Prepared remarks
Good morning, and welcome to the NeoGenomics, Inc. Fourth Quarter and Full Year 2025 Financial Results Call. Please be advised that today's conference is being recorded. I will now turn the call over to Kendra Webster with NeoGenomics, Inc. The floor is yours. Thank you, Kelly, and good morning, everyone. Welcome to the NeoGenomics, Inc. Fourth Quarter and Full Year 2025 Financial Results Call. With me today to discuss the results are Anthony P. Zook, Chief Executive Officer, Jeffrey S. Sherman, Chief Financial Officer, and Abhishek Jain, EVP of Finance. 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 to the Investors 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 the 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-Ks, 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 also refer to certain non-GAAP financial measures that include 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, Kendra. Well, good morning, everyone. Thank you for joining us today. As has been our practice, I will begin with a discussion of Q4 highlights and key business growth drivers before turning the call over to Jeff for a deep dive into our 2025 financial results. Our new EVP and incoming CFO, Abhishek Jain, will then introduce our 2026 guidance. Afterwards, we will open up the call for your questions. Our mission and vision guided us through 2025 to deliver improving results throughout the year. Let us get into the recent highlights. As we covered in our pre-announcement, during 2025, we delivered record revenues while making meaningful progress advancing our NGS and MRD long-term growth initiatives, including preparing for a full clinical launch of our RADAR ST MRD this month. I will cover these initiatives in more detail shortly. Total revenue for Q4 was $190 million, representing double-digit growth of 11% year over year.
Our clinical business continued its robust growth with revenue increasing 16% year over year. The clinical performance was driven by effective execution of our key commercial strategy, enabling volume and share gains in key segments. In the fourth quarter, we again saw a sequential improvement in AUP, continued growth in test volumes, and NGS revenue growth of 23%, well ahead of the NGS market growth rate. The five NGS products launched in 2023 contributed significantly to clinical revenue in the quarter. We continue to see demand for our non-NGS modalities as well, with all modalities continuing to grow at above market. Our full year total revenue was $727 million, which represents 10% growth over full year 2024. We ended the year with significant momentum, and I attribute this to several factors. One, a pure play oncology solutions provider driving rapid dissemination and adoption of innovation through our best-in-class commercial organization in the community setting.
Studies have shown that as much as 80% of all cancer care is now delivered in the community setting, which has historically lagged behind NCI-designated cancer hospitals when it comes to introducing the latest in cancer testing innovation. How are we winning in the community? We believe community oncologists are guideline-driven and focused on certainty, not possibility, and they choose partners that remove friction and enable confident treatment decisions under operational, economic, and time pressures. Reimbursement coverage is also critical. The results of several meetings of our scientific advisory board, as well as independent market research that we commissioned, reveal several reasons why community oncologists look to us. NeoGenomics, Inc. offers ease of ordering, simple-to-interpret test reports, fast and consistent test turnaround times, access to medical expertise, and, most importantly, our comprehensive test menu spanning diagnosis, therapy selection, and MRD.
Our net promoter score of 79 reflects strong physician satisfaction among our current customer base, with our NPS score continuing to improve in 2025, even with record test volumes. Two, we enjoy a leadership position in the hematology testing market, with greater than 25% share across diagnostics and therapy selection. As pathologists and oncologists consolidate the number of vendors they use, we are successfully leveraging this team leadership position to create enhanced test demand, particularly in high-value areas such as therapy selection and MRD. In fact, in 2025, we saw 14% growth in the total number of pathologists and oncologists ordering five or more tests from Neo. On top of that, we estimate that approximately 40% of all active pathologists and oncologists have ordered five or more tests of ours during the year. While we are proud of that reach, it also means that over half of the practice providers are still available to us to bring over to Neo.
Three, we 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. This network was further strengthened by our acquisition of New Jersey-based Pathline last year, which gives us a meaningful presence in the number three cancer market in the country. We are on track to capture operational efficiencies and synergies from the Pathline acquisition that we anticipate will be accretive to profitability beginning this year. Four, we have one of the broadest cancer test menus in the industry, spanning diagnosis to therapy selection to MRD for both hematological and solid tumor cancers, including over 300 commercial payer contracts, which enables us to be the partner of choice among community hospitals and community oncologists.
