Adaptive Biotechnologies Corporation (ADPT) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reflects strong revenue growth driven by MRD, improved EBITDA in the MRD segment, and optimistic guidance with margin expansion and increased pharma partnerships. Despite some concerns about expenses and ongoing investments, the market strategy and business updates are robust. The Q&A highlights progress in community account engagement, reimbursement profiles, and EHR integration, with positive analyst sentiment. While some uncertainties remain, particularly around Medicare bundle increases and contract transitions, the overall sentiment is positive, anticipating a 2-8% stock price increase.
Key Financial Performance
MRD Revenue $67.1 million, grew 53% year-over-year. Growth driven by broad-based strength across clinical and pharma segments.
clonoSEQ Clinical Volumes Increased 41% year-over-year to almost 32,600 tests in Q1. Growth attributed to strong adoption and expansion in community settings.
Sequencing Gross Margin Increased 8 percentage points year-over-year to 70%. Improvement due to scale and operational efficiency.
Cash Position Approximately $222 million at the end of the quarter. Reflects reduced cash burn and strong financial discipline.
Community Volumes Grew 67% year-over-year, now representing 35% of total testing. Growth supported by EMR-enabled workflows and favorable guideline updates.
U.S. ASP (Average Selling Price) per Test Increased 11% year-over-year to $1,360 per test. Growth supported by policy expansions and commercial payer negotiations.
MRD Pharma Revenue Grew 53% year-over-year or 33% excluding milestones. Growth driven by strong bookings and backlog increase to $254 million, up 24% year-over-year.
Immune Medicine Revenue $3.8 million, down 26% year-over-year. Decline due to timing of sample receipts and processing.
Total Revenue $70.9 million, representing 45% growth year-over-year. Driven primarily by MRD, which accounted for 95% of total revenue.
Total Operating Expenses $90.1 million, up 10% year-over-year. Increase driven by investment in commercial infrastructure and higher personnel-related costs.
Adjusted EBITDA (MRD Segment) $12.1 million, compared to a loss of $4.1 million in the prior year. Improvement due to revenue growth and operating leverage.
Adjusted EBITDA (Immune Medicine Segment) Loss of $10.4 million. Reflects ongoing investment in immune medicine programs.
Net Loss $20 million, including $2.9 million of interest expense related to royalty financing agreement with OrbiMed.
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Operating Highlights
MRD revenue: Grew 53% year-over-year, reflecting broad-based strength across both clinical and pharma. Recognized first primary endpoint milestone this quarter.
clonoSEQ clinical volumes: Increased 41% year-over-year, demonstrating strong continued adoption. Blood-based testing reached 49% of MRD volume, with significant growth in community settings.
clonoSEQ pricing: U.S. ASP grew 11% year-over-year to $1,360 per test. clonoSEQ is now listed in the Texas Medicaid policy manual.
Community volumes: Grew 67% year-over-year, now representing 35% of total testing. Growth supported by EMR-enabled workflows and repeat utilization.
Physician engagement: Number of ordering clinicians grew 43% year-over-year to nearly 5,000 in Q1, indicating broader acceptance of MRD in clinical management.
Sequencing gross margin: Increased 8 percentage points year-over-year to 70%, driven by scale and operational efficiency.
Adjusted EBITDA for MRD: Improved to $12.1 million compared to a loss of $4.1 million in the prior year, reflecting revenue growth and operating leverage.
FDA regulatory trends: FDA introduced a new clinical trial model incorporating real-time data submission, reinforcing the value of MRD endpoints.
AI/ML modeling in immune medicine: Advanced AI/ML modeling work with over 6 million functional TCR antigen pairs. Initiated RA target discovery partnership with Pfizer.
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Risk or Challenges
Regulatory Challenges: The company is navigating evolving regulatory trends, including the FDA's new clinical trial model. While this presents opportunities, it also introduces complexities in ensuring compliance and maintaining data quality, reproducibility, and regulatory credibility.
