Caris Life Sciences, Inc. (CAI) Q2 2026 Earnings Report, Transcript and Summary

Good day, everyone, and welcome to the Caris Life Sciences Q2 2026 Earnings Call. My name is Tanya, and I'll be your conference operator today. [Operator Instructions] As a reminder, this call is being recorded. I would now like to hand the call over to Russ Denton at Caris. Please go ahead.

Thank you. Earlier today, Caris Life Sciences released financial results for the quarter ended June 30, 2026. Joining from Caris today are David Dean Halbert, our Founder, Chairman and CEO; David Spetzler, our President; Brian Brille, our Vice Chairman and EVP; and Luke Power, our CFO. Before we begin, I'd like to remind you that during this call, management will make forward-looking statements within the meaning of federal securities laws. These statements are based on management's current expectations and involve risks and uncertainties that could cause actual results to materially differ from those anticipated. For a discussion of the factors that could affect our future results, please refer to our SEC filings, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. We undertake no obligation to update these statements, except as required by law. This call will also include a discussion of non-GAAP financial measures, which are adjusted to exclude certain specified items. The reconciliation of these non-GAAP measures to the most directly comparable GAAP measures are provided in today's earnings release. A copy of today's presentation materials can be found on our Investor Relations website. I'll now turn the call over to our Founder, Chairman and CEO, David Dean Halbert. David?

Thanks, Russ, and thanks, everyone, for joining. I want to start by highlighting that this was a record quarter with record clinical volume, including record tissue and record blood volume as the investment in our commercial engine in Q1 has started to pay dividends and will continue into the second half of the year. We added roughly 6,400 cases in the quarter, a record for sequential case additions that led us to 59,200 cases. As you know, Caris' case reflects our comprehensive approach with each case representing multiple oncology tests. On the tissue side, a single case can include Whole Exome and Whole Transcriptome Sequencing, along with multiple IHCs, methylation and SSH. On the blood side, it's even more sequencing as we run Whole Exome, Whole Transcriptome and double that sequencing then for Buffy Coat Subtraction. So each case is many tests worth of biology, and that's the strength behind our platform. Last quarter, we ran over 345,000 clinical oncology tests, including over 114,000 Whole Exome and Whole Transcriptome tests. And that strength changes what we can do for patients today. For therapy selection, our blood and tissue assays are indisputably superior to any other assay because we run Whole Exome and Whole Transcriptome sequencing together with our AI, and we're not just pointing physicians to the obvious drug. We're surfacing the options they otherwise miss and more and more, we're helping inform the diagnosis itself, ordering any other test as a disservice to the patient. This comprehensive approach is the whole reason I started Caris in 2008. I've always believed that if you could read a patient's entire molecular story, all of it at scale and apply machine learning and AI to it, you can fundamentally change how disease is diagnosed and treated. That conviction is why I built Curis as a patient-focused science-driven company from day 1. 18 years later, we've built one of the deepest molecular databases in all of oncology, over 1.13 million patients and the AI trained on reflects a comprehensive approach that no one can match. We're also now putting that agent directly in our customers' hands with large language models and a next-generation AI assistant we call [ JAKE ]. They can now run comparative analyses against our proprietary database in ways that simply weren't possible before. And it's that same commitment that led us to Caris Detect. Not all so-called early detection tests are the same. We built Caris Detect a Whole Genome and Whole Transcriptome Sequencing because the narrower approaches like methylation just don't hold up in early stage. It's not only how you look, it's how much you find. Cancers found in Stage 1 have a 90% chance of being cured. The cancers found in Stage 4 only have a 10% chance. So early stage is the entire point. And think about screening today, it's mostly one cancer at a time, and some of it, frankly, is unpleasant enough that people put it off for years. The stool test is the obvious one. So the question I always ask myself is simple, why settle for a test that looks for a single cancer when one blood draw can look for many, currently 58 so far and actually perform where it counts early. To me, that's not someday, that's now. And that is reflected by the interest from physicians, health systems, patients, which has run ahead of even my own expectations for Detect. Frankly, near-term demand may run ahead of our rollout, and we can see back orders as we scale. But detection is only half of what makes Detect different. Because it doesn't stop in detection, and that's the other reason I'm excited. We're advancing what we call the mutational cleans, and David Spetzler will get into it in more detail. But essentially, when Caris Detect flags disease early, we don't just report a signal. We follow -- we go back at 10,000-fold depth of coverage, what we call our MAX assay and we use [ Jake ] and our AI/ML tools to identify specific immunogenic mutations. And then we make peptides that are personalized immune targets. In other words, find the dangerous mutations early and go after them before they do harm. This is the arc from early detection to early interception. And the same engine sequencing, database and AI isn't limited to oncology. We see the same approach extending into other disease areas over time, including cardiology, neurology and autoimmune, among others. The biology is different. The Caris platform is the same. We're not slowing down on the near-term pipeline either. Later this year, we will take the platform into MRD, which David Spetzler will walk you through in a few minutes. It all comes back to one thing for me, making precision medicine a reality for every patient. We took another big step this quarter, and we did it while growing and funding our own investments. That's the leading science company I set out to build 18 years ago, and I'm more convinced than ever about where it's headed. I'll now turn it over to Brian to start walking through the presentation. Brian?

