Good morning, everyone, and welcome to the NeoGenomics Third Quarter 2025 Financial Results Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Priya Vedaraman, Senior Vice President of Finance at NeoGenomics. The floor is yours.

Thank you, Jenny, and good morning, everyone. Welcome to the NeoGenomics Third Quarter 2025 Financial Results Call. With me today to discuss the results are Tony Zook, Chief Executive Officer; and Jeff Sherman, Chief Financial Officer. Additional members of the management team will be available for the Q&A portion of our call. This call is being simultaneously webcast. For reference, concurrent with today's call, we posted a short slide presentation in the Investor tab on our website at ir.neogenomics.com. During this call, we will make forward-looking statements regarding our future financial and business performance, business strategy, the timing and outcome of reimbursement decisions and financial guidance. We caution you that the actual events or results could differ materially from those expressed or implied by the forward-looking statements. These forward-looking statements made during the call speak only as of the original date of this call, and we undertake no obligation to update or revise any of these statements. Please refer to the information disclosed on the safe harbor statement slide in the deck posted on our website as well as the information under the heading Risk Factors in our most recent Forms 10-K, 10-Q, and 8-K that we filed with the SEC to identify important risks and other factors that may cause our actual results to differ materially from the forward-looking statements. These documents can be found in the Investors section of our website or on the SEC's website. During this call, we will also refer to certain non-GAAP financial measures that involve adjustments to GAAP results. The non-GAAP financial measures presented should not be considered an alternative to the financial measures required by GAAP, should not be considered measures of liquidity and are unlikely to be comparable to non-GAAP financial measures provided by other companies. Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable GAAP financial measures in a table available in the press release we issued this morning and in the slide deck available in the Investors section of our website. I will now turn the call over to Tony.

Thanks, Priya. Well, good morning, everyone. Thank you for joining us today. I'll begin with a discussion of Q3 highlights and key business growth drivers before turning the call over to Jeff for a deep dive into the financials. We'll then open the call for your questions. During the third quarter of 2025, we again delivered record clinical volumes and revenues while making meaningful progress advancing our NGS and MRD long-term growth initiatives, including securing a favorable court ruling in our ongoing litigation with Natera that paves the way for a full clinical launch of our RaDaR ST MRD assay. I'll cover these initiatives in more detail shortly. Taking a step back, for those who may be new to the story, having spent much of my first 2 quarters as CEO, engaged in conversations with key stakeholders, I am as optimistic as ever about the significant opportunities that are in front of us as a leader in cancer testing. Importantly, we continue to differentiate ourselves in the community setting with both hospitals and oncologists, where approximately 80% of all cancer care is delivered. We've built a geographically balanced lab network that allows us to be responsive to customer needs, including offering some of the fastest test turnaround times in the industry when faster, more accurate treatment decisions can have a material impact on patient outcomes. Our recent acquisition of Pathline, a New York State-approved lab based in New Jersey, gives us a meaningful presence in the Northeast, which is the #3 cancer care market in the U.S. We believe the addition of Pathline allows us to offer significantly faster turnaround times, a larger and relevant New York State-approved test menu and an enhanced physician experience in the Northeast region, where we have historically been underpenetrated. The integration continues to proceed…

Thanks, Tony, and good morning. Third quarter total revenue grew sequentially by 4% from Q2 and increased by 12% over prior year to $188 million. Total clinical revenue continued with strong double-digit growth and increased by 18% from prior year. This strong clinical growth was partially offset by nonclinical revenue climbing by 27% versus the prior year, driven by weakness in the pharma revenue Tony spoke about. Adjusted gross profit improved by $5.2 million or 7% over prior year. Adjusted EBITDA was $12.2 million, the ninth consecutive quarter of positive earnings. Clinical volumes and revenues continued with robust growth in the quarter. Total test volumes increased by 15% in the third quarter with AUP growth of 3%. Same-store revenue without contribution from Pathline was $167 million, representing growth of 15%, driven by a 10% increase in test volumes and a 4% increase in AUP. We are continuing to see strength across our portfolio with above-market growth rates across the modalities we offer. NGS revenues grew by 24% over prior year in the quarter and accounted for 33% of total clinical revenue. Year-to-date NGS revenues grew by 22% over prior year. Average revenue per clinical test increased sequentially from Q2 by $15 or 3% and was up by 3% from prior year. Excluding Pathline, AUP increased by $17 or 4% from Q2 and was also up 4% over prior year. A larger percentage of higher-value tests, including NGS as well as recent managed care pricing increases are helping to drive higher AUP. Total operating expenses in the quarter were $107 million, an increase of $11 million or 12%. We recorded an additional $7 million in impairment charges related to the planned sale of Trapelo with the balance of the cost increase due to higher compensation costs driven by the expansion of…