Operational Costs: Total operating expenses increased by 10% year-over-year, driven by investments in commercial infrastructure, EMR integrations, reimbursement efforts, and higher personnel-related costs. This could pressure profitability if not managed effectively.
Immune Medicine Revenue Decline: Immune Medicine revenue decreased by 26% year-over-year due to timing issues with sample receipts and processing, highlighting potential operational inefficiencies or demand fluctuations in this segment.
Dependence on Milestone Revenue: The company recognized $9 million in MRD milestone revenue in Q1 but does not anticipate additional milestone revenue for the remainder of the year. This reliance on milestone payments could impact revenue stability.
Economic and Financial Risks: The company reported a net loss of $20 million for the quarter, including $2.9 million in interest expenses related to a royalty financing agreement. This underscores ongoing financial pressures and the need for careful cash flow management.
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Guidance & Outlook
MRD Revenue Guidance: The company has raised its full-year MRD revenue guidance to a range of $260 million to $270 million, reflecting stronger-than-expected clinical volume performance and continued momentum across key growth drivers. This represents approximately 25% year-over-year growth or 33% growth excluding milestones.
Clinical Volume Growth: The company now expects clinical volumes to grow at least 35% in 2026, up from the initial guidance of over 30%, with potential for upside.
Pricing Target: The company remains on track to achieve a target of approximately $1,400 per test in 2026, supported by recent policy expansions, Medicaid payment traction, and commercial payer negotiations.
EMR Integrations: The company has added six new Epic accounts year-to-date and expects five more to go live in the next month, with seven of the top 10 accounts now fully integrated.
Biopharma Registrational Studies: The company has already exceeded its goal for new registrational studies, with 10 signed in the first quarter alone.
Sequencing Gross Margins: The company expects to achieve over 70% sequencing gross margins in 2026, supported by strong top-line growth and operational efficiencies.
Adjusted EBITDA and Free Cash Flow: The company remains on track to achieve positive adjusted EBITDA and positive free cash flow for the full company by the end of 2026.
Immune Medicine Programs: The company is advancing its AI/ML modeling work and expects to deliver the RA data package in the second half of 2026 as part of its RA target discovery partnership with Pfizer.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you compare and contrast the nature of conversations with community accounts today versus a year ago?
A:A year ago, conversations were about understanding MRD and its practical applications. Now, they focus on practical implementation, standardizing testing protocols, and ensuring clinicians provide the best care for heme patients.
Q:How is clonoSEQ positioned from a reimbursement profile amidst CMS and CRUSH initiative changes?
A:ClonoSEQ is not subject to PAMA reporting requirements due to its billing structure under the MolDX program. Most Medicare revenues are generated through episodic rate structure billing, which is not on the CLFS list. Discussions are ongoing to increase the number of tests per bundle under the episode structure.
Q:How should we think about MRD as a primary endpoint and its impact on pharma partnerships?
A:MRD is increasingly used in regulated and interventional studies, benefiting from being the only FDA-cleared assay with high sensitivity and specificity. Pharma companies are partnering to maximize MRD adoption, and there is potential for clinical trial matching applications.
Q:What is driving the growth in DLBCL and its sustainability?
A:Growth is driven by clonoSEQ's advantages, including brand awareness, technology, clinical experience, and customer satisfaction. The company expects durable growth as MRD becomes routine in clinical practice and plans to release additional data to support this.
Q:What is the breakdown of the pharma backlog and the economics of primary versus secondary endpoints?
A:The backlog includes 190 active studies, with 23 primary and 88 secondary endpoint studies. Primary endpoint milestones generally have higher economic value than secondary endpoints.
Q:What is the progress on EHR integration and its potential upside?
A:The company has integrated with 7 out of 10 top academic accounts and 150 community EMR integrations. Efforts are focused on optimizing integrated accounts, with strong results seen in targeted accounts. The process is still in early stages.
