Adaptive Biotechnologies Q1 2026 Earnings Call - MRD Momentum Drives Raised Guidance and Margin Expansion

Anton, Conference Operator: Good day, and thank you for standing by. Welcome to the Adaptive Biotechnologies first quarter financial results. At this time, all participants are in listen-only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during this session, you need to press star one one on your telephone. You would hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Karina Calzadilla, Head of Investor Relations. Please go ahead.

Karina Calzadilla, Head of Investor Relations, Adaptive Biotechnologies: Thank you, Anton, and good afternoon, everyone. I would like to welcome you to Adaptive Biotechnologies first quarter 2026 earnings conference call. Earlier today, we issued a press release reporting Adaptive financial results for the first quarter of 2026. The press release is available at adaptivebiotech.com. We are conducting a live webcast of this call and will be referencing to a slide presentation that has been posted to the investor section in our corporate website. During the call, management will make projections and other forward-looking statements within the meaning of federal securities laws regarding future events and the future financial performance of the company. These statements reflect management current perspective of the business as of today. Actual results may differ materially from today forward-looking statements depending on a number of factors, which are set forth in our public filings with the SEC, unlisted in this presentation.

In addition, non-GAAP financial measures will be discussed during the call, and a reconciliation from non-GAAP to GAAP metrics can be found in our earnings release. Joining the call today are Chad Robins, our CEO and Co-founder, and Kyle Piskel, our Chief Financial Officer. Additional members from management will be available for Q&A. With that, I’ll turn the call over to Chad. Chad?

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies: Thanks, Karina. Good afternoon, and thank you for joining us on our first quarter earnings call. As shown on slide 3, we’re off to a strong start to the year, with accelerating momentum in MRD and disciplined execution across the company. MRD revenue grew 53% year-over-year, reflecting broad-based strength across both clinical and pharma. We also recognized our first primary endpoint milestone this quarter, a meaningful proof point for MRD’s expanding role in drug development. clonoSEQ clinical volumes increased 41% year-over-year, demonstrating strong continued adoption. We also delivered meaningful margin expansion, with sequencing gross margin increasing 8 percentage points year-over-year to 70%, driven by scale and operational efficiency. At the same time, we maintained strong financial discipline, reducing cash burn and ending the quarter with approximately $222 million in cash.

Given the strength we’re seeing in the MRD business, we are raising our full-year MRD revenue guidance to a range of $260 million-$270 million. Kyle’s gonna provide more detail shortly. Let’s now turn to slide four for a deeper look at the MRD business. Our clinical business continues to deliver strong growth, with revenue up 54% year-over-year. ClonoSEQ tests reached another quarterly record of almost 632,600 in Q1, up 9% sequentially. Growth was observed in all reimbursed indications, led by DLBCL at over 19% growth versus prior quarter. Importantly, we’re seeing mounting traction across the key drivers that support durable long-term adoption. Blood-based testing reached 49% of MRD volume.

In multiple myeloma, a traditionally bone marrow-driven indication, the contribution of blood-based MRD increased to 29%, up 8 percentage points year over year. This shift is closely linked to expansion of the community setting, where promotion of favorable guideline updates and implementation of standardized testing protocols contributed to growth rates that outpaced the rest of the business. Community volumes grew 67% year over year and now represent 35% of total testing. Growth in the community business was further supported by our EMR-enabled workflows, which are driving UP repeat utilization. Serial monitoring orders available to Flatiron integrated accounts are widely being utilized, and strong initial pull-through rates have further improved with 72% of repeat orders due are being fulfilled.

Physician engagement also continues to expand, with the number of ordering clinicians growing 43% year-over-year to nearly 5,000 in Q1, underscoring increasingly broad acceptance of MRD as part of routine clinical management. Finally, we continue to see increases in pricing, with a U.S. ASP growth of 11% year-over-year to $1,360 per test. Importantly, I’m excited to share that clonoSEQ is now listed in the Texas Medicaid Policy Manual. clonoSEQ is 1 of only 2 specific tests included in the newly developed genetic testing section. Patients may receive up to 6 tests per year. It’s great to be pioneers in bringing advanced molecular testing to some of our most vulnerable patients. Our scale, adoption, and embedded workflows support clonoSEQ’s sustained growth and continue to strengthen our leadership position as the market evolves.