Thanks, Jeff. To recap, during the third quarter, we again delivered strong clinical volumes and revenue while advancing NGS and MRD initiatives that we believe will contribute to accelerating growth in 2026 and beyond. We believe our unwavering focus on delivering a superior customer experience in the community setting is resonating in the marketplace. And as we continue to expand our menu of tests, community oncologists and pathologists will continue to view us as a partner of choice for their cancer testing and send-out consolidation needs. We remain committed to innovation and operational excellence, which we believe will drive sustainable and profitable growth for our company and improve outcomes for patients. Thank you for your continued interest in NeoGenomics. Operator, this concludes our prepared remarks, so please open the line for questions.

[Operator Instructions] Your first question is coming from David Westenberg of Piper Sandler.

Congrats on a strong quarter, particularly with that clinical revenue growth. So how do you feel -- I'm going to start with Jeff. How comfortable do you feel with the guidance? And can you remind us what's the latest on PanTracer liquid? Is there any chance you could see some revenue from it this year? And I just want to confirm that, that was removed from the guidance, so if we do get revenue from it this year, it would be upside to your estimates.

Yes. Thanks, Dave. So we gave thoughtful guidance for the year in Q2. We believe we had a good third quarter and believe we're in a good position to meet Q4 expectations. In terms of liquid, Tony was pretty clear that last quarter, that we did not need approval for liquid biopsy from MolDX to hit our guide, and that is still the case as we look at our performance now in the fourth quarter.

And now I know you're not giving '26, but you gave a lot of good commentary on MRD and you hinted that you will be a contributor to revenue in '26. Can you give us a sense for when you expect certain reimbursements? I mean I know there's some competitive stuff you want to be a little bit careful with. But just in the sense of the magnitude and timing of some of those, what you're going to get in MRD? And then can you give us a sense on how much commercial muscle you'll put behind these launches? And just as a reminder, I mean, I think with breast, you have a lot of expansion indications. Do you think could you get expansion in that indication this year, so -- next year? And again, congrats, and I'll hop off after this.

Thanks, David. It's Tony. I'll take a crack at a couple of these, and then certainly, I can look to Warren to add a little bit more color as well. First, on '26, as you appropriately say, we'll talk '26 in 2026, but I will give you a sense of what we see as some of the growth drivers that we anticipate for 2026. And then I will pull that back to your conversation around liquid biopsy and RaDaR ST. So at the highest level, you should expect the growth drivers for '26 to be in large part, quite similar to what we had in 2025. We expect our ongoing strong clinical performance relative to volumes to continue. And so that will certainly be a growth driver for us. We expect ongoing NGS growth rate. As Jeff commented in his remarks, we had 24% growth in revenue in NGS, and that without the full ability of PanTracer LBx included within that mix. And so we have every expectation that NGS will continue to be a growth driver for us. As you rightfully mentioned, PanTracer LBx combined with the PanTracer family, we believe, will be drivers moving forward. I can't really speculate as to the timing of LBx reimbursement. But nonetheless, we see early signs of a positive uptake for the product. And we believe once reimbursement is secured, that will be a growth driver for us. We'll see revenue build through the course of the year with obviously more of that becoming evident in the second half. The sales force that you mentioned, we are beginning to see the full benefit of now the sales force expansion efforts that we have put in place, and we expect that to be a continued driver for us. And then on the RaDaR…

Our next question is coming from Andrew Brackmann of William Blair.

Maybe on the NGS side of things, so the growth rates here imply that you're obviously taking share or growing the market or some combination of both. Can you maybe just sort of talk to us about where you're seeing the most win on the customer side of things? What types of accounts where you're winning? And then also on the product side, what products are you leading with? Where you're able to sort of capture share and begin to capture some share there?

