Thomas DeBourcy

Thomas DeBourcy asked about the DoD testing revenue, specifically the $10 million to $12 million guidance, and how to think about biopharma revenue expectations for 2026, considering Q4's biopharma revenue and potential future contributions from MRD or other clinical trials, distinguishing between product and one-time biopharma revenue.

Answer

CFO Rebecca Chambers clarified that less than $1 million of biopharma revenue is implied in the 2026 guidance, as only signed and booked contracts are included. She noted that the vast majority of previous biopharma revenue came from the now-closed French entity, and future biopharma engagement will primarily be an evidence strategy rather than a revenue driver. On the product front, the implied $10 million is down year-over-year due to a new contract manufacturer (allowing for wiggle room) and the decision not to sell the IVD to U.S. customers before the LDT launch.

Thomas DeBourcy asked about Veracyte's DoD testing revenue guidance of $10 million-$12 million for 2026. He also inquired about expectations for biopharma revenue in 2026, potentially from MRD or other clinical trials, and how to differentiate between product and biopharma revenue.

Answer

CFO Rebecca Chambers clarified that the 2026 guidance implies less than $1 million in biopharma revenue, as only signed and booked contracts are included, and the primary source (French entity) was shut down. She emphasized that biopharma engagement is primarily an evidence strategy, not a revenue strategy. Product revenue, around $10 million, is down year-over-year due to variability from a new contract manufacturer and the decision not to sell IVD to U.S. customers before the LDT launch.

Thomas DeBourcy asked if Decipher's Level 1 evidence in NCCN guidelines has improved payer coverage and whether the long-term 25% adjusted EBITDA target accounts for spending on new product launches.

Answer

CCO John Leite confirmed that the NCCN guideline status is a crucial tool in their ongoing, long-term discussions with payers. CEO Marc Stapley added that it significantly bolsters their case. CFO Rebecca Chambers affirmed that the 25% adjusted EBITDA target for 2026-2028 fully incorporates the planned investments for new launches, citing the company's track record of efficient spending and metered investment.

Tom DeBourcy from Nephron Research asked for an updated timeline on the NIGHTINGALE study for the Percepta Nasal Swab and for context on the $10-$15 million milestone payment mentioned in the Q4 cash forecast.

Answer

CEO Marc Stapley stated that the company no longer provides specific guidance on the NIGHTINGALE study's completion date due to the unpredictability of clinical trial enrollment but confirmed enrollment continues across nearly 100 sites. CFO Rebecca Chambers clarified the cash usage in Q4 is primarily for expenses, including a ~$5 million milestone payment, ~$5 million in CapEx for 2025 projects, and working capital changes.

Thomas DeBourcy asked about refilling the demand pipeline for contract manufacturing in the second half, given the flat growth forecast, and the opportunities seen there. He also inquired if the reshoring of U.S. customers represents an incremental opportunity or merely a shift in manufacturing strategy.

Answer

CEO Eric Green stated that West is at the table for new investment announcements regarding U.S. reshoring, which could lead to incremental volume or a shift in manufacturing strategy. He noted West's global assets can support customers, requiring additional labor and equipment rather than new facilities. For contract manufacturing, he explained that the exiting business (end of Q2) is intended to be utilized by new customers in late 2026, with several discussions ongoing, while other investments in Dublin and Grand Rapids will ramp up.

Thomas DeBourcy of Nephron Research LLC asked about supply chain redundancy for HVP components, specifically if most products are validated across multiple sites and if customers are requesting this to mitigate tariff risks.

Answer

CEO Eric Green stated that West is very well-positioned with its global HVP manufacturing network (US, Europe, Asia), which minimizes tariff impacts by producing regionally for regional consumption. While there are occasional customer requests to transfer a product to a second site for operational or supply security reasons, the existing network structure already mitigates much of the tariff risk.

Thomas DeBourcy asked if West is observing changes in customer ordering patterns, such as a shift to smaller, more frequent orders, a trend seen elsewhere in the bioprocessing supply chain.