Let’s now turn to slide 5 to discuss our biopharma business. We delivered one of the strongest quarters to date in MRD pharma, with revenue growing 53% year-over-year or 33% excluding milestones. As mentioned, we also recognized our first milestone in the U.S. tied to MRD as a primary endpoint in the CEPHEUS trial in multiple myeloma. New bookings were strong, driving backlog to approximately $254 million, up 24% year-over-year. Bookings came primarily from regulated studies, including several registrational trials where MRD will be used as a primary or co-primary endpoint in both multiple myeloma and CLL. We continue to see increasing use of MRD to guide treatment. Today, we have approximately 20 ongoing interventional studies where MRD is used for enrollment, stratification, or to guide therapy decisions.

As these trials read out, they directly support our commercial business. For example, data from the PERSEUS trial helped establish sustained MRD negativity as a meaningful measure of deeper response in multiple myeloma, which supports broader adoption of clonoSEQ in clinical practice. The momentum we are seeing in the pharma business is likely to be further supported by evolving regulatory trends. The FDA recently introduced a new clinical trial model that incorporates real-time data submission with early proof-of-concept studies underway, including the TrAVeRse trial in mantle cell lymphoma, where MRD negative complete response is measured by clonoSEQ is a key endpoint. While early, this emerging model for accelerating data review will reinforce the value of MRD endpoints that are objective, quantitative, and longitudinal.

These dynamics are particularly relevant in regulated and registrational settings, where data quality, reproducibility, and regulatory credibility are critical, and where clonoSEQ is well-positioned as a clinically validated MRD assay. Taken together, the trends we are observing support a reinforcing flywheel between biopharma and clinical testing as adoption of clonoSEQ in drug development generates evidence, strengthens clinical utility, and drives demand in the clinic. To wrap up on MRD, as shown on slide 6, we are well on track to deliver against our key priorities for the year. Starting with clinical volumes, we initially guided to over 30% growth for the year. Based on our first quarter performance and continued momentum, we now expect volumes to grow to at least 35% in 2026, with potential for upside. Importantly, the underlying drivers of growth are already nearing our full-year targets.

Blood-based testing is rapidly approaching our goal of over 50% contribution. Community contribution is already at 35%, in line with our full-year expectations. EMR integrations continue to advance, with 6 new Epic accounts added year to date and 5 more expected to go live in the next month. In April, we went live with Epic on another of our top 10 accounts, bringing us to 7 of our top 10 now being fully integrated. On pricing, we remain on track to achieve our target of approximately $1,400 per test in 2026, supported by recent policy expansions in CLL and DLBCL, Medicaid payment traction, and commercial payer negotiations. In biopharma, we have already exceeded our goal for new registrational studies, with 10 signed in the first quarter alone.

Finally, strong top-line growth combined with continued operational efficiencies positions us to achieve over 70% sequencing gross margins and expand adjusted EBITDA. Overall, our progress across these MRD priorities is a testament to our continued momentum and strengthens our confidence in our ability to meet or exceed our full-year commitments. Turning now to slide 7, our immune medicine programs are progressing well against our 2026 key priorities. We continue to scale our TCR antigen data sets and advance our AI ML modeling work. We now have more than 6 million functional TCR antigen pairs with data that currently spans about 50,000 antigens and 50 plus HLA types. This proprietary data set enables us to understand TCR antigen interactions and their role in cancer, virology, and autoimmunity. We recently confirmed that our digital AI model outperformed the accuracy of existing public benchmarks in predicting TCR antigen binding.

We published this work in Proceedings of Machine Learning Research and presented the Machine Learning for Health Symposium. Our focus this year is to further improve these models in targeted applications that could be attractive to partners seeking to leverage our data and our digital capabilities. In parallel, we are applying our AI-enabled Immune Medicine platform to identify the likely disease-causing T cell receptors and their antigens in select autoimmune conditions. This quarter, we kicked off our RA target discovery partnership with Pfizer. We received over 1,000 patient samples and are on track to deliver the RA data package in the second half of 2026.