Thanks, David, and thank you all for joining our second quarter 2026 earnings call. This is another strong quarter, and we're pleased to report sustained growth, profitability and cash generation, which supports our investment strategy focused on our MCED launch, the broader product pipeline and commercial platform expansion. As illustrated on Slide 3, our platform continues to expand across technology, scale and commercial breadth. We're now supporting more than 6,200 ordering oncologists with more than 74% of orders coming through our EHR and portal channels. In the second quarter, we completed approximately 59,200 cases, up 18% year-over-year. With this clinical activity, our data set surpassed 1.13 million profiled cases, including more than 733,000 Whole Exomes, 783,000 Transcriptomes and approximately 843,000 matched cases with clinical outcomes. The Precision Oncology Alliance is growing in size and activity and now includes 101 members with the addition this quarter of UC San Francisco, a leading NCI academic cancer center and Northwell Health, New York State's largest health care provider. As David noted, this was a very important quarter featuring product launches, which expanded our continuum of care. For example, ChromoSeq, our heme therapy selection assay featuring Whole Genome, Whole Transcriptome technology launched on April 1 and received MolDX coverage at a reimbursed rate of $3,228. In addition, MIClarity, our digital pathology prognostic for early and late recurrence risk in breast cancer is now live, and we'll be launching our next version with expanded capabilities in the second half of this year. And most importantly, our multi-cancer early detection assay, Caris Detect, launched in June with strong interest from many potential channel partners in concierge medicine, longevity centers and digital platforms such as Everlywell. Caris Detect features a unique technology platform, ultra-deep Whole Genome together with cell-free RNA, and Spetz will take you through the latest data shortly. In addition, we continue to make progress on our goal of launching a market-leading MRD capability. So our philosophy continues to be a long-term strategic orientation to develop the best and most comprehensive offerings on the market and to pursue this innovation, while maintaining financial strength. We had a strong second quarter with total revenue increasing 45% year-over-year to $263.7 million. As illustrated on Slide 4, this result was driven by strong performance from clinical profiling, with molecular profiling services revenue increasing to $252.3 million, representing growth of 55% year-over-year. In summary, we had a very productive quarter, illustrated by the quarter highlights on Slide 5. The strong revenue performance, combined with the operating leverage inherent in our business model has produced positive financial results, while we continue to invest. Revenue growth of 45%, driven by volume growth of 18% and a 30% increase in clinical ASP. This revenue growth has led to improved gross margins of 68% on a GAAP basis, up from 63% in the second quarter last year and from 65% in the last quarter. We've invested significantly this quarter, while maintaining financial discipline. This approach has produced positive adjusted EBITDA of $55.7 million and net cash from operations of $28.5 million. Accordingly, despite significant growth CapEx for MCED lab capacity, we generated positive free cash flow of $6.4 million. Notably, this is our fifth consecutive quarter of positive adjusted EBITDA and positive free cash flow, and it provides us with valuable strategic flexibility for ongoing investment in our platform, new products and new channels such as MCED. Our balance sheet remains strong with cash and investments of $793 million at quarter end. Given our financial position, our Board authorized a share repurchase program of up to $100 million, and we used some of that in the second quarter with approximately $18 million purchased in the open market. We believe that our financial performance continues to give us unique strategic flexibility, which supports our ongoing investments in our product pipeline, importantly in MCED and MRD as well as continued expansion of our sales organization. Our strategy is to maintain financial discipline through a strong balance sheet and profitability, and these financial pillars of strength will allow us to realize our mission of making precision medicine a reality to benefit patients and support physicians. With that, I'll turn to commercial performance. The commercial strategy instituted in the first quarter is beginning to produce results. As Slide 6 indicates, clinical case volume grew from approximately 52,800 cases in the first quarter to approximately 59,200 in the second quarter, roughly 6,400 incremental cases, which is a record for us. This represents 18% year-over-year and 12% sequential growth. With respect to performance by product, we completed approximately 48,300 MI profile tissue cases, up 13% year-over-year and 11% sequentially and 10,700 Caris Assure blood cases up 50% year-over-year and 17% sequentially. Overall, we feel very optimistic about the market opportunity and demand for our technology-leading products. We feel very good about the execution of our new commercial strategy and leadership, and we completed the realignment of the sales team in January 2026, expanding our territory structure from 82 to 146 territories with a further expansion in the number of territories underway. Since then, we have continued to build out the field organization and ended the quarter with more than 290 commercial team members, which is up from 270 at the end of the first quarter. We made those changes deliberately to improve coverage, sharpen accountability and create a broader footprint for execution across MI Profile and Caris Assure as well as our new product launches. The first quarter was a transition quarter, and in the second quarter, we are beginning to see the return on investment. So overall, we feel very good about the commercial team strategy and execution. I'll now turn the presentation over to Dr. Spetzler to discuss our progress on the product pipeline, along with updates on Caris Detect. Spetz?

