test will be offered to biopharma by year-end 2025, with a broader commercial launch planned for late 2026 or 2027 to align with reimbursement.

Kyle Mikson of Canaccord Genuity asked for an update on the product pipeline, particularly the MRD program with Memorial Sloan Kettering, and its potential as a pan-cancer test. He also inquired about the potential impact of anticipated HEDIS quality measure updates for lung cancer screening on the company's outlook.

Answer

CEO Scott Hutton confirmed the pipeline is robust but stated no new tests would be commercialized in 2025 to maintain cash discipline. He expects to provide more detailed updates on the risk of recurrence and MRD programs later in the year. Hutton described the MRD strategy as a potential multiomic approach, combining a pre-surgical test to identify recurrence risk with post-surgical monitoring. Regarding HEDIS, he noted that while updates are expected, the timing is uncertain. He reiterated that any measure increasing lung cancer screening would significantly expand Biodesix's addressable market, as their tests would be crucial for managing the resulting increase in identified nodules.

Kyle Mikson of Canaccord Genuity asked about the outlook for the biopharma segment in Q4 following a project delay, the quantifiable impact of recent hurricanes on the core lung business, and how new blood-based screening tests might affect the company's market opportunity.

Answer

Executive Scott Hutton and Executive Robin Cowie confirmed that the biopharma project delay was a timing issue and the aggregate second-half revenue for the segment remains on track. Cowie noted the hurricanes impacted the last two weeks of the quarter in the Southeast, a key market, but reaffirmed full-year guidance. Hutton added that emerging blood-based screening tests are viewed as additive, likely enriching the patient referral funnel for Nodify testing.

Kyle Mikson inquired about the performance of the Accelerator lab revenue versus expectations, the drivers behind the record consumables quarter, the strategic implications of making Simoa ONE kits compatible with flow cytometers, and the expected timing and pricing for the LucentAD Alzheimer's test.

Answer

CEO Masoud Toloue stated that the record consumables quarter was driven by top neurology assays and growing traction in inflammation markers. He highlighted that making Simoa ONE kits compatible with the vast installed base of flow cytometers will accelerate menu adoption in a capital-constrained environment and has high synergy with the Akoya merger. He also noted that pricing for the multi-marker LucentAD test is expected in Q3, with reimbursement anticipated in early 2026 at a high triple-digit level. CFO Vandana Sriram added that Q1 Accelerator revenue was in line with expectations, but the forward-looking pipeline is developing more slowly with smaller project sizes.

Kyle Mikson asked for the company's response to the significant stock decline following the Akoya merger announcement, questioning if the Board's view had changed and what investors might be missing. He also sought confirmation of the $6 million in 2024 diagnostic enablement revenue and asked if this revenue stream is included in the 2025 guidance.

Answer

President and CEO Masoud Toloue attributed the stock pressure to broad market weakness in the life science tools sector due to NIH funding concerns, not negative sentiment about the Akoya deal itself. He reaffirmed the deal's strategic value in creating scale and accelerating profitability. CFO Vandana Sriram confirmed the $6 million in 2024 revenue from diagnostic partners, which trended between $1 million and $2.5 million per quarter. She stated this revenue is included in the 2025 guidance, while direct revenue from LucentAD testing is not.

Kyle Mikson of Canaccord Genuity questioned the interplay between declining Instrument sales and rising Accelerator revenue, the 2025 instrument sales outlook, the reimbursement and scaling strategy for LucentAD Complete, and the key metrics guiding future investment in the diagnostics business.

Answer

Executive Vandana Sriram acknowledged the toggle between Instruments and Accelerator, noting Accelerator's strength is offsetting instrument weakness but stated there are no concrete signs of an instrument recovery yet. President and CEO Masoud Toloue addressed reimbursement, stating the multi-marker LucentAD test is expected to command a materially higher rate than single-marker tests. He outlined a dual scaling strategy using both internal capacity and global partners, with investment drivers being therapy uptake and reimbursement rates.

Kyle Mikson asked about the test volume outlook for 2025 following a record quarter, the reasons for a lower effective ASP, and the market size for the expanded EsoGuard indication in patients without GERD.

Answer

CEO Dr. Lishan Aklog and CFO Dennis McGrath advised against extrapolating the record 4,000 quarterly test volume, noting the focus is shifting to revenue-driving activities and that volume can be lumpy. They clarified the low ASP reflects the timing of collections under current accounting rules for traditional claims, not a decline in the allowable amount. Dr. Aklog added that the non-GERD market could add 20 million patients and is supported by existing AGA guidelines and a promising pilot study.

Kyle Mikson inquired about the reasons for the sequential decline in Q3 test volume, the outlook for Q4 given a strong October, and the company's new strategic push into the concierge medicine market, including historical success and pricing models.

Answer

CFO Dennis McGrath explained that Q3 volume was impacted by a slow July but saw a strong recovery in August and September, with October setting a record. CEO Dr. Lishan Aklog added that volumes are within the expected range as the company focuses on direct contracting. Dr. Aklog described the concierge medicine initiative as a new, promising channel for Lucid, inspired by the success of other companies like GRAIL and enabled by Lucid's now-complete clinical data package. He noted that pricing in this channel is negotiated directly with practices.