Yes. Thanks, Andrew. Certainly, as you said, the growth rate of 24% implies a pretty meaningful share capture. Most of that business in quarter 3 was coming out of the community setting and largely from the oncology practice. Certainly, we still see opportunity within the community hospital setting. But as we onboard new practices, bring on new oncology ordering physicians and we see repeat order rates, we're seeing a compounding effect. So largely coming from that community oncology setting. In terms of focus areas, certainly, the PanTracer Family has been a core focus for us. We've launched liquid, as we've mentioned, but at the same time, we've introduced the PanTracer family, which includes PanTracer Tissue, PanTracer Tissue plus HRD and obviously, PanTracer Liquid, which is our solution for therapy selection on the solid tumor side, and we're seeing really strong growth within that category as we make that a priority. But we're certainly not losing sight of sort of what got us here, which is our heme NGS portfolio, and that continues to grow very effectively as well. But there's a subset of 5 to 7 products, which are ultimately our key focus area from a therapy selection perspective, and all of them are seeing attractive growth.

And then just from a potential expand and acquire perspective, from an acquirer, new oncologists coming on board, we're seeing a good lift from recently brought on oncologists. In 2025, we track that closely, and we're seeing reorder rates and higher penetration amongst that. So we are seeing success in the acquire aspect of our strategy as well.

I guess, Andrew, the last tap-off point, I think Warren was just hitting on it towards the end. NGS just strategic for us, is extremely important that we continue that penetration into the therapy selection markets. As Warren highlighted, the top 5 products now represent almost 1/4 of our clinical revenue and NGS in totality is almost 1/3 of our total clinical revenue. And so it aids us in AUP and a whole lot of other areas. And so it's going to be a continued point of emphasis for us moving forward. So thanks for the call.

And then if I could follow-up, just as one other question here. On the LIMS rollout, and I also think that you're integrating with Epic in some accounts. Obviously, those are multiyear processes to roll out here. But anything you can maybe share with respect to benefits that we should start to see from these initiatives into 2026, just in practical terms, what does this do for your business?

Yes. Warren and I will tag team on that one, Andrew. I would say, first, from an organizational perspective, you're going to hear me speak quite a bit about ongoing need for simplification across the organization. I think that the model that we have today with multiple locations and, unfortunately, multiple LIMS systems, it works against us in that regard. And so moving towards a common LIMS program, it aids certainly within the organization, not just the lab team, where they'll be able to be able to see where a particular testing at any given time along the continuum. Organizationally, as you say, we can retire 8 LIMS systems that were in place prior to that. So there's certainly a cost benefit. And then across other parts of the organization as well because in order to kind of offset the complication of multiple LIMS systems, we do a lot of things in other organizations that require a bit of a heavy lift that I think the LIMS system provide some efficiencies for as well. And so I think the early view is we should start to see some of these efficiencies coming through in the latter part of '26 and the later -- the better benefit being more evident in '27 and '28 and beyond. But it is just one step of many relative to simplification that we think could help us from a contribution perspective. And now Warren to give a little added color.

Yes. So let me start with the Epic, Andrew. So first of all, I will start by saying we have over 340 interfaces in place already today. Some of them with Epic already, but we're establishing the Epic Aura solution, and that will go live towards the end of this year, and we'll see fairly rapid customer onboarding in early part of 2026 and beyond. So excited about the acceleration nature that the Epic Aura solution will bring to us. And we've seen very strong sort of revenue growth and ongoing adoption when we put interfaces in place in general, and we believe it will be the same with Epic Aura. So certainly, that's a key strategy for us moving forward and enables growth and stickiness. Coming back to the LIMS side of things, as Tony said, I think a strategy to simplify, we have sort of 5 key priorities, operational simplification, and margin expansion, one of which is being LIMS. I'll touch on 2 of the benefits that I anticipate us seeing value in 2026. The first one is our ability to be able to proactively equip physicians, ordering physicians and practices to understand sort of test status and more particularly the ability to do add-ons, et cetera, that they can do themselves versus having to come to customer service. So just ultimately creating a more seamless experience for the ordering physician or the practice, so to speak. That's one area. The second one is the LIMS system we're putting in place has sort of AI integrated into it, and it will allow us to identify areas of, I'm going to call it, leakage, productivity leakage within our workflows, and we can identify this and obviously look to streamline the workflow to iron out those areas that sort of lack or have opportunity for productivity. So it really is going to deliver insights to our workflow that we don't have today that will allow for further productivity.

Our next question is coming from Mason Carrico of Stephens.