Thanks, Brian. I will walk through some product updates along with the next phase of development because the numbers you just heard are downstream of it. Everything I'm about to walk through comes back to a single idea you heard from David at the open, read the patient's entire molecular story at depth, and you can transition the benefits of precision medicine from late-stage disease to early stage. And nowhere is that more beneficial than in early detection. So let's start with Caris Detect. The first thing to understand about Detect is breadth. From a single routine blood draw, Caris Detect now identifies 58 distinct cancer types, spanning solid tumors, hematological malignancies and importantly, providing guidance to patients to minimize the time to diagnostic resolution. Look across this map, lung, colorectal, breast, prostate, pancreas, the full upper GI and gynecological spectrum, skin, brain, renal, urothelial, liver and on the right, the harder categories, most screening tests simply don't touch, soft tissues and bone sarcomas and of course, the hematological malignancies. This is not a single cancer test wearing a wide label. It's a genuinely pan-cancer coverage from one blood draw, and that breadth is a direct product of building the Whole Genome and Whole Transcriptome Sequencing, which spans the entire spectrum of biology rather than a narrow approach, which only captures a small portion of what drives cancer. Detecting a signal is only half the job. The question every clinician asks next is, where is it? And where our tissue of origin classifier changes the economics of the workup. Our approach focuses on what the best action for the patient is, finding the cancer faster while minimizing the number of procedures a patient have to experience to get there. The way to think about this slide is on the left. When a signal comes back, most tests hand the physician an open-ended search, a scattershot battery of scans and procedures. Our classifier was the opposite. It concentrates probability onto the true site and turns that open-ended hunt into a short prioritized workup. Here's what that looks like in the validation data. Across true positives, a little over 2,500 patients, 83.9% are resolved in a single workup and 99.8% are localized within 2. That's an average of just 1.19 procedures per patient. And even in the small positive -- false positive group, we've resolved essentially 100% within 2 workups, meaning patients are not sent down a long, arduous, anxious and expensive diagnostic odyssey. Down at the bottom is why that matters. It's not abstract, fewer procedures, less radiation exposure, a faster path from signal to answer and real support for the hardest cases in oncology. The metastases of unknown primary where origin is genuinely uncertain and because every routing step is explainable, the coverage balance is a dial we can tune. It's not a black box. I want to make this concrete because it's ultimately what the ordering physician holds in their hands. Every detect result is delivered as a prioritized workup, not just a yes or no. At the top, a clear actionable statement, cancer signal detected backed by Whole Genome and Whole Transcriptome Sequencing. Below it, the suspected tissues of origin ranked by probability. Sometimes that's a single high confidence call like the 99% thoracic lung example on the left. Sometimes the signal is spread across sites, like the example on the right, led by HPV liver at 18%. And critically, each of those ranked sites comes with a specific next step, the exact study to order mapped on to the body, a colonoscopy, a contrast enhanced CT of the chest or a CT of the abdomen and pelvis. We even tell the physician what the data de-prioritizes, the tissues the signal makes unlikely listed at under 0.1%. So the diagnostic search has narrowed from the very first day, sometimes knowing what's -- where it's not can be just as valuable as knowing where it is. That's the Detect story. Test, know, act. Now this is the part that I'm most excited to walk you through because it's where Caris stops describing disease and starts intervening against it. We call it the mutational cleanse, and it's the embodiment of that shift you saw on the title from personalized medicine to personalized prevention. Here's the arc, left to right. First, Caris Detects flags disease early, while tissue of origin routing is possible and disease burden is still low. In the validation set, that's 60% Stage 1/II sensitivity or catching, and this is the stage that has a very high cure rate. We don't just want to report the signal. We want to follow it. Step 2, Caris MAX. We go back and interrogate the circulating tumor signal at 10,000x depth of coverage, ultra-deep mutational analysis of the exome layered with HLA and germline logic to separate out real somatic mutations from noise and identify the rare variants that matter. Step 3 is where our AI does the work no panel can. It scores each candidate mutation on pathogenicity, clonality, expression, antigen processing, HLA fit and blood on-target risk to identify the subset of mutations that are immunogenic, which are the mutations the immune system can actually see. And the performance here is strong, 83.8% positive predictive value and 86.5% sensitivity on the top variant per patient. We were able to achieve this level of performance by leveraging our unmatched data set, which contains thousands of specimens collected before the administration of immunotherapy and matched samples after. Step 4, the top neoepitopes become patient-specific immune targets, which we can monitor over time against ctDNA and T-cell response to determine if the source of the signal is going away, a closed loop. So the whole idea in one line is on this slide, find the dangerous clone early, make its mutation visible to the immune system and remove it before clinically overt disease ever emerges. That is early detection becoming early interception. Now let me turn from the frontier to what's landing in the near term, 3 pipeline items an upgrade to MI Clarity, our MRD program and the clinical evidence underneath all of it. MI Clarity is our recurrence risk platform, and version 2 meaningfully expands what it does. Version 1 already delivered distant recurrence across both the early and late windows, years 0 through 5 and 5 through 15, orderable right at diagnosis with fast turnaround time at an accessible cost. What's new in V2 is decision support, not just prognosis. We're adding chemotherapy decision support, identifying which patients are actually likely to benefit from chemo. We have also extended endocrine therapy decision support, informing treatment beyond the first 5 years. And we have also expanded ordering years after diagnosis, which the extended endocrine therapy decisions need to be made. And finally, we've integrated early and late treatment decision support into a single test. In short, version 2 moves MI Clarity from telling you the risk to helping you act on it. As you heard at the open, we're taking the platform into MRD, minimal residual disease, and we're doing it with 2 complementary approaches because different clinical settings need different tools. On the left, tumor-naive built on Whole Exome plus Whole Transcriptome on our Caris Assure platform initially in colorectal, a diagnostic for Stage 2 and 3 solid tumors after curative intent treatment, profiling cancer-associated circulating tumor DNA and RNA from a whole blood sample with no need for the original tumor tissue. We're collecting more longitudinal outcome data for MolDX technical assessment and with more indications to follow. On the right, a tumor-informed Whole Genome solution, leveraging our Caris Precision technology platform, we perform Whole Genome not just on the tissue, but also on the blood sample. In the approach, we will offer pan-tumor Stage 1 through 3. This comprehensive approach reflects our forward-looking vision of always providing the best possible assays. Tumor normal Whole Genome Sequencing identifies the maximum number of trackers, which minimizes false negatives and drives ultra-low parts per million sensitivity. The analytic performance speaks for itself over 5 logs of linear dynamic range, a median of roughly 15,000 trackers per patient and an R squared above 0.99 with a slope near 1 across that entire range. The validation for this assay is in process and our launch planning is underway. We are applying the same principle as we always use everywhere else on the Caris platform, more depth, more trackers and fewer things missed. And I want to close on the studies we released this quarter to further build on the evidence that our approach leads to better outcomes for patients compared to small panels of hundreds of genes because this is the through line of the entire company. Comprehensive testing reveals what targeted gene panels miss on both sides of the equation, who's eligible for therapy and how they actually do. Two peer-reviewed studies from this year support this claim. On the left, our lookback program published in the oncologist shows how our commitment to the patient doesn't end when we deliver the report. By re-interrogating prior comprehensive results with no new test and no re-biopsy, we identified 13,293 patients newly eligible for FDA-approved targeted therapies and told their physicians about their new options. That came from reviewing 87 FDA approvals across more than 483,000 molecular profiles in 10 tumor types. The depth we captured years ago is still generating new treatment options for patients still fighting their disease today. On the right, published in cancer immunology, the study shows that our whole exome-based total mutational burden assay drove longer overall survival than smaller panels when selecting patients for pembrolizumab. And you can see why. Targeted panels, even larger ones at 300 to 650 genes, disagreed with the Whole Exome on TMB in roughly 10% to 15% of cases. That's 1 in 7 to 1 in 10 patients potentially misscored on a decision determines whether they get immunotherapy and the opportunity to live longer. And we don't just view this as a competitive advantage. We do it because it's providing patients with the best care, and it's why we built the entire platform the way we have. So that's our focus on our science, detection that's both broad and precise, an intersection strategy that's genuinely novel and world-changing and a pipeline landing in the near term, all on evidence that keeps validating the depth-first approach. With that, I'll turn it over to Luke.