Kyle Mikson of Canaccord Genuity asked about the decline in effective ASP despite a focus on concierge medicine, the test mix in the quarter, and the current percentage of Medicare patients in the volume mix.

Answer

CEO Dr. Lishan Aklog noted that revenue from the new concierge and employer channels was minimal in Q1 as these initiatives are still ramping up. CFO Dennis McGrath elaborated that the lower recognized revenue was primarily due to collection delays and denials from specific payers, including a systemic Z-Code issue at UnitedHealthcare and ongoing work with Kaiser. Mr. McGrath stated the current Medicare patient volume is about 12-15%, with a goal to increase this to 40% or more once Medicare coverage is secured.

Kyle Mikson of Canaccord Genuity asked about the expected dollar contribution and growth from care gap revenue in 2025 compared to 2024. He also inquired about any noticeable shift in business from standard primary care ordering to these programs.

Answer

CFO Aaron Bloomer stated that after triple-digit growth in 2024 (over 250,000 patients), they expect to build on that momentum in 2025. He noted similar phasing to 2024, with about two-thirds of care gap revenue in the second half. CEO Kevin Conroy added that the ExactNexus platform is driving this shift, and these programs could become a $500M+ opportunity.

Kyle Mikson asked for details on the care gap revenue contribution in 2025 versus 2024, including the dollar amount and implied growth rate, and inquired about any shift in business from standard ordering.

Answer

CFO Aaron Bloomer stated that over 250,000 patients were screened via care gap programs in 2024, representing triple-digit growth, and the company expects to build on that momentum in 2025. He noted that about two-thirds of this revenue was recognized in the second half of 2024, with similar phasing expected in 2025. CEO Kevin Conroy added that the ExactNexus platform is the key enabler and that care gaps represent a potential $500 million-plus future opportunity.

Asked if market saturation could be a factor in slowing growth, questioned the declining consumable pull-through, and inquired about the performance of the service revenue line.

Answer

Management stated the market is far from saturated and that challenges are primarily funding-related. They explained that reagent pull-through is volatile but not on a declining trend, with Q3 impacted by customer stocking behavior. The service line's performance was linked to lower instrument sales earlier in the year, which affects deferred warranty revenue recognition.

Asked for confirmation on the resolution of manufacturing issues, the status of delayed biopharma revenue, the specific drivers (instruments vs. consumables) for the guidance reduction, and the outlook for PCF instrument pull-through.

Answer

The manufacturing center is fully operational and contributing to efficiencies. Delayed revenue was recognized as expected with more to come in H2. The guidance cut reflects a more refined outlook on sales cycles, not a specific product line issue. PCF pull-through is expected to continue its upward trend driven by workflow improvements and market expansion.

Inquired about the key assumptions in the 2024 guidance, including instrument placements, pull-through potential, services visibility, and the outlook for China. Also asked for more detail on the clinical application of the MaxFuse algorithm and the potential for future software partnerships.

Answer

Executives stated that 2.0 upgrades will boost pull-through, not slow placements. The services business is growing due to high-value, late-stage clinical partnerships. The outlook for China remains cautious for the first half of the year. The MaxFuse algorithm is currently a powerful discovery tool for integrating spatial proteomic and single-cell RNA data, and it represents the first of many such AI-based analytical approaches to come.

Kyle Mikson inquired about the second-half 2024 outlook, including international instrument placements and revenue cadence. He also asked about the financial implications of a potential U.S. commercial partnership, the reasons for the T2Resistance panel's submission delay, the strategy behind reduced SG&A expenses, and plans for strengthening the balance sheet.

Answer

CEO John Sperzel reiterated the full-year revenue guidance of $10M-$11M, with an expected 40/60 split between the first and second halves of the year. He noted that while Q2 instrument sales were light, six instruments were already sold in July. Regarding the partnership, Sperzel confirmed negotiations with a large healthcare company to gain commercial scale but could not share financial details. He explained the T2Resistance submission was delayed to Q4 2024 to prioritize shipping products to existing customers. Sperzel also stated the U.S. sales force was strategically reduced in anticipation of a partner and that the company plans to leverage upcoming catalysts to strengthen its balance sheet.

Kyle Mikson of Canaccord Genuity inquired about the sales impact from the T2Bacteria Panel's expanded FDA clearance, the timeline for cost-cutting measures to improve gross margins, the financial benefits of launching the T2Lyme Panel as an LDT, and potential for non-dilutive funding for pipeline products like Candida auris.

Answer

CEO John Sperzel explained that adding Acinetobacter baumannii to the T2Bacteria Panel increases pathogen coverage to approximately 75% and has driven demand. He noted that cost improvements will be sequential as revenue ramps and that the T2Lyme LDT strategy allows for faster market entry and higher margins. Sperzel also confirmed the company sees opportunities for non-dilutive grant funding for pipeline products, particularly the Candida auris test, and is exploring similar funding for its tick-borne panel.