As we continue to make progress on these 2026 priorities, we’re advancing discussions on additional data partnerships, maintaining a disciplined approach to capital allocation, and operating within our expected IM cash burn range of $15 million-$20 million for the year. I’ll now turn the call over to Kyle, who’s going to walk through our financial results and updated full-year guidance. Kyle?

Kyle Piskel, Chief Financial Officer, Adaptive Biotechnologies: Thanks, Chad. Starting on slide 8 with our first quarter results. Total revenue was $70.9 million, representing 45% growth year-over-year, driven primarily by continued strength in MRD, which accounted for approximately 95% of total revenue. Of note, amortization from the Genentech payments is excluded from all prior period comparisons. MRD revenue grew 53% versus prior year to $67.1 million, with clinical and pharma contributions of 65% and 35% respectively. Immune Medicine revenue was $3.8 million, down 26% from a year ago, primarily due to timing of sample receipts and processing. Turning to margins, sequencing gross margin, which excludes MRD milestones, was 70% for the quarter, up from 62% a year ago.

This improvement reflects reduced assay costs due to efficiencies from our NovaSeq launch in the second half of 2025 and leverage in overhead as we support higher volumes as well as favorable pricing trends across both clinical and pharma. Total operating expenses, inclusive of cost of revenue, was $90.1 million, up 10% year-over-year. This increase was mainly driven by continued investment in commercial infrastructure, including EMR integrations and reimbursement, as well as higher personnel-related costs. At the segment level, MRD continues to demonstrate strong profitability with adjusted EBITDA of $12.1 million compared to a loss of $4.1 million in the prior year, reflecting the impact of revenue growth, including milestone revenue and continued operating leverage. Immune Medicine adjusted EBITDA was a loss of $10.4 million.

At the total company level, adjusted EBITDA was a loss of $2.5 million. Net loss for the quarter was $20 million, including approximately $2.9 million of interest expense related to our royalty financing agreement with OrbiMed. I’ll now turn to our updated full year guidance on slide 9. We are raising our full year MRD revenue guidance to a range of $260 million-$270 million, up from our prior range of $255 million-$265 million. This increase reflects stronger than expected clinical volume performance in the first quarter and continued momentum across key growth drivers. This range includes $9 million of MRD milestone revenue, which was recognized in the first quarter, and we do not anticipate additional milestone revenue for the remainder of the year.

At the midpoint of the guide, this implies approximately 25% year-over-year growth or 33% growth excluding milestones. In terms of seasonality, we continue to expect MRD revenue to be weighted approximately 45% in the first half and 55% in the second half. We are reiterating our full year total operating expense guidance, including cost of revenue of $350 million-$360 million. This reflects continued investment in MRD growth, with approximately 75% of spend allocated to MRD, approximately 20% to Immune Medicine, and the remainder to corporate unallocated. Importantly, we remain on track to achieve positive adjusted EBITDA and positive free cash flow for the full company by the end of 2026. Overall, the quarter reflects strong financial execution supported by continued revenue growth, expanding margins and operating leverage.

With that, I’ll turn the call back over to Chad.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies: Thanks, Kyle. The strength we’re seeing, particularly in MRD, gives us confidence in both our plan and the opportunity ahead. As we move through the year, we expect to build on this performance and drive additional upside over time. With that, I’ll turn it over to the operator for questions.

Anton, Conference Operator: Thank you. At this time, we’ll conduct a question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while I compile the Q&A roster. Our first question comes from Andrew Brackmann from William Blair. Please go ahead.

Andrew Brackmann, Analyst, William Blair: Hey, guys. Good afternoon. Thanks for taking the questions here. I wanted to ask on community testing. You know, Chad Robins, as you sort of outlined here, I think you’re already at the full year target for the mix that you want coming from the community. Can you maybe sort of compare and contrast for us just the nature of the conversations that you’re having with those accounts in particular, maybe today versus a year or so ago? You’ve just got so much sort of tailwinds from the blood mix, sort of increasing and then also the EMR integration. How have those conversations sort of evolved over the last year or so? Thanks.