Thanks, David. Turning to Slide 18, and I'll be brief, as David and Brian touched on some of these highlights earlier, we again delivered another strong quarter with total revenue of $263.7 million, up 45% year-over-year. Molecular profiling revenue was $252.3 million, up 55% and pharma R&D services revenue was $11.4 million, reflecting the timing of deliverables in that business as we continue to focus on longer-term partnerships and growth in our pipeline rather than onetime smaller deals. Completed clinical case volume was up 18% in the quarter, and we were very pleased with the sequential improvement and the great work done by our sales and lab teams in the quarter. And as Brian noted, our tissue volume reaccelerated and our blood continued growing at 50% year-over-year. GAAP gross margin expanded to 68%, up from 63% a year ago, and operating expenses were $152.7 million, up about $21 million year-over-year as we invest behind the commercial expansion and product pipeline, including Caris Detect. The revenue growth continues to translate into a strong bottom line with our GAAP net loss narrowing to $0.6 million, which also included a $25 million onetime extinguishment charge for refinancing of our term loan in April. As Brian also mentioned, our adjusted EBITDA increased to $55.7 million, up from $16.7 million last year, and free cash flow was $6.4 million, making Q2 our fifth consecutive quarter of positive adjusted EBITDA and positive free cash flow. Free cash flow this quarter also absorbed $22.1 million of capital expenditures as we continue to ramp up capacity for the new product launches, along with continuing to expand our inventory with the goal to continue to fund our next growth catalysts from the strength of our existing businesses. Moving to the next slide. This reflects the strength of our molecular profiling business, which grew 55% year-over-year and as we continue to gain traction with payers due to our unique comprehensive approach. Our blended base ASP surpassed $3,850, including our newer products, which is a new record for us and continues to demonstrate the strength of our approach. Approximately 75% of my profile volume continues to be MI Cancer Seek, and we also received our first reimbursement for Caris ChromoSeq by Medicare at the approved reimbursement rate of $3,228. With regard to covered lives that now stands at approximately $239.5 million for MI Cancer Seq and $131.9 million for Care Assure and is a testament to the great work by our market access teams as we continue to see improvements across the payer landscape. Due to the great work by these teams of getting MI Cancer Seek covered, we're also pursuing a similar strategy with Care Assure, focusing on increasing the number of covered lives for that solution as quickly as possible in order to increase access while we continue to work on medical policy updates, which we believe will benefit us very near in the future, and it was great to surpass the 130 million covered lives milestone this past quarter. As a reminder on the framework, our clinical assays are billed at CDLTs, and we continue to view our underlying reimbursement position as stable with an expected update in September on the current PAMA reporting cycle. Finally, turning to guidance on Slide 20. On the strength of our first half, and particularly around molecular profiling, we are raising our full year outlook. We now expect total revenue of $1.03 billion to $1.04 billion, representing 27% to 28% growth, up from the prior range of $1 billion to $1.02 billion, driven by that continued molecular profiling strength. We continue to expect clinical therapy selection volume to grow approximately 20%, with Q3 expected to hit that market continuing to improve from there. And we now expect GAAP operating expenses of $595 million to $600 million, up from $590 million to $595 million, and that is due to continued commercial expansion along with increased marketing behind our launches. We also continue to expect adjusted EBITDA to be positive for the full year. And for free cash flow, we expect that to be positive for the full year as we plan to utilize the positive free cash flow from the first half of the year to fund the ramp in inventory and initiatives for Caris Detect in Q3 and then have positive free cash flow again in Q4, resulting in full year free cash flow positivity. With that, I'll wrap up, and I'll turn it back to the operator to open the line for questions. Operator?

Maybe a high-level one for me, high level, maybe broad. But just focusing on the total clinical volume, nice to see the bounce back and nice to see the step-up in the quarter. You talked about a lot of things that contribute to that, but maybe if you could just drill in specifically into why you think you were able to reaccelerate that from 1Q to 2Q, whether you're looking at year-over-year, if there is -- if that's tied to the commercial ramp, anything like that? As part of that, maybe you could talk about some of the tests that didn't come through in the first quarter. There was a small volume of tests. Were you able to recapture that? Just kind of want to dig into that the volume number. And I've got a follow-up.

Yes, Michael, I'll take that. This is Luke. So yes, so we feel great about the volume and the reacceleration, particularly around tissue. We've obviously been excelling at Caris Assure since we've launched it, and that remains at the kind of 50% growth rate. So we feel very good about our blood share and where that's growing. But for tissue and particularly, to see that acceleration, and it's the most amount of cases we've added in the quarter. You referenced kind of that fall over from Q1. Even excluding that 1,000 cases that we mentioned back in Q1, it was still a record for us. And that's due to the great work by the sales team after we've done the alignment and people are getting more and more mature now in their new territories. So I think as we look going forward, I definitely think tissue, we are obviously one of the leaders, if not the leader in tissue. I think that's going to continue. And I think you'll see that play out over the second half of the year. The other thing that also gives us confidence is we got to the 290 salespeople. We publicly disclosed that. We surpassed 300 in July. I feel good telling people that today. But we're not going to stop there because, again, the KPIs we're seeing and the investment strategy that Bobby and the team are implementing, it's going to play out, and we feel very confident with the numbers and the guidance.

Okay. And then maybe related to that, you're talking about your EBITDA and your cash flow. You touched on reinvestment. I just want to get a little bit more clarity on where you're going to be reinvesting any particular areas you're going to focus on in the second half? Anything you can do to quantify it? And specifically to the lab build-out of some of that CapEx, is that complete? Do you still have more to do? Sort of if you could give us an update on the CapEx and lab build-out side?