On your NGS business, you've called out share gains. You guys often quote NGS revenue growth. But I was curious if you'd be willing to give us a bit of insight into how NGS volume growth has trended, just to give us a better view on gains. So when we look at NGS revenue growth, 24% this quarter, I think 23% last quarter. How much has been driven by volume versus ASP? Because I assume you guys are benefiting from ASP to some degree as coverage expands for those assays.

Yes. We haven't disclosed the volume per se, but I would say it is more volume driven. There is some AUP growth, but it's more volume-driven than AUP growth. And I think as we're continuing to see penetration there and getting the ability to be -- access our strong commercial channel, I think that's where we're seeing that volume uptick. I think bringing on the liquid, we're actually seeing good uptick between the 2 of them as well, liquid and solid. And so I think we're well positioned to continue to get those gains.

And when you think about revitalizing growth within your pharma business, could you just talk about how much of that is in your control versus how much relies on a snapback in spend across the broader sector? I guess what do you view as kind of the key internal initiatives that you'll need to execute on to reaccelerate growth in that segment?

Yes. Mason, I'll take a crack and then Warren again could add additional detail. I would say that for us, a big part of the opportunity lies in the portfolio and bringing that portfolio forward. And so we have now the opportunity to represent products like Paletrra. We have RaDaR ST now available to us within the Pharma segment and of course, the liquid biopsy and PanTracer family. It affords us opportunities to have conversations and get a little bit more relevant in those conversations as well. As I said to you before, I think a lot of those conversations are generating interest, but because of the lag times, I would still expect that some of the challenges that we see in our business in '25 will continue into 2026. And so we see a return to growth opportunity in '27 and anything that would lead that to happen a bit faster would represent upside. As far as things in our control, there are things still in our control, and that's a heavy focus on execution excellence, and we have onboarded a leadership team that is taking the bull by the horns. And I think that part is very much in our control to drive the right conversations with the right customers. And that, I think, is something that we acknowledge that we had to improve upon. I'm pleased to see that that action is taking root across the organization. With that, I'll turn to Warren to add any other color.

I think, Tony hit most of the high points. I'd say that certainly, we're preparing our execution so that we can offer an attractive value proposition to our target customers in the biopharma space. Certainly, the inclusion of RaDaR has made us a significantly more attractive partner, which is enabling access for us to focus on both RaDaR, but other sort of high-value products, NGS, Paletrra, et cetera. So we're certainly gearing our commercial organization around that focus, coupled with underpinning that with a sound customer experience, which is, again, a key buying driver for pharma sponsors. From a market perspective, certainly, we're going to continue to work to execute effectively. As the market rebounds, we feel that there will be a compounding effect in the recovery of the business.

But this is a long sales cycle product area. And so just to reiterate what Tony said last quarter, we expect pharma to be soft in Q4 as well as throughout 2026 as well.

Our next question is coming from Dan Brennan of TD Cowen.

This is Tom on for Dan. Congrats on the quarter. Just a question now on what is driving the acceleration in your base clinical business? It looks like it's ticked up on a volumes basis this year versus prior years. The base clinical -- the non-NGS business. What is driving that? Is that better bundling? Is that better turnaround times to your point? This is a business that everyone thought would be kind of cannibalized quite aggressively by NGS. So I just want to understand how you're driving that growth and how sustainable that acceleration kind of could be going forward?

Tom, thanks for the question. I think a couple of facets I'll highlight here. First of all, I would again come back to effective execution of our protect, expand, and acquire strategy. We continue to do a great job of protecting existing customers. And that's sort of driven to just continuous focus on customer experience, whether that be from an operational perspective or just end-to-end as we look at it from requisition to results. So protect has really been a key factor. But we're seeing accelerated wins on the expand side and the acquire side of things. And I attribute that to 2 aspects. First and foremost, it's new products that we're bringing into the portfolio, and we speak significantly, obviously, about the NGS side of things, but don't forget about products like Claudin 18 and c-MET, which have been critical sort of pillars to actually round out our offering. So new products is certainly a key driver. And I think lastly and very importantly, we communicated in Q4 of last year around the sales force expansion and sort of said that this was going to be a 6 to 9 months sort of ramp to productivity. And what you're seeing right now is just follow through on exactly what we had said. We're starting to see increased productivity from those added sales resources, which are focused on the protect, expand, acquire strategy and the new products we're bringing to market. And these things are operating in concert with one another, delivering the type of numbers that you reflected on.