Kyle Piskel, Chief Financial Officer, Adaptive Biotechnologies: Thanks for the question, Andrew. I can help answer that. I think a year ago, if you had asked me this question, I would have said, "Well, the conversations have shifted from, you know, what is MRD? Why should I care? Why should I do this?" To, you know, "Okay, how should I do this? You know, what patients, which indications, which use cases, you know, help me understand more of the practical applications." Now a year later, the conversations are increasingly shifting toward practical implementation. We are increasingly getting traction with conversations around protocols, in fact, have established testing protocols in a number of large community centers and networks. The goal is let’s standardize testing so that all our patients have access to the best care.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies1: Let’s ensure our clinicians aren’t forgetting about this for their heme patients who in the community may not make up the lion’s share of the patients they see every day. That sort of practical implementation-oriented conversation is more and more the norm, and I think a really positive sign for the degree to which MRD is now becoming really entrenched as part of the standard of care, you know, in the community at large.

Andrew Brackmann, Analyst, William Blair: That’s perfect. I appreciate all that color. Then I just wanted to sort of ask on the reimbursement front. Obviously there’s a lot of noise out there with respect to CMS and the CRUSH initiative. Can you maybe just sort of remind investors how clonoSEQ is positioned from a reimbursement profile and how you see your sort of rate as durable, even if there are changes to things like MolDX nationalization or implementation of prior authorizations? Thanks for taking the question.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies: Yeah, thanks for the question, Andrew. We look extensively at this question, and after kind of internal and external evaluation with outside counsel, we’ve determined that we’re currently not subject to PAMA reporting requirements for this cycle. There’s actually very specific and defined requirements for PAMA reporting that’s actually by statute. Your test kind of must not only fall under the CLFS or clinical lab fee schedule, it also has to account for over 50% of your Medicare revenue. You know that CMS publishes a list of CP codes, CPT codes that fall under the CLFS. Frankly, the clonoSEQ episode billing structure, it’s not on it.

If we double-click and go one level deeper, CMS does not identify the MolDX code that we use for billing, the clonoSEQ episodic rate structure as being on a CLFS list. It’s worth noting as you all know, that the vast majority of our Medicare revenues are generated through the episode rate structure billing under the MolDX program. CMS does consider the PLA code that we use to bill Medicare for MCL recurrence monitoring, as being on the CLFS. You know, we have Medicare revenues under the PLA code that are under that recurrence monitoring that are well below the 50% revenue threshold set for PAMA, for these purposes, for this initial data reporting period.

You know, kind of separately, you know, I think we’re in process of really a multi-pronged strategy that not only includes kind of recurrence monitoring. This goes to your kind of durability question. We’re also in productive discussion with MolDX to increase the number of tests per bundle, kind of under our episode structure, and there’s other things that we’re looking at. Kind of this is of super high importance and kind of we’re all over it.

Andrew Brackmann, Analyst, William Blair: Great. Appreciate all the color. Thanks, guys.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies: Sure.

Anton, Conference Operator: Thank you. Our next question comes from David Westenberg from Piper Sandler. Please go ahead.

David Westenberg, Analyst, Piper Sandler: Hi. Thank you for taking the question. Congrats on the great job here. I want to talk about with MRD as a primary endpoint. Congratulations on that. How should we think about different things like CDx or on the label, how should we think about pharma basically helping to push your product because of it being on the label? Then lastly, I imagine there’s a lot of power in being able to find patients that are recurring. Is there any potential reimbursement or strategic monetization of maybe getting these clinical patients into clinical trials that were not able to prior to maybe, you know, clonoSEQ and its incredibly high sensitivity?