Yes. Yes. So from an investment standpoint, you'll see it on our balance sheet this quarter. You can see the ramp-up that we did in inventory, and that was on purpose. And David Halbert obviously touched on this in his speech. The outreach that we've received for detection has been quite substantial. So we're actually investing ahead of kind of the ramp in the cases coming in. So you'll see our inventory increased $47 million from Q1 to Q2. And that's on purpose because we want to get ahead of the volume. So that's what the bulk of the cash is going to be utilized for in Q3. And then from a CapEx standpoint, yes, we spent $22 million. We're going to continue to build out. We're also looking at additional sequencing capabilities, not just what our current existing supplier is. So we'll continue to assess that as we go into the second half of the year. So there will be incremental dollars there. From a standpoint of what we would expect for Q3 to kind of get to the crux of your question, we would expect our free cash flow to basically be neutral by the end of the 9 months. So utilizing that $30-ish million from the first 6 months, spending that in Q3 and then ramping that back up in Q4. And then from a CapEx standpoint, our expectation is to be in that $15 million to $20 million in Q3.

I guess my first one is on the updated guidance here, Luke. So your clinical volumes, I think implied for back half is 23%. What drives this acceleration from first half? I know there was some disruption from the sales force reorg. Is that what is being assumed in the back half that the sales force reorg disruption is primarily done and sales force gets more productive in the back half? What visibility do you have in the step-up for the back half?

Yes. I mean, Vijay, look, what we -- what I just stated, I think, is what gives us confidence is we did the bulk of the work in Q1. It was disruptive. We were very upfront about that on the Q1 earnings call. But seeing those KPIs play out in Q2 and the great work done by the sales team once they're starting to mature, that's what's given us confidence as we go in. As we've referenced throughout the script, too, like the record quarter for sequential growth in tissue, like adding that amount of cases, the 4,700 cases, even if you include some of those cases rolling over from Q1, like we said, it's still a record if you exclude those. So I think we have the momentum building there. And again, based on the KPIs we're seeing and continuing to add to the sales team, like we're not going to stop. We're going to continue to assess the KPIs given the financial position we're in and the profitability we have, we're going to continue to invest and give the resources to the team. So we feel very confident, particularly about tissue, along with blood, like blood continues to do that 50-plus percent. So that's the expectation that we continue that into the second half of the year.

Understood. Then maybe one on new products. There's a lot of details in the presentation between Caris Detect and your MRD test. What is being assumed for any of these contributions from new products? And when you think about the guidance raise, Lu, is any of this new launches contributing? Or is this just the step-up from first half back payments? Is that what's driving the revenue guidance increase?

It's -- yes, it's basically -- it's our existing business. We're not assuming anything for Detect. We've been quite clear like when we launch new products, we're going to give it a quarter or 2. We're very excited about it, but we don't want to put numbers out there until we have a history of it coming in. Again, we're planning based on what you can see from our inventory ramp-up, a lot of volume coming in, but we want to see it play out before we start including in the guidance. And to answer your question, Vijay, see you mentioned kind of the true-ups. Like those are kind of standard now, like we continue to excel. And obviously, you can see that from our ASP. Those are kind of standard, as you can see across the industry. So we feel very good. Even with that, we've raised the guidance just purely on the molecular profiling business, and we're not assuming any true-ups in that raise in the second half of the year.

[Technical Difficulty] more suppliers and adding a series of new assays. There are clearly long-term benefits to these changes. That said, are you contemplating in guidance any potential transitory inefficiencies such as longer turnaround time or higher failure rates as you migrate assays and evolve menu?

Yes, I can take that. I think you broke up a little bit, Subbu. But no, we're not contemplating that at all. I think what we're doing and what we're planning for is obviously, we're putting in a significant investment now to ensure that we're ready for the expected volume coming in the door. We have one of the leading turnaround times for tissue and for blood, considering we're doing Whole Exome and Whole Transcriptome, and we want to maintain that as we obviously increase the portfolio solution with the new products. Did that answer your question?

Yes. And for the broader team, the first move in MCED is towards a potential FDA approval over the coming quarters. Do you have any plans for a study that would support FDA approval, especially given the importance to CMS reimbursement?

Yes. Do you want to take that one, Spetz, and then I can answer the reimbursement.

Yes. So we're in the planning phase of FDA submission for Caris Assure. That will be our next submission. And that's really our next one that we're looking at.

Yes. So Subbu, to answer your question on MCED, we've stated, obviously, for the last couple of quarters, our plan is to go self-pay route, and that's what we're doing. That's what we've launched. We'll continue to assess the reimbursement landscape. Again, the focus for us is always on the technology first. And given where the current landscape sits, they're not really taking into account the technology from that standpoint and the performance, we feel. So we'll continue to assess that, but there's no plans right now.

This is [ Martin ] on for Casey. I just wanted to follow-up on the updated guidance. Any color you can provide on pacing for volumes in the back half, specifically between tissue and blood? And then also on your gross margins, they came in quite strong in 2Q. So how should we think about that for the full year?

Yes. So for tissue and blood, we expect to have a consistent kind of mix of what we saw in Q2 as we progress into the second half of the year. From a growth standpoint, what I mentioned in the kind of remarks was our next milestone for our therapy selection is that 20%, and we expect to hit that in Q3 and then continue to improve on that as we go into Q4. So that's kind of the cadence from a milestone standpoint. To answer your question on the gross margin, again, we maintain that we've been in that kind of high-60% gross margin. We feel very good about that. One of the things that we've always communicated is we're not trying to push gross margin as much as we could possibly do right now. It's always deeper, not cheaper for us when we're developing assays when we're running assays. And obviously, you can see that by the tech and our existing profiling assays. So we're going to maintain doing that and getting the most from assays before we actually start squeezing. But the potential is there for future years to get our COGS way down, but that's not where we're focused on right now. So I would expect it to be in that 60% for the second half of the year as well.

And then quickly on ChromoSeq. I just wanted to ask now that you have the MolDx approval, how is the early traction going? And then which reps are selling you currently? And what's your plan in terms of which reps are going to sell it going forward?

Yes. So it's been going well. We launched products. We roll it out. What we've been trying to do with these 2 new products from a clinical standpoint in Q2 was to give the clinicians and physicians kind of more of the complete care continuum from our solutions. So these are assisting us also with our tissue volume and our blood volume. So from a Heme standpoint, we've communicated previously, it's a smaller market, but we do have the sales force selling it, a particular team in the sales force selling it. And that will continue to ramp as we get into the second half of the year and as we add indications to the assay. And then from that standpoint, I think all our new solutions will continue to ramp as we go into the second half of the year. But as I stated to a previous answer, we'll continue to assess it for a couple of quarters before we start adding it to guidance.