Q:What is the status of increasing the Medicare bundle of tests beyond four?
A:Discussions are ongoing with government contractors, but timing is uncertain. The company has strong relationships and evidence to support the increase.
Q:What is the progress on transitioning pharma contracts to a direct pay-for-service structure?
A:The transition is a long process as many contracts are multiyear. Conversations are ongoing during contract renegotiations, but it will take years to revisit all existing contracts.
Q:What is the expected gross margin progression for sequencing this year?
A:The company aims for a 75% gross margin as a North Star, with linear step-ups throughout the year. The NovaSeq X transition and volume growth will contribute to margin improvement.
Q:What are the expectations for pharma MRD bookings and conversion to revenue?
A:Pharma bookings are lumpy quarter-to-quarter. The company is cautious with its guidance but sees potential for increased bookings and backlog pull-through, which could lift guidance later in the year.
Q:What is the commercial organization strategy for this year?
A:The company has 65 sales reps split between academic and community accounts. No significant expansions are planned this year, but deployment strategies and market dynamics are being monitored.
Q:What is driving the acceleration in the sequencing side of the pharma business?
A:Traction in pharma MRD, increased bookings, and backlog pull-through are driving growth. The company expects continued growth but notes that it can be lumpy quarter-to-quarter.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the timing of increasing the Medicare bundle of tests beyond four, citing the unpredictability of government contractors and agencies. Additionally, the transition of pharma contracts to a direct pay-for-service structure was described as a long process with ongoing conversations, but no specific timeline or percentage of transition was provided.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI medicine
AI model
Biopharma quarter
Blood testing
Bookings study
CEPHEUS trial
CLL use
Chad Slide
Community volume
DLBCL Medicaid
DLBCL traction
Epic account
FDA trial
Genentech payment
Health Symposium
MRD increase
RA
adoption clonoSEQ
biopharma
date
drug development
efficiency
level
leverage
machine
percentage point
priority
proof
remainder
repeat
role
scale
strength MRD
track
trial MRD
volume momentum
work
workflow
ADPT Transcript
Adaptive Biotechnologies Corporation (ADPT) Q1 2026 Earnings Call Transcript
Positive5-5
The earnings call reflects strong revenue growth driven by MRD, improved EBITDA in the MRD segment, and optimistic guidance with margin expansion and increased pharma partnerships. Despite some concerns about expenses and ongoing investments, the market strategy and business updates are robust. The Q&A highlights progress in community account engagement, reimbursement profiles, and EHR integration, with positive analyst sentiment. While some uncertainties remain, particularly around Medicare bundle increases and contract transitions, the overall sentiment is positive, anticipating a 2-8% stock price increase.
Adaptive Biotechnologies Corporation (ADPT) Q4 2025 Earnings Call Transcript
Positive2-6
The company reported strong financial performance with significant revenue growth, improved margins, and a substantial reduction in cash burn. Raised revenue guidance and a positive EBITDA outlook further bolster confidence. Despite some conservative growth assumptions and lack of specific contract details, the overall sentiment is positive, supported by strong MRD performance and strategic partnerships like Pfizer.
Adaptive Biotechnologies Corporation (ADPT) Presents at 44th Annual J.P. Morgan Healthcare Conference Transcript
Neutral1-12
Adaptive Biotechnologies Corporation (ADPT) Q3 2025 Earnings Call Transcript
Positive11-6
The earnings call summary and Q&A section reveal several positive aspects: raised revenue guidance, improved margins, and strong growth in MRD volumes. The company's strategic partnerships and regulatory advancements, along with a clear path to profitability, are positive indicators. Despite some vague management responses, the overall sentiment is optimistic. The stock is likely to see a positive movement, with increased MRD revenue and improved cash burn guidance contributing to investor confidence.
ADPT Slides
ADPT Report
Frequently Asked Questions
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