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies1: Thanks, David. I appreciate those questions, and I think, interesting set of topics. First of all, with regards to primary endpoint, you know, as you’ve heard in Chad’s prepared remarks, we’re seeing increasingly increasing use of the assay in the pharma setting in terms of regulated studies, and even more beyond that, seeing use in interventional studies where MRD is being used to stop or start therapy, being used to actually qualify patients that should be enrolled in the study to begin with. That particular trend is extremely favorable for our business because, of course, we’re the only FDA-cleared assay in the space. We’re extremely well-positioned to capture these opportunities.

We’re also an assay that has extremely deep sensitivity and high specificity, which is really important in the context of interventions where you don’t want to be giving patients therapies they don’t need, right? You know, the question does then come up, well, is this a companion diagnostic? Should it be incorporated into studies? There are now the beginnings of studies that are exploring that use case for MRD, although up till this point, the FDA has not taken the position that MRD needed to be positioned as a companion diagnostic within the regulatory context. I imagine that that will come up as time goes on. There will be some studies for which that may be appropriate, others not.

Regardless of whether MRD becomes a companion or remains a complementary diagnostic for these studies and for these therapies, it’s quite clear that the pharma companies are very interested in partnering to ensure that MRD uptake is maximized to support the adoption of their therapies. We’re already having numerous conversations actively with our biopharma partners who want to better understand MRD adoption dynamics, from what our point of view and want to think about how we can work together to expand MRD adoption, especially in the community setting.

To your question about, I think, essentially the concept of clinical trial matching, that is potentially an application of the data that we generate, and we have done some initial exploration, and there is, I think, some level of interest potentially in that, but more work to be done to be determined whether and how we may determine to proceed with that.

David Westenberg, Analyst, Piper Sandler: Got it. If I may, I’m gonna ask just 1 more on sticking with the clonoSEQ business. DLBCL grew 19% quarter-on-quarter. That’s great, particularly because there’s a lot of noise with competition and/or competitor having a lot of different presentations. Do you think that you maybe saw benefits from all of the different presentations in ASH, and that would be kind of a 1, 2-quarter, 3-quarter benefit as all these, you know, physicians, you know, saw that at ASH? Or do you think, like, there’s a sustainability for, you know, something beyond that? Thank you.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies1: You know, I think that the strength we saw in the DLBCL business in Q1, Fresenius is very pleased to see. Also, we’ve seen very strong growth quarter-over-quarter, you know, prior to and since the entry of competition in the space. I’m quite confident that the growth we’re seeing quarter-over-quarter is driven by the sustainable moats that we’ve built, also the durable advantages that we have. You know, the brand awareness, specifically as a heme MRD test, the technology and its advantages relative to other approaches to assessing MRD and the broad real-world clinical experience that we’ve built, along with the coverage and the customer satisfaction that we’ve been able to deliver. All those things, I think, have contributed to clinician confidence in utilizing ClonoSEQ.

As the noise around MRD and DLBCL continues to mount, you know, we are disproportionately benefiting from that as the market leader.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies: I was just gonna say, David, just remember, it’s really early days for MRD and DLBCL in general. You know, Susan mentioned all the reasons that we’re well-positioned, but, you know, we see durable growth over kind of many quarters ahead. You know, the general sentiment is getting doctors to incorporate MRD into clinical practice as a routine kinda measure. You know, we’re benefiting, you know, not only from really the noise, you know, across the industry, but also, as Susan mentioned, from the fact that we have what we believe is kinda the most sensitive and specific test out there.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies1: Yeah. David, we do intend to continue to release additional data in this space. I think particularly at ASH, we expect that you’ll have the opportunity to see another round of significant data advances.

David Westenberg, Analyst, Piper Sandler: All right. Thank you.

Anton, Conference Operator: Our next question comes from Mark Massaro from BTIG. Please go ahead.

Mark Massaro, Analyst, BTIG: Hey, guys. Thanks for taking the questions, and congrats on another beat and raise. I wanted to start on the pharma backlog, which increased 24% year-over-year. Like David said, it’s great to see the first primary milestone come in. I think in prior quarters, you’ve sort of broken out the secondary versus primary funnel. I’m just curious if you could just speak to, you know, with just, of course, 1 primary milestone in the bank, what does that look like for you guys, say, over the next couple of years? Is this something that you think can continue? Can you just remind investors the economics of the primary endpoint compared to, like, a secondary endpoint?