This is [ Albert Hu ] on for Brandon. Maybe just one on the ASP side. Did you guys discuss the ASPs for tissue and blood specifically? If not, I would appreciate some color there. And maybe on the same line, maybe you can discuss on how payer conversations have went this quarter and then maybe success rates and what are the expectations there in the future?

Yes. So from an ASP standpoint, what we'll be guiding to and what we'll be disclosing going forward is going to be the total blended ASP, and there's kind of 2 reasons for that. Obviously, we're 5 quarters out from being a public company. And of those 5 quarters, we've publicly disclosed in the past what our tissue and our blood ASP. And the reason for that is because tissue ramped so quickly over the past year, and we've had great success with it. So going forward, now that we have an additional 2 products out there and now that tissue is getting and it's following where we actually communicated at the start of the year, we're going to be just giving out the blended clinical ASP going forward. And as I stated on the call, that getting over 3,850 was a record for us. So you're continuing to see strength through the tissue along with the uptick in covered lives, what we publicly disclosed. Then for blood, it's the same thing. One of our unique things that we're -- what we're doing with blood is we're trying to get as many covered lives as possible, and that's been successful for us because that opens up access. And you'll see that play out in the volume along with improved reimbursement over time. So that's where we'll point to going forward. But we feel good about it continuing to improve as we progress into the second half of the year.

Okay. Great. And then maybe one on MRD. I think someone mentioned earlier in the call something about later this year. I didn't hear much on that after. But we do see it's a launch planning initiated. But is it going to be later this year? Or how should we think about the time lines for MRD here?

Yes. Spetz, do you want to take that one?

Yes, sure do. Yes. So we will finish the validation and be looking to launch it this -- the back half of this year.

So I wanted to follow-up on something you said in the answer to Mike's question. I think you mentioned looking at additional sequencing suppliers. Can you maybe walk us through how that could potentially change the economics of each test kind of in the long term?

Yes. Spetz, I think that's more your area.

Sure. So there are 2 competitors out there now against the long-standing sequencing supplier, and they're their throughput and their cost is significantly higher and lower, respectively, than what's available. So they create the opportunity to increase our capacity and decrease our cost of goods simultaneously.

Okay. Great. And then I guess on EBITDA, how should we think about the cadence for that going forward the rest of the year? I mean, obviously, you have new tests coming online, which will probably come at a lower margin. So just anything you could provide there would be great.

Yes, Evy. So from an EBITDA standpoint, and again, not talking about adjusted EBITDA, but EBITDA itself, like we want to -- basically, we did, what, $33 million in Q2. We would expect that to drop a little bit in Q3 as we continue to do our investments, et cetera, but we continue to maintain that will be positive and then that kind of picking back up in Q4. So the expectation right now is for EBITDA to be about $10 million to $16 million in Q3 and maybe improving back up in Q4 to where we were in Q2. And then adjusted EBITDA, obviously, the only delta between the 2 is the stock comp expense.

On the quarter. I know there was a question asked on the back half ramp. I'd love to just explore a little bit more. So the guide for Q3 is 20% volume growth. I guess we can plug what the fourth quarter guide is. And Luke, did I hear you say you expect the mix to be similar between tissue and blood, which we had mix going down, we have blood going fast. So maybe just elaborate a little bit on that in terms of the expectation for tissue and blood in the third quarter, just so we're crystal clear on it. And then I have a couple of follow-ups.

Yes. Yes, Dan. So like for us, for the tissue and blood mix, it's been in the kind of 80-20. So there will be probably some small like 79-21 from a blood and tissue standpoint. So that's kind of expected, but it's not going to change significantly from where it was in Q2. That's where I was getting at with that. I think from a ramp and cadence standpoint, I think what we stated on the call is our next goal and the goal that we've always set ourselves since the beginning of the year was to get through this reorg, start to show the improvement like we did in Q2 and continue to show the improvement into Q3 and Q4. One of the unique things about us as a company, obviously, when you look at our performance last year, we had very tough revenue comps as we go into Q3 and Q4 just because of the ramp we have with the MI Cancer Seek reimbursement, but we actually have really good comps from a case volume standpoint. And that's the thing that we focused on from an investment as we went into the start of this year. So I think any incremental that you're going to see is going to be a huge improvement in the second half of the year, and that's why we feel confident with the 20% guide today. So the 20%, obviously, it's in that 61,000 to 62,000 cases. we would point towards that kind of range. And then the delta, as you said, in the second -- in Q4.

Great. And then maybe kind of related to that with the sales force expansion, do you feel like -- how should we think about that back half year ramp? I mean, is that like the number? Or do you think there's some cushion based upon sales productivity and just continued kind of push that you guys have towards maybe providing some upside potential that? Just want to understand the characterization of this back half year volume ramp.

Yes. Again, we're not incorporating the additional people that we've added into it. We want to see it play out to the KPIs. We've been very clear that it takes normally 6 to 9 months for new people to get fully ramped up. So hopefully, we'll start seeing that and it will be on top of that then as you progress into Q4. The other thing, too, is, obviously, we're pushing very hard with the new products, and we're going to have Detect. We're going to have ChromoSeq, MI Clarity. We're continuing to build out. And I think you'll start to see some of those play through. But from a therapy selection standpoint, I definitely think we feel good about the numbers where they are today.

Awesome. And if I can sneak a quick one in. Just competitively, kind of what are you guys seeing? Obviously, one of your peers, blood leader has been posting accelerating growth. So just kind of wondering if you could speak to what's happening in the field in terms of blood usage, tissue usage? How do you guys feel competitively you're stacking up? And do you think you're gaining your fair share of kind of the new starts that are out there?

Yes. Brian, do you want to take that one, and I can chime in, Dan.