We are highly differentiated from both large reference labs and specialty oncology labs, and this optimally positions us to address underpenetrated markets in therapy selection and MRD that exceed $30 billion while potentially improving outcomes for patients as they advance along the cancer care journey. We are enabling precision oncology in the community setting. Turning now to RADAR ST. In November, we presented new research for the RADAR ST assay for circulating tumor DNA detection across solid tumor types. The data from this bridging study showed that RADAR ST demonstrated 97% concordance, maintained equivalent sensitivity with RADAR 1.0. This bridging study was used to secure MolDX reimbursement in the two previously approved indications, HPV-negative head and neck cancer, and a subset of breast cancers. This decision paves the way for us to broadly commercialize RADAR ST, formerly known as 1.1.
To that end, we are on track to execute a full clinical launch of RADAR ST by the end of this month. As part of our go-to-market strategy, we are expanding our sales force to help us penetrate the head and neck market. We believe that adding feet on the ground will help us penetrate this market with the only MolDX-approved HPV-negative test currently available to patients. To ensure that we are well positioned to capture more of this large and rapidly growing MRD market, we have also submitted two additional solid tumor cancer indications for MolDX for approval. While we are not disclosing these cancer types yet for competitive reasons, we believe that upon securing coverage, we will effectively double the market opportunity of patients eligible for RADAR ST testing. To expand our reach and secure additional MolDX approvals, we expect to add more than 25 oncology sales specialists, or OSSs, by the third quarter.
From a financial perspective, we believe 2026 will see modest revenue contributions from RADAR ST as adoption ramps, and we gain reimbursement approval in the additional indications. We expect revenue growth to accelerate in 2027 and beyond. In parallel with our RADAR ST launch preparedness activities and efforts to gain coverage for additional indications, we also continue to focus our R&D investment in next-generation MRD testing for various cancer types. This assay will be an ultra-sensitive whole genome solution for lower-resourced environments. We are working on product development now with data generation and MolDX submissions slated for next year, and a potential clinical launch as early as 2028. Turning now to our PANTRACER portfolio of products for solid tumor therapy selection. PANTRACER is designed to work for both solid and liquid tumors, empowering oncologists with actionable genomic insights for confident, real-time treatment decisions.
The test can be ordered independently or as complementary tests depending on a patient's individual needs. PANTRACER LVX is a non-invasive blood-based test that analyzes circulating tumor DNA to identify key genomic alterations that inform treatment decisions in patients with advanced stage solid tumors. Importantly, PANTRACER LBX fills a gap in our portfolio that providers have been asking for, allowing them to further consolidate the number of labs they use. We have submitted to MolDX for clinical reimbursement coverage of the LVX test and are awaiting a decision. Assuming a favorable decision, we anticipate that LVX will contribute modestly to revenue in 2026 as adoption ramps throughout the year. Another product in the PANTRACER family, PANTRACER tissue, had strong growth throughout 2025. We doubled the volume of tests ordered from 2023 to 2024, and then nearly doubled again from 2024 to 2025 while continuing to grow AUPs.
This represents another proof point of our ability to pull higher value tests through our community channel, leveraging our leadership position. 75% of community oncologists who were new to NEO in 2025 ordered five or more tests, a strong leading indicator of our continued growth and success penetrating the community channel. I am pleased to share today that the PANTRACER portfolio is growing. Last week, we launched PANTRACER Pro as part of the expanded solid tumor therapy selection portfolio. The test integrates broad genomic profiling with diagnosis-directed immunohistochemistry and ancillary testing, intelligently selected based on tumor type and clinical context, to provide oncologists with actionable insights for therapy selection in a single order. PANTRACER Pro rounds out the portfolio and will help streamline the ordering and testing process, delivering timely, relevant results, helping clinicians personalize treatment strategies and improve patient outcomes.
At the end of 2024, moving into 2025, we invested in our commercial organization, specifically our oncology sales specialists. We added 35 people to this group, who target community oncologists, and as these individuals mature in their roles, we are seeing continued uptake in NGS testing, accounting for a larger portion of our total clinical revenue. As we increase our reach and frequency, this penetration speaks to the strength of our commercial channel as well. We have launched five NGS products since March 2023, and even though we were later to market to some of our peers with these products, we are still seeing very good uptake. PANTRACER tissue, highlighted earlier, was one of the five products which reflects the breadth and strength of our menu, and our ability to capture market share when we introduce new products. With the success of our NGS products, we now have the ability to be more selective with the volumes that we prioritize.
We are intentionally shifting testing capacity towards more guided and higher value testing, which is expected to make AUP expansion a more significant driver of revenue growth relative to volume. And with that, I will hand it over to Jeff to further discuss our results for the quarter and full year.