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies1: Sure, Mark. To start out, I think, I can kind of give you an overview of how the backlog is broken out. We have about 190 active studies, of those, 111 are either primary or secondary endpoint studies. 23 are primary, the remaining 88 are secondary. Kyle, maybe you want to speak to the economics.

Kyle Piskel, Chief Financial Officer, Adaptive Biotechnologies: Yeah. On the economics front, I mean, I think deal by deal can have its own unique, you know, differences, I won’t go into specifics. Generally, primary endpoint milestones are higher than what you’ve seen historically in the past, which has been, you know, the vast majority of secondary endpoint milestones. They won’t all be the same dollar amounts, et cetera, but, you know, they’re typically a little bit higher.

Mark Massaro, Analyst, BTIG: Fantastic. Maybe at a high level, can you just maybe give us a sense, this might be for you, Chad, like, what inning do you think you are in the EHR integration? I’m just basically trying to determine what type of upside you have as we think about getting to full maturity across the EMR systems.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies: Yeah, I mean, I think, one of the, one of the kinda most important things is kinda prioritizing going after our largest accounts. You know, now we’re kinda 7 out of 10 of our kinda top largest kinda academic accounts. In the community setting in particular is where we’re targeting kinda the large network practices on EMR integrations. Obviously, Flatiron gives you kinda certain advantages that Epic doesn’t, and that you could turn on, you know, a lot of accounts at one time. We have, you know, now kind of 150-ish on the community EMR integrations. Now the real point is, once you have your accounts integrated, we have a very defined strategy about targeting those accounts and the pull-through and how you optimize the EMR.

I would say we’re early on those, but in the accounts that we’ve gone in really kind of put that muscle into it, we’re seeing really strong results. That’s really the focal point right now is to say, "Okay, once we’re integrated, how do we go in and optimize those accounts?" You know, I would say early, but we’ve got a very strong playbook in place.

Mark Massaro, Analyst, BTIG: Fantastic. Thanks, guys.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies: Sure.

Anton, Conference Operator: Thank you. Our next question comes from Subbu Nambi from Guggenheim. Please go ahead.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies0: Thank you, guys. Thank you for taking the questions. You’ve mentioned before having preliminary discussions on increasing the Medicare bundle of tests to over four. Can you give us the latest on the progress in those conversations? Is this a late twenty twenty-six or a twenty twenty-seven opportunity, and what are the steps left in that process?

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies: Yeah. Subbu, I it’s really hard to predict timing of kind of government contractors and agencies. I’m not gonna go out on a limb and try to do that on this call. The only thing I can tell you is that we have a very strong relationship. We continue to develop very strong evidence, and we have had very productive discussions.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies0: That’s fair, Chad. Can you talk about your progress so far this year related to the structure of milestone payments versus transitioning pharma to a more direct pay for service structure? How has that been received by partners, is there a percentage of total customer numbers you’re looking to have transitioned as we progress throughout the year?

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies1: Yeah, Subbu, you know, it’s a long process. Many of our contracts are multi-year contracts. The renegotiations come up sort of as those contracts expire. It’s gonna take some amount of time, some number of years for us to even get the opportunity to revisit the existing contract structures. What I will say is that in the situations that it’s come up, it’s been a topic of conversation every time. Many of those conversations are still ongoing.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies0: That’s fair. Last one from me, for Kyle, maybe. For sequencing margin, what is the ceiling this year, and what will be the gross margin progression look like this whole year? Should we expect sequential increases each quarter? Will the full benefit of NovaSeq transition be realized this year, and what other levels do you have for gross margins?