Yes. The only thing I would add to that is even with record volumes, our operational execution and turnaround times continue to improve. So that remains kind of a vital component of our go-to-market strategy for retaining and growing and expanding business.

Great. And then just one follow-up on kind of the launch of PanTracer into next year and just trying to scope out the potential for acceleration there. So should we be treating this as kind of 2023 all over again? Or is the sales force now appreciably larger? Should we expect a larger acceleration given this is quite a hot area in general in oncology diagnostics? So just anything to help frame your expectations versus your kind of solid tissue launch in 2023 would be really helpful.

Yes, certainly. As an organization, we've matured since 2023. We've also expanded commercially as well. And so I think using 2023 as sort of a proxy would probably be a good starting point at this junction and probably layering on some additional factors like the sales force expansion would be a way to look at it.

And the majority of the sales force expansion was in the community segment. So that really positions us well to have the coverage we need for these new products.

Our next question is coming from Subu Nambi of Guggenheim Securities.

This is Thomas on for Subu. Maybe I can ask both upfront. So first, are you still expecting stronger performance in the data business on the nonclinical side in fourth quarter? And maybe just some color on why that should show strength based on what you've seen so far this year? What you're seeing in the funnel to be comfortable with that? And then second, can you just talk specifically for clinicians in the community setting on how RaDaR has been received following the favorable summary judgment? What's the chatter like there?

Yes. On the data business, Q4 is historically the strongest quarter in that business. That business actually did grow in the third quarter, double-digit growth in the third quarter. And so we are expecting that business to see sequential growth over Q3 and the fourth quarter.

Yes. Again, I just want to reiterate that we have not clinically launched RaDaR as yet in the clinical setting. However, obviously, the news with regards to the outcome of the summary judgment has certainly circulated through the community oncology setting. And I'd say the vibe is increasingly positive about the fact that we can reenter the market. Again, it comes back to the fact that we believe we have one of the most sensitive assays in the market, but also the portfolio effect, the ability to consolidate all of your needs within the community oncology setting within a single vendor. So this helps round out that sort of value proposition for us.

Yes. I think that's an important point, just to reinforce. We've always said this preferred partner of choice in the community setting, and that speaks to a balance of breadth of portfolio and innovation as well. And we look at that breadth of portfolio beyond just heme of solid tumor and MRD, we look at breadth of portfolio at MRD as well. And so for us to be in a position to be able to offer Flow MRD, have an outstanding NGS partner MRD with Adaptive and now RaDaR ST. And don't forget, we're going to continue to invest in our next-gen MRD program. So it's a suite of products that also fits well into our overall strategy. So I believe as that becomes more evident to our customers, the chatter will increase. Thanks for the question.

Our next question is coming from Yuko Oku of Morgan Stanley.

Given that IMvigor011 trial demonstrated how incorporating MRD testing can enhance probability of trial success, are you seeing an uptick in interest from pharma partners in integrating MRD into their clinical trial designs? And then a separate follow-up. Could you provide an update on an Adaptive partnership? And what are some of the key learnings and feedback from the pilot so far?

Yes. So coming back to sort of pharma interest, I would say that pharma interest has been robust ever since we launched the product back in August of this year. Certainly, our first targets were prior users of the assay because of their familiarity, et cetera. But we've rapidly expanded that. We were recently at the ESMO conference, which was in Germany late last month or early this month. And again, very, very strong interest with regards to the assay for multiple purpose, but also from an endpoint perspective, as you articulated. So we're encouraged by the early signs in terms of the pharma sponsor interest with regards to MRD. Sorry, what was your second question?

Adaptive.

Adaptive. Yes. So we continue to progress very favorably with Adaptive. We started a pilot initiative in the third quarter. And really, this was just to sort of understand the operational workflows, et cetera, because both organizations are very focused on delivering a sound customer experience, and we continue to expand that pilot into -- in 3 distinct phases. We're rolling out the first phase of the 3-phase initiative now holistically in the fourth quarter and Phase II and Phase III will happen quickly in 2026.

Our next question is coming from Tycho Peterson of Jefferies.

This is Lauren on for Tycho. Just going back a little bit to the rebounding growth in the pharma and nonclinical setting, likely more of a '27 event. For '26, how are you seeing RaDaR adoption evolving in pharma partnerships versus the clinical setting? And then in terms of kind of the phrasing of partner of choice you've been using for community oncologists, what are some of the specific investments or initiatives that are kind of reinforcing that position?