Thanks, Tony, and good morning. Fourth quarter total revenue increased by 11% over the prior year, reaching $190,000,000. Total clinical revenue continued with strong double-digit growth, increasing 16% from the prior year. As expected, nonclinical revenue declined by over 25% in the fourth quarter. Adjusted gross profit improved by $5.8 million, or 7% over the prior year, and adjusted EBITDA was $13.4 million, up 10%. Q4 was the tenth consecutive quarter of positive earnings, with adjusted EBITDA and margins improving sequentially each quarter in 2025. Clinical volumes and revenues continued with robust growth in the quarter. Public test volumes increased by 11% in the fourth quarter with AUP growth of 5%. Same store revenue without Pathline was $170,000,000, representing growth of 14%, driven by a 6% increase in test volumes and a 7% increase in AUP. Volumes were negatively impacted in the fourth quarter as we intentionally rationalized our exposure to higher volume, lower-value test clients.
We are continuing to see strength across our portfolio with above-market growth rates across modalities we offer. NGS revenues grew by 23% over the prior year in the quarter and accounted for around a third of total clinical revenue. Average revenue per clinical test increased sequentially from Q3 by $12, or 3%, and was up 5% from the prior year. Excluding Pathline, AUP increased by $15, or 3% from Q3, and was up 7% over the prior year. A larger percentage of higher value tests, including NGS, as well as recent managed care pricing increases and revenue cycle management initiatives are helping to drive higher AUP. Total operating expenses in the quarter were $97,000,000, an increase of $1,000,000 or 1% over the prior year. Cash flow from operations was a positive $1,000,000 in the quarter. We ended the quarter with total cash of $160,000,000, down slightly from Q3. Our balance sheet and expected cash flow will enable us to continue to invest in our business to drive organic growth through new product development and sales force expansion, while also increasing operating efficiencies through investments in technology and automation.
Turning to full year 2025 results, revenue is up 10% versus the prior year to $727,000,000, driven by deeper penetration into the community setting, a continuing shift to higher margin modalities, and execution of revenue cycle management initiatives. Total clinical revenue increased 15%, and growth was 13% excluding Pathline. Nonclinical revenue declined 24% for the year, in line with our revised expectations. Adjusted gross profit increased by $23,000,000, or 8 percent, to $335,000,000. This represents an aggressive adjusted gross margin of 46%, or a decline of 111 basis points mostly driven by Pathline, the decline in nonclinical revenue, and the operating cost of the clinical liquid biopsy launch. Cash flow from operations was positive $5,000,000 in 2025, with free cash flow improving by over 35% as compared to 2024. Adjusted EBITDA increased by $4,000,000 to positive $43,400,000, an improvement of 9% over the prior year. And now I will hand it over to Abhishek to introduce our 2026 guidance.
Thank you, Jeff. I would like to begin by thanking my colleagues at NeoGenomics for their warm welcome. Over the past month, I spent time with investors and analysts, attended our global sales meeting, visited our labs, and gained deeper insights into our strategy and the opportunities ahead. It has been a productive and energizing first month. With that context, let me share our 2026 guidance. For the full year, we expect revenues of $793,000,000 to $801,000,000. The midpoint of our 2026 revenue guidance assumes RADAR ST revenue in mid-single-digit millions for our approved indications, a modest revenue contribution from PANTRACER liquid, and sustained softness in nonclinical through the year, exiting 2026 down low to mid-single digits. While we do not provide quarterly guidance, let me provide some color on quarterly cadence that is impacted by the Pathline acquisition and revenue assumptions for RADAR ST and PANTRACER Liquid, which are weighted towards the back half of the year.
I suggest modeling approximately 10% year-over-year growth in the first quarter, 8% to 9% in the second, 9% to 10% in the third, and slightly above 10% in the fourth quarter of 2026. Regarding the extreme weather throughout the country so far this year, we know some providers had to close their offices and appointments have been rescheduled. As a result, there will be some impact on volumes and revenue for Q1. This has been contemplated in our full year 2026 guidance and cadence by quarter. We expect adjusted EBITDA to be in the range of $55 million to $57,000,000 for 2026, representing year-over-year growth of approximately 27% to 31%. We expect adjusted EBITDA to grow by low 20% year over year in the first and the second quarter, and low 30% year over year in the third and the fourth quarter, respectively. We will continue to take a balanced approach to investments, strategically increasing sales and marketing and R&D spending for new product initiatives and clinical programs that support payer reimbursement and drive top-line growth while improving liquidity with the goal of becoming free cash flow positive this year. Now let me turn the call back to Tony.