Kyle Piskel, Chief Financial Officer, Adaptive Biotechnologies: Appreciate the question, Subbu. I’d say, you know, as it relates to ceiling, we’ve talked about 75% kind of being the, you know, the North Star. I think it’s a fair step up into that 75% gross margin throughout the year. At the end of the day, you know, the utility of the NovaSeq X, as we continue to drive volume, that just compounds value for us, and as we can continue to improve our price point, you know, you’ll see more margin improvement throughout the year. I think it’s probably fair to just state that as a, you know, linear step up through to about that 75% range.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies0: Perfect. Thank you so much, guys. Sorry to have nitpicky questions because honestly, the volume numbers are pretty impressive. Thank you, guys.

Kyle Piskel, Chief Financial Officer, Adaptive Biotechnologies: No worries.

Anton, Conference Operator: Our next question comes from Sebastian Sandler from J.P. Morgan. Please go ahead.

Sebastian Sandler, Analyst, J.P. Morgan: Great. Thank you for taking the question. My first question is on pharma MRD bookings and conversion expectations. It looks like most of the guide change is on better volumes. I’m just wondering if you expect any of the incremental bookings you saw in 1Q to convert to revenues in 2025. I think normally there is a 20%, you know, release rate for in-year bookings. I’m just wondering what’s baked in there and if there could be any upside to the guides from that. I have a quick follow-up.

Kyle Piskel, Chief Financial Officer, Adaptive Biotechnologies: You know, it was great to see the bookings in Q1 and the increased backlog exiting Q1. I’d say as it relates to the guide, we, you know, we wanna kind of You know, pharma’s lumpy quarter to quarter. It’s a great start to the year. I think we just wanna be prudent here in kind of managing expectations, so keep it, you know, at that 11%-12% year-over-year growth. That being said, you know, if, you know, the trajectory continues and the pace of bookings and, you know, pull-through of the backlog increases, it could provide some opportunity to lift the guide in the back half of the year or even potentially next quarter.

Sebastian Sandler, Analyst, J.P. Morgan: Sure. Thank you. Just follow up. It looks like EBITDA for MRD stepped up around $2 million quarter-over-quarter despite a $9 million pharma milestone. Were there any one-offs we should be aware of? It seems like it might have just been personnel and EMR costs. I know you have the total co adjusted EBITDA guide, you know, positive by the end of the year. Wondering if you can give us any more color on, you know, incremental MRD EBITDA margins for the balance of the year and just kind of pacing there. Thank you.

Kyle Piskel, Chief Financial Officer, Adaptive Biotechnologies: Sure. As it relates to the sequential movement Q4 to Q1, you know, there is a bit of seasonality in our business in Q1, where we have some increased costs, you know, that won’t recur. Then, you know, Q4 also a little bit higher on the pharma revenue versus Q1. That’s the majority of the balance of the mix. As it relates to the EBITDA improvement on the MRD business, you know, again, if you focus on the base business, I think it’s going to have a continued growth trajectory throughout the rest of the year. I don’t wanna put anything firm in terms of, you know, an EBITDA margin at this point, but sufficient to say it’s gonna continue to grow sequentially each quarter.

Sebastian Sandler, Analyst, J.P. Morgan: Great. Thank you.

Anton, Conference Operator: Thank you. Our next question comes from Dan Brennan from TD Cowen. Please go ahead.

Dan Brennan, Analyst, TD Cowen: Great. Thank you. Thanks for the questions, guys. Congrats. Maybe just starting off with the 35% up volume guide. Like, what do you think the puts and takes would be if you guys come in above that over the back half of the year, given I think we’ve been accustomed to these really strong volume numbers, and now you just raised the bar again.

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies1: Thanks for the question, Dan. You know, we are very pleased with the performance in Q1. I think it’s a great strong start to the year. We do feel very confident in the 35% year-over-year growth. Could it be higher? I think the answer is yes. There’s high potential for upside. We’re just early in the year. We wanna see how our key growth drivers continue to play out. You know, that said, it’s the same things that we’ve been talking about, you know, EMR integrations and whether or not we can drive increased adoption of serial testing and increased pull-through, particularly on the Flatiron system, which allows us to really standardize that ordering approach. We’ve seen really good results to date from that.