Yes, sure. Dan, it's Brian. Look, we see opportunity everywhere. We continue to think this market is in relatively early innings for precision oncology. The TAM is big. It's growing. And these institutions, whether they're community or academic are still in the process of organizing precision oncology programs. And they're looking for better technology, the best technology. They're looking for support in setting up those programs. So our team of PhDs, it's a whole programmatic approach. And the market is in a secular trend of adoption and adoption of not narrow panels, but of comprehensive genomic profiling. David led us the Whole Exome, Whole Transcriptome early. And that breadth and depth strategy has really served us well and will continue to serve us well. So for us, it's really all about execution and delivering that technology and those services as broadly as possible. So the things that Luke was talking about in terms of what we're doing in the commercial investment is very important. So it's all about that delivery of putting salespeople in the right territories, improving the tactics, the tactical approach, covering more individual physicians and also covering top-down as well in terms of senior strategic leaders of these institutions who are increasingly expressing themselves and making decisions around who should be the profiling partner across the whole institution. And our position as both a clinical partner as well as a research partner with the POA really matters. So I think we're as optimistic about the opportunity as we've ever been. The volumes that we've delivered here and will deliver is really a function of the investment in that pipe. And the good news here for us is we think we have the best technology. We have a tremendous set of relationships, and we have the financial flexibility and power here to make these investments that we're making. So we're really excited at this point.

This is Megan on for Mark. Our first one has to do with the blood-tissue attach rate. So we're just looking for you guys to help us understand what a normalized or target attach rate might look like over the medium term?

Yes. I'll take this one, Spetz, you can add to it. From an attach rate standpoint, so like for cases that we're getting in on our blood volume, it's kind of been consistent with what we've stated in the past in that kind of 40% range. So blood and then also a tissue coming in. So we kind of think that's where it is today. Obviously, guidelines are going to be a driver of that as guidelines update, it's probably going to update that percentage of attach rate. But we feel very good where we're at today with that percentage, and we think there's only room for upside from there.

Great. And our next question just had to do with M&A appetite. So can you help frame how you're thinking about capital deployment? Is M&A on the table to accelerate your capabilities in MRD, pharma? Or is the preference to build organically and preserve flexibility?

Yes, I can add my thoughts, and then I can pass it to Brian and obviously, David or for two. We obviously feel we have the best technology, and that's organic. And I think what we disclosed today in the presentation is that continued approach of building it ourselves just because of the comprehensiveness, and we want it to be best-in-class. So we always look from a standpoint is with the technology if we did an M&A, would it be additive, not just to have it. So that's our approach, and that's how we're going to continue to look at it. So there's nothing in the pipeline right now. But again, we'll continue to assess. But again, it has to be from the technology standpoint. It has to be additive. And we haven't seen anything out there that speak to our interest just yet.

I want to go back to Detect. I appreciate all the CapEx color earlier. I guess when will you move beyond being capacity constrained? And then maybe just touch on OpEx. How are you thinking about DTC spend? And as you think about the channel, how do you balance the Everlywell partnership with your own sales force expansion for MCED specifically?

Yes. Do you want to take that, Spetz?

Yes, sure. We're going to be pretty aggressive about our DTC campaign and advertising starting very soon. We've been aggressively expanding our capacity and continue to do so. So we will hopefully stay above demand, but it's quite likely that we won't, but we'll be adding capacity as quickly as we possibly can.

And our current capacity is about $1 billion a year of revenue, and we're just about to triple that. So that will be about $3 billion a year in revenue, and we're still worried about back orders.

Okay. And then on the sales channel, Everlywell versus your own sales resps?

Yes. So we're mostly doing it through channel partners. We're not devoting a lot of our sales team to text directly.

A direct-to-consumer ad campaign, which we're shooting on Monday and will start running nationally in a couple of months, and it's going to be pretty amazing.

Okay. And then maybe just swing topics. What's the status of the New York state approval? And did you factor that into the back half of your guide for liquid?

So we're still in -- we can'get our CFO to factory in if we had no history with it.

Yes, Tycho. So yes, we feel really good about our blood volume. We think the New York State approval will be on top as a catalyst on top of that 20%. It's going through review right now. We're still waiting. It's obviously a governmental agency. So there's no real update on that.

Okay. And then last one on MRD. Just you're compiling data, obviously, for MolDX. Just what's the timing, I guess, of submitting the data?

So it's waiting for that clinical outcome data to mature. So it really depends on the rate of relapse within our patient population, which is, of course, impossible to really predict. So there's probably another 6 months at least of clinical maturity that we need, but it could be more than that.

You're talking about naive?

Yes. We're validating tissue form right now. Yes, that was about...

A couple of sales-related ones. The first is the MI Clarity launch V2. I was wondering just because we've seen -- it seems like you're hiring to support that launch. Can you give us a quick update on what the reimbursement situation is for that? Do you need like your own specific code and coverage? Or are there existing codes that you're filling that under? What does that look like?

Yes. Jack, I'll take this one. I can pass it off to obviously others to chime in. Yes, so we're obviously having conversations with it about what particular LCD could fall under, and that's kind of where we're at today. We're still going through that kind of analysis and where it could fit. Obviously, there's been an expansion in these kind of AI technologies. So I think that's something that we're focused on. One of the key things we're also focused on from a reimbursement standpoint is actually going to the third-party payers themselves directly because obviously, this is a cheaper alternative than some of the sequencing tests out there today. And we're making the case, so that be United, Aetna, et cetera. So we'll continue to do that, but I think it's going to be around a potentially updated LCD before you get kind of reimbursement for Medicare.

Great. Okay. And then I noticed in the deck, you said now 74% of orders going through EMR in the portal. I was trying to quickly look back to see what old stats were, but I was just -- I couldn't find anything quickly. I was wondering how has that trended? And do you think that could kickstart more growth in terms of volumes beyond what the reps are doing?

Yes, definitely. And it's grown. So like I think last year in Q1, we're just above 50%. So we've continued to put investment behind that. And it's a key initiative from a commercial standpoint as well. So definitely, yes. Now you'll never get to 100%, obviously, but we're going to continue to push, especially with our bigger sites, and that's kind of one of the other objectives we have this year is to continue to push that percentage.