Thanks, Abhishek, and welcome to the team. To recap, during the fourth quarter, we again delivered very strong clinical volumes and revenue, while advancing NGS and MRD initiatives that we believe will contribute to accelerating our growth for years to come. Looking forward to 2026, in our clinical business, the focus is on strategic, profitable growth driven by continued expansion of NGS revenues and market penetration for the PANTRACER family and RADAR ST. Simultaneously, we are implementing tools and solutions we believe will enhance the productivity of the entire sales organization, and working to enhance customer workflows through solutions like our EPIC four integrations. In parallel, with our product and service offerings to grow revenue, we are making targeted investments to drive top-line growth and margin expansion. There is a very strong financial discipline embedded throughout the organization, and we are going to build on that as we continue to grow revenue and improve operating efficiencies and margins. Thank you for your continued interest in NeoGenomics, Inc. And Operator, this concludes our prepared remarks, so please open the line for questions.
Questions and answers
Certainly. The floor is now open for questions. If you have any questions or comments, please press 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality. Please hold just a few moments while we poll for questions. Your first question is coming from David Michael Westenberg with Piper Sandler. Please pose your question. Your line is live.
So I will just ask one question, but it will be, you know, kind of on the longer side. I will just ask it upfront. You talked about the intimate launch of RADAR ST. Can you provide a little bit more specifics? You mentioned specific or submissions to MolDX. Can you give us more specific timing? I get that, you know, this is trying to predict government, but, you know, is this the end of the year? Is this, you know, potentially dragged into the next year, etcetera? And then you mentioned also 25 sales reps. I just want clarification that is specific to MRD or esoteric tests in general. And then on those sales reps, do you plan on just going after the head and neck, the subset indications of breast, or are you thinking about some of those future MolDX exhibitions that you have there? And then lastly, I get this is really long, but, you know, just talk about the complementarity with PANTRACER liquid. Thanks so much.
Okay. So, David, there is a lot to unpack there.
Why do I not I will I will try and start it and kick us off and then look to Warren to address, follow-up questions six, seven, and eight. Okay, Warren. So get ready for that. Relative to RADAR ST, Dave, you were right that the intention is we go out the end of this month for our full launch. Relative to focus, it will be focused, Dave, on the initial indications of head and neck and the subsets of breasts that we have articulated. HPV negative, and the HR HER2 negative breast. So that will remain the focal point for the initial launch activity. So that was one of your questions. As far as additional indication flow, as you say, you know, all we can do is submit and put the best packages forward that we believe are optimal for MolDX to work their way through. For our own assumptions, we believe, Dave, that those additional indications will be available in the latter half of this year for us.
And so it is still possible to potentially generate some revenue from those this year, but that would be upside against our guide. We are not counting on those and certainly will help fuel additional robust growth going into 2027. Relative to the actual field force expansion, I am going to turn that over to Warren because what we wanted to do, Dave, was two things. First and foremost, we wanted to take advantage of the HPV-negative indication because we believe we will be the only MolDX-approved product for HPV negative. And it is a very specialized group of physicians that account for that bulk of that business. There is a fairly clear roadmap to how we can get to those. And so Warren’s team is initially now expanding to cover that group. And then he will build the additional reps over time for the added indications that we have. And yes, Dave, they are intended to be complementary to MRD and NGS. They will not be specific only to MRD. So, Warren, maybe a little bit more color on the coverage aspect.
Absolutely. Thanks, Tony, and morning, Dave. So, yeah, the expansion is taking place. There is an initial expansion happening sort of as we speak that is to really address the RADAR ST launch and particularly head and neck, HPV negative. The reason why we felt we needed to do a small initial expansion is one of the primary call points for head and neck HPV is the ENT, and that has not been a traditional core point for us up until now. So we actually are investing in a small team dedicated towards ENTs, and they will be almost exclusively focused on the RADAR head and neck indication. They will have an option to represent other parts of the portfolio, but we feel that their focus will be largely directed towards RADAR ST. As we have done in the past, and very successfully, we expect new products and, in this case, new indications to come to market, we will expand our sales force because we want to increase reach and frequency.
We will be doing that in quarter two and quarter three in anticipation of the additional indications that we expect from MolDX. Again, these team members will be oncology sales specialists. They will be responsible for selling our oncology portfolio, which includes therapy selection for hematological and solid tumors, as well as MRD. It is probably a bundle of about 12 or 14 tests if you really look at it. But we see a 100% call point overlap between our portfolio for therapy selection as well as MRD. And today, based on the size of our sales team, we feel we get more value by consolidating sales activities within one resource rather than having specialized sales teams. Although we will learn good lessons from our dedicated ENT group that we are establishing as we speak.
Thanks, guys.