So I think we are -- we're certainly expecting to see revenue on the MRD side of things in the pharma space for 2026. And certainly, that would sort of go a long way to address some of the other sort of headwinds we've been experiencing. We'll obviously look to quantify that as part of the guide when we speak about that next year, but certainly expecting pharma revenue for MRD. In terms of your second question, it's multiple factors. I think first and foremost, it is around the portfolio and making sure that as we look to be the partner of choice to the community setting, it's having the most relevant portfolio, which a big focus of ours has been on ensuring we've got the right therapy selection portfolio. And we believe that the PanTracer family brings that to the table now, along with key sort of add-on sort of testing, c-MET, Claudin 18 that sort of rounds out our larger portfolio across diagnosis and therapy selection. Now we have MRD as well. And as Tony mentioned, it's not just RaDaR ST, it's the partnership with Adaptive. It's the fact that we have Flow MRD on the heme side as well. But in addition to that, it's the work that we're doing from a bidirectional interface perspective. It's the work we're doing around customer experience because those are the 2 areas which are sort of critical buying drivers. We hear over and over again that these community oncology practices are looking to remove friction from their practices, so they can focus on sort of top of license type activities and they look for vendors that offer this frictionless experience. And we believe the combination of consolidating the oncology send-out requirements to a single lab along with best-in-class customer experience makes for a very, very attractive value proposition.

Yes. I just think overall, from -- if you go back historically, when we were on the market for a few years with RaDaR Pharma, we hit $6 million, $7 million a year after a couple of years. So there will be a ramp for pharma in RaDaR as we're kind of reengaging in the market.

And our next question is coming from Puneet Souda from Leerink.

How are you thinking about the AUP with -- as you bring this MRD on board? And then maybe just elaborate to us sort of as you think about -- looking at the competitive landscape, CGP has continued to grow for a number of companies that are serving products in the marketplace. So are you seeing anything different competitively in the NGS side of the business?

So I'll start with AUP and then let Warren talk about the competitive dynamics. Puneet, so I think obviously, getting MolDX approval was a good first step for RaDaR. We're also working to get commercial approval as well. And as is the challenge with some larger panel tests, that will take time to get commercial coverage for RaDaR as well. Others being in the space and having more overall acceptance, I think, is a positive. So I think it will be a driver for AUP over time, but probably more starting in the back half of next year and into '27.

I think in terms of are we seeing anything different in sort of therapy selection in NGS, Puneet, I mean, we certainly -- the competitors that we've continuously come up against in the community oncology setting remain very present. It's certainly a hotly contested environment. But we feel that the -- certainly the round out of our portfolio, which was sort of requested by many of these oncologists in the community has been very well received. And it's not just the volume increases that we've seen across the liquid biopsy test that we launched, we're seeing across the category. And actually, for interesting information, some of our what we call NeoTYPE, which are cancer-specific panels for breast or for lung or for brain, we're seeing actually renewed growth in those panels as well. So again, it comes back to this comprehensive offering that we have both across solid tumor and heme that creates the differentiation for us in the marketplace.

And then just on the COGS side, can you talk a bit about the levers you have to reduce the COGS? As you bring on these new assays, there's obviously a push and pull there. So just wondering how are you thinking about the overall cost per test?

Yes. Thanks, Puneet. I think even in Q3, we've got some LBx volume and limited reimbursement. So we're actually covering the COGS in Q3 for LBx. As our volume increases from some of these larger panel tests, we will see operating cost efficiencies just by the number of tests we can do at one time. I think a few of the other things we've talked about today will also be drivers of COGS. The LENS consolidation, consolidating multiple LENS systems, streamlining the lab. We have a dedicated process on lab automation. And so the ability to automate processes and use technology and newer lab equipment to drive efficiencies is well underway, and we see good uptick there. Being able to digitize more lab processes to improve the customer experience as well. And then digital pathology, we see efficiencies and revenue opportunities with digital pathology. And finally, look, we still have a fair amount of capacity in our lab footprint. So we've got the lab in Fort Myers. We've got a new lab we expanded in North Carolina, RTP. We have new lab in the Northeast. So just incremental volume coming in, we can get operating efficiencies on a relatively large fixed cost footprint. So we have a multiyear opportunity to drive margins there.