The blood-based testing, you saw 29% of myeloma MRDs coming in this quarter in blood, and that is a nice step up, and we’ll continue to look for that as a potential area for upside because we do see increased testing frequency where we see increased use of blood. Community use, we achieved our goal, as Chad Robins’s prepared remarks indicated, for the full year in Q1. We need to maintain that. We need to continue to see disproportionate growth in that segment. The guidelines that we’ve been promoting, like the favorable updates that came last year, have been an important component of that.

If we can continue to build and continue to implement some of the pathways that I talked about earlier, these protocols that really dictate how testing will be done in a standardized fashion in large community practices, that’s another source of upside. I think the takes are simply that we believe we’re in a very strong position. We have the right strategy, we have the right team, but we’re a market leader. We’re going to remain attentive to new existing and to new emerging competition. I think that’s just why it makes it important for us to maintain a rapid pace of growth and invest appropriately and solidify all the moats that we’ve been talking about.

Dan Brennan, Analyst, TD Cowen: Great. Maybe just talking about the commercial organization, can you just remind us kind of the plan this year, kind of where you stand now, what the targets are by year-end in terms of commercial ads and, you know, what’s the balance you’re trying to strike there with, you know, driving profitability while ensuring you have enough feet on the street to kind of stay ahead of, you know, any competition that’s coming or to maximize on the opportunity ahead?

Chad Robins, CEO and Co-founder, Adaptive Biotechnologies1: Sure. You know, the short answer is that we think that the team we have is the right team to continue to prosecute the opportunity. We have 65 sales reps in the field. They’re split half and half between account managers who focus on academic institutions and diagnostic hematology specialists who focus on community practices. Our reps have manageable index values. They’re calling on a reasonable number of accounts and doctors. They have acceptable amounts of travel time. We always look at the individual territory performance and potential, and potentially we shift or add territories here and there to make sure that we’re capitalizing on opportunities in specific geographies. We will over time continue to look at, you know, the option of new deployment strategies that could justify additional hiring, and we’re watching the market dynamics carefully in that regard.

Not expecting to invest in any significant expansions this calendar year.

Kyle Piskel, Chief Financial Officer, Adaptive Biotechnologies: Well, I’ll just say kinda some of the areas that we are continuing to deploy capital and invest behind is EMR integrations, as discussed, reimbursement and revenue cycle management, and continued data generation to demonstrate clinical utility across all of our indications.

Dan Brennan, Analyst, TD Cowen: Great. Thank you.

Anton, Conference Operator: Thank you. As a reminder, to ask a question, you need to press star one one on your telephone and wait for your name to be announced. Our next question comes from John Wilkin from Craig-Hallum. Please go ahead.

John Wilkin, Analyst, Craig-Hallum: Hi, guys. Thanks for taking the questions. Just one quick one from me. Wanted to dig in a little bit deeper on the sequencing side of the pharma business. I know you guys have historically talked about that business being more of like a high single-digit grower, and now we’re in the second straight quarter where it’s grown. I think Q4 was 24%, this quarter over 30%. If you could give a little detail on what’s driving that acceleration, if you think that acceleration can be sustainable through the balance of the year. Thanks.

Kyle Piskel, Chief Financial Officer, Adaptive Biotechnologies: Yeah, John, appreciate the question. You know, I think we’re seeing a lot of traction in the pharma MRD space. You know, the bookings are and backlog are really the drivers of that. The pull-through is also starting to happen as just, you know, additional pharma partners wanna generate data and get readouts on their trial. You know, I think it’s an opportunity, as I mentioned in one of the Q&As earlier, I think it’s an opportunity for us to continue to go after and, you know, we’re gonna be beneficiaries of it. It’s just, you know, again, we’re just gonna hold the guide here right now and, you know, I do anticipate it will grow, you know, throughout the year, but it can be lumpy quarter to quarter.

John Wilkin, Analyst, Craig-Hallum: Okay. That’s helpful. Thank you.

Anton, Conference Operator: Thank you. This concludes the question and answer session. Thank you for participating in today’s conference. This does conclude the program. You may now disconnect.