Hey, guys. Hoping to sneak in a couple of questions, but the first would be just on the clinical volume. Is there any chance you could quantify the impact of exiting the low value business and then maybe clarify whether there is more business that you will still be exiting in future quarters so we can have some sense of how to think about volume growth as we progress through the year?
Sure, Bill. I will kick that off. And, again, if I I will look to Abhishek or Jeff to add in any additional color. Bill, can you just step back and look at us historically? Right, and if you looked at how the revenue models were built, you know, volume represented for us typically, you know, upper single-digit growth, and AUP was more in the low single-digit growth. There are two factors that are driving our thinking now. First, those are this constant and purposeful penetration into therapy selection in MRD. With that, we will be the beneficiaries of higher AUPs, and therefore a better impact on our margins and business overall. So that is point number one. We expect our AUPs to continue to grow. And then the second point, Bill, was this idea we want to make sure we secure the right ball. We want to be a business that is growing our revenue as well as our margins over time. And you recall that we had discussed a contract throughout last year that was a high volume, low-value added opportunity for us.
The AUPs still in that were in the low $200 range. We entered into that with the potential opportunity to secure longer-term growth into higher value tests. But if things do not materialize, we had to look at it in the macro sense. For us, we believe the better course of action here was to say, our resources are better used and focused in the areas where we are seeing higher margin opportunities and higher growth. And so the model now kind of inverts a little bit. What you should be expecting is AUP now in the upper single-digit range with volume in the lower to mid single-digit range. But that being said, I just want to clarify this, Bill, because it is an important point. We are still growing all the right volumes. We are going to continue to grow by modality. We have no desire to pull back in that area. We continue to expect NGS to have robust growth as well. And so that is going to continue.
We saw robust NGS volume and AUP growth in 2025. We would expect similar results in 2026, and so the right volume will come through. And on that MTS business, again, you know, it is over a third of our clinical business. And an interesting fact, Bill, is that, you know, that third of our clinical revenue is supported with only 9% to 10% of our laws. And so it is the right volume that is generating these kinds of growth numbers. So I would expect most of this to be evident through Q1 and Q2. And then from that point on, we will be back to normal growth trends. That help, Bill?
It does. And I mean, should we think even a bit lower perhaps as we get into Q2 and Q3, just then on the volume growth, sounds like maybe a little bit still to come? Is this a pretty good proxy?
So let me take that one, Bill. So we, like, for example, what we have seen in Q4 results are sequential volume growth was slightly down. And we are anticipating as we get into Q1, our numbers will be sequentially down in a similar vein, as we kind of start to focus on these high margin high value tests. And this is very intentional from our strategy standpoint, and that is the reason we are moving in that direction. But as we get into Q2, we will basically be year over year flattish, and that is where we will start to grow our volumes in Q3 and Q4 on a year-over-year as well as on the basis.
Thanks, Bill.
Hi, guys. Good morning. Thanks for taking the questions.
Maybe just also a similar line of questioning to Bill here just sort of around guidance. By my math, it looks like the core clinical business when I exclude Pathline and some of these new contributions from LBX and MRD, it looks like that core is called the sort of growing that high thing digit to maybe 10% year over year. You maybe just unpack some of the underlying assumptions there for the export book of business. And I guess, in particular, just sort of reconciling that to the I think you did 14% same store sales growth in Q4. Just sort of reconciling that to that high single to 10% growth. Again, I will kick it off, and I will look to Abhishek and Jeff to add additional color. So, yes. In 2025, you saw, you know, ex Pathline, we were about 13% growth on the clinical side. And, you know, we are anticipating, you know, double-digit growth on the clinical. And so what is within there? First, there will be the full year of Pathline that will be built into the numbers as well.
As I just mentioned with Bill, that one contract that we exited that has an impact in the totality of the clinical side. And then of course, in the guide itself, Andrew, just to be clear, we wanted to be prudent relative to the back half with LBX. Since we still do not have LBX approval in hand, we thought it better to only pack in revenue for the second half of the year at a modest rate. And so we do not really see the benefits of that coming through in the current guide. If we, in fact, get LBX support for LBX earlier than that, then it would represent upside in our total growth and of course, that would be on the backs of the total clinical business. And so, again, I hope that gives you some color and, Abhishek, if I missed any key points, please. Call out for Andrew. No. I think you have covered it well, Tony. And, Andrew, we are expecting the clinical business to be growing at about 11 points based on our low mid-single digits on the nonclinical side.
So it is kind of in the range that we have been expecting the company to be growing in, like, at about 10%. That is what we have called out, and that is where our midpoint currently is $797,000,000. Is pretty close to that 10%. I think the guide is pretty prudent to the extent that it gives us a very high degree of confidence to