I'd add maybe 2 points to substantiate what Jeff was saying about larger volume and the leverage there. So I mean, we've always focused on turnaround time because that's a differentiator for us. And as a result, we hadn't moved to largest flow panels and we hadn't moved to the NovaSeq X. Those are both initiatives that we have in focus for us in 2026. So there are 2 real tangible examples in terms of how incremental volume can help to drive down cost.

Yes. And the last piece I would say is from a cost per test perspective, Pathline has a higher overall cost per test than legacy Neo because of that lack of incremental volume. So the ability to streamline Pathline and actually pump incremental volume in there will bring down that cost per test as well. So early.

Our next question is coming from Mark Massaro of BTIG.

This is Vidyun on for Mark. I'll just keep it to one on RaDaR. Could you just remind us what indications you're pursuing here in addition to head and neck and breast cancer? And any cadence of reimbursement that you're expecting there? Any further milestones we should be looking for out to '26?

Well, as you mentioned, the 2 indications that we have secured have been subsets of head and neck, which is HPV-negative adjuvant and surveillance. And in breast, it's HR-positive and HER2-negative surveillance 5 years out. So those are the 2 that we go to market. Relative to new indication areas, I will tell you, we have every intention. We have done -- we have been doing ongoing work in R&D. And so we will be making additional submissions for indications, expansion for RaDaR ST. I won't go into the specifics about those for relatively obvious reasons, but we plan to be moving forward with those. And as well, we are continuing our next-gen MRD program as well. And we see the necessity of having both RaDaR ST and Next-Gen because having an ultrasensitive option for low-shedding cancers is going to be an important aspect as well. And so we see the indication flow a little bit different for our Next-Gen program that we would with RaDaR ST. So we're trying to avoid redundancy and overlap in spend relative to those indications. So you should expect us to add indication submissions in the short term, which we believe could be manifest in the second half of 2026.

And our next question is coming from Mike Matson of Needham.

This is Joseph on for Mike. I guess just 2 from me. Just looking at pricing, AUP, obviously, you guys have seen many consecutive quarters of improvement there. While small Pathline is a headwind there. And I did hear what you guys said concerning just volume coming through at a higher rate will improve COGS. But I know NGS, bringing NGS into there is the plan or was the plan. I was just kind of curious if you could remind us on the time line for that. Is that a 2026 plan? Or is that already in the works to bring NGS or more NGS into the Pathline lab?

Yes. So just to be clear, on the Pathline lab, so the NGS is going to be done at our other sites. So the fast turnaround tests enable us to capture more NGS work. The time lines for doing that NGS work enable us to send those out to our other labs in Florida and California and still meet our time frame. So we're actually going to gain operating leverage by pumping more volume into our existing sites as a pull-through through the Pathline site.

Yes. And just as a follow-up, on that Pathline, as we said, the strategy there was always to give us opportunity to deal with the under-penetration in the Northeast, and we have made really good progress there. So all the legal integration and the assay validations have been completed. And so now we can offer a more complete complement of the Neo portfolio and take advantage of the Pathline site for the more rapid turnaround testing needs that are up there, but as Jeff said, taking advantage of our footprint and the efficiencies we gain in our other lab sites. And so we're confident. I know our selling team is excited about the prospects that they are generating. We see a healthy new customer list beginning to emerge, and that's why we are of the belief that it will be a growth driver for us in '26 and beyond.

I guess maybe just one quick one. NGS growth specifically, I know the target there is 25% or more, very near that target, obviously, above market growth right now. But we have seen acceleration there in NGS growth the last 2 quarters. I'm just curious how you're thinking of the next quarter, 4Q '25 and 2026? Is it back on that target of over 25%? Is the target more just above 20% at this point? I'm just kind of curious your guys' thoughts there.

Yes. So we gave guide for the back half of the year. We didn't give a Q4 specific guide. We expect to see continued good growth in NGS, but we haven't broken out the specifics on that.

Well, that does conclude our question-and-answer session. I would now like to turn the floor back to Tony Zook for closing comments.

Well, again, I'd just like to thank everybody for joining us on the call. As we said, it was a good quarter. We have focused on operational excellence, and I'm pleased to say that the teams in both our commercial organization and our lab have performed extremely well, and we're very proud of all the work people at Neo are doing to advance cancer care for all the patients in the community. Once again, thank you for your time, everyone, and we'll look forward to some one-on-one follow-ups.

Thank you very much. This does conclude today's conference. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.