Answer

CEO Eric Green confirmed that customer order patterns have changed and are now more aligned with the pre-COVID era. He attributed this shift to two main factors: a more stabilized market environment and West's significantly improved manufacturing lead times, which have decreased from 40-50 weeks during the pandemic to a more normal 8-12 weeks, giving customers greater confidence and flexibility.

Thomas DeBourcy from Nephron Research inquired about the continuation of Neogen's portfolio assessment, specifically asking if additional divestitures are anticipated beyond the Cleaners & Disinfectants business and the ongoing genomics sale, given the company's shift towards food safety and reevaluation of lower-margin product lines.

Answer

CEO Mike Nassif expressed alignment with the current portfolio strategy and the rationale behind past divestitures. He stated the focus is on optimizing the remaining strong animal safety and food safety product lines to achieve predictable, profitable growth. CFO Dave Naemura added that portfolio review is an ongoing process, evaluating end market exposures, growth profiles, and financial performance, and while they are pleased with the current portfolio, continuous assessment will occur.

Thomas DeBourcy of Nephron Research LLC asked about the drivers behind the strength in the pathogen product lines, specifically if it was due to market share gains. He also inquired about the reasons for the lower-than-expected fiscal 2026 CapEx guidance of $50 million.

Answer

President and CEO John Adent attributed the strength in pathogens to a strategic focus and recent product launches, such as Listeria Right Now on the MDS platform, which address previously unmet customer needs. CFO & COO David Naemura explained the lower CapEx guidance is a result of a combination of factors, including a minimal impact from divestitures, some CapEx being pulled forward into fiscal 2025, and a disciplined focus on priority projects.

Thomas DeBourcy of Nephron Research LLC asked about the increased cost savings target of $85 million following the Akoya acquisition, questioning if customer service levels could be maintained and how the company views long-term growth for the combined entity.

Answer

CFO Vandana Sriram explained that the company is operating as a single entity, and additional savings beyond initial expectations were identified in overlapping operations and lab processes. She affirmed their ability to serve the combined portfolio while noting that investments in key growth areas for both Simoa and Spatial platforms have been carefully protected.

Thomas DeBourcy from Nephron Research inquired if the Simoa Advantage PLUS initiative has contributed to gross margin improvement and asked about the potential for developing diagnostic tests for other neurological conditions like MS and ALS.

Answer

Executive Vandana Sriram confirmed that the transition to Advantage PLUS is progressing, with about 30% of eligible consumable sales now on the new lines, which helps margins. President and CEO Masoud Toloue affirmed the potential for future diagnostics, highlighting NfL and GFAP for MS monitoring and noting that nearly all neuro trials now include biomarkers, creating a pipeline for future diagnostic tests.

Thomas DeBourcy from Nephron Research inquired about how the forthcoming KOAR study data will enhance the existing evidence base and whether it could drive greater protocol compliance and secure additional payer coverage.

Answer

CEO John Hanna affirmed that the KOAR data is expected to achieve both objectives. He explained that well-designed, large, prospective trials are crucial for converting non-believing clinicians and for strengthening the case for payer coverage. He anticipates the first manuscript publication in the second half of 2025, which would likely influence payer policies in 2026.

Thomas DeBourcy asked about transplant center retention rates over the last few years and whether the projected 2-3 quarter timeline for implementing new surveillance protocols is a reasonable average.

Answer

CEO John Hanna affirmed that customer retention has been high, attributing it to the 'sticky' nature of CareDx's broad solution portfolio. He confirmed the 2-3 quarter timeline for protocol adoption is a good estimate, noting that 10 centers have already implemented new protocols since September, and CareDx is increasing its commercial staff to support this logistical effort.

Thomas DeBourcy asked about customer order patterns, referencing a step-up in purchase orders at the beginning of the calendar year and inquiring if a similar dynamic is expected in 2025, as well as how those orders converted to revenue in 2024.

Answer

CFO Adam Laponis acknowledged a trend of customers making longer-term commitments, which simplifies procurement. He stated that the company expects sequential growth in both orders and revenue throughout fiscal 2025. However, he reiterated that future disclosures on orders will be focused primarily on the biopharma segment, with the main focus for the overall business shifting to revenue, gross margin, and profitability.