On the quarter. Maybe just on pharma R&D, it came in a little bit lighter than we expected. Do your full year assumptions of that $75 million to $80 million of revenue still hold there? Or is the profiling strength offsetting that in your guide? And maybe just how we should think about the third quarter for pharma R&D?

Yes. Catherine, so for pharma, like what we stated at the start of the year still holds. We've had an opportunity to do smaller onetime deals that we're just not doing because we want to be focused on the longer-term initiatives and be more strategic with our pharma partners. So that's the focus, and that's what the pipeline is based on today. That being said, we obviously did double -- more than double from Q1 to Q2. We do -- and normally, over the last couple of years, we've had a drop down in Q3. We don't expect that to occur this year. We actually do expect to improve from Q2 to Q3 based on our pipeline. And then from a Q4 standpoint, it is more heavily weighted towards Q4, similar to what you saw in 2024 for us. And again, that's due to the robust pipeline that we have going through discussions today. So we feel good about it right now. We'll continue to assess it. Obviously, the sales cycle is a little longer than I would like as a CFO, but they normally start to play out as you get into Q3 and Q4. So once we get to the end of Q3, we'll feel kind of very good about where the numbers are going to shake out at the end of the year. But overall, today, we feel good with the pipeline. The molecular profiling strength, to your point, continues to excel. So we feel really good about the overall guidance.

Okay. Great. And then maybe on Detect, I mean, it seems like you guys are very excited about this and expecting a lot of volume there. Can you just remind us on the COGS or gross margin side, maybe COGS since that's more in your control, how we should really think about that ramping as volume ramps and kind of any kind of midterm guidance you can give us there?

Yes. I mean from a COGS standpoint, we've stated that it's going to be kind of consistent with our existing products from a liquid standpoint. I think we maintained that today. Obviously, as you ramp a new product, you're going to have more higher fixed costs hitting that, et cetera. That will go down as volume ramps. So we feel very good about that. And also, as Dr. Spetzler mentioned, we're also assessing other technologies as well that can definitely assist with that as we go into the year. So from a ramp standpoint, that's one thing we're always saying like the deeper, not cheaper, like that's our attitude with everything. We're not going to launch a product just to hit a gross margin. We're going to launch a product to make sure the technology works and it's getting what we need to get to, to a patient. And that's the same thing that we're going to do with Detect. And then we'll continue like what we did with tissue that was very expensive, but that's continuing to come down. The same with blood. We'll get the data we need, and then we'll work on getting it down. So from a Detect standpoint, the goal is to get it launched and get it into the hands of patients as quickly as possible. And then the gross margin itself will play out over the next couple of quarters as we ramp.

I want to revisit the sales force expansion. It sounds like you guys have hit that 300 sales target and perhaps that's no longer a destination and you're going to go beyond that. So I guess, is there an updated sort of destination for the final sales rep counts that you are working towards? And also, I would welcome the same sort of steer on the territory adds. And if I can sneak in one more layer. How are you guys planning for allocating these commercial resources across the variety of tests that you are launching now?

Yes. So I think like we're going to continue to assess is effectively what it is. We're not stopping at the 300. We're going to keep growing, again, due to our financial position and again, because of the profitability, the return on investment pays out pretty quickly. So I think that's our plan as we go into the second half of the year is continue to assess from a total headcount standpoint. From a territory, it's the same thing. We're going to continue to expand, and we'll assess as we continue to grow. And obviously, as we get more customers, we'll continue to assess that count from a territory standpoint. But as we stated during the call, like the sales team has done a fantastic job since Q1. I think that will continue into the second half. And we're in a great position that we can invest behind them and support them. So I think that's where we're kind of focused on from a growth standpoint.

And just one more, if I may, on the guidance update for the full year. revenue guide is up, the volume guide is the same. Is there something that has changed in your assumptions with ASPs for the full year? And if so, is that something that's still in front? Or is that already reflected in the second quarter?

Yes. So I think for ASP, obviously, what I've stated is we expect to continue to improve even with the new product ramp launches. So we do expect for Q3 to be in that $3,800 to $3,900 blended ASP range. That's kind of our goal. And can we improve on that going into Q4. We feel very strongly about that as we sit here today. So from an ASP, we feel really good about where we're at.

On an excellent quarter. Maybe, could you just maybe distribute that $24 million in prior period collections to MI Profile and Assure, the $24 million is double last year. I think it compares to like $10 million last quarter. So if you could just help us distribute it would be good.

Yes. The bulk of it, it is the same with the blended. The bulk of it was obviously like our major product tissue. So -- and again, like the 24% and the 10%, like that's consistent with others for the full year or for the 6 months. So it's actually getting smaller and smaller as a percentage of revenue, which is kind of the expectation.

Okay. That's helpful. And then on Detect, with Everlywell, the volume is obviously like immaterial probably. But are you going to -- do you expect to see more payments upfront for that to the $3,500 or monthly payment options to be the choice there because consumers to digest the economics there, could they can get more kind of choose more attractive option. Obviously, some of these other [indiscernible] tests have monthly payment options and just it could be a little bit different for you guys. So I was just curious how you expect that to kind of progress going forward.

Yes, we'll be flexible. That's our thing. Obviously, we don't really need it from a cash flow standpoint. So we'll be flexible based on the needs of the patient.

Awesome. And then on the Assure like coverage wins to get towards 200 lives for the end of the year, is there any baked into guidance as you kind of gain broader coverage from commercial plans?

Sorry, you broke up a little bit there on my side. Could you repeat that?

Are you assuming Caris Assure it gets any more coverage this year as you kind of get closer to 200 covered lives for that liquid biopsy product?

Yes, we'll continue to push. Again, we'll assess it as we progress. We want to get as many covered lives as possible. Obviously, starting this year, our code is obviously on the clinical lab fee schedule, so it's public. So that's helping us getting more and more contracts. And there's a strategy behind that, too, that will hopefully play out as we get into 2027.

And we're expecting a pricing increase with PAMA.

And I'm showing that was our last question. And this concludes today's conference call. Thank you for participating. You may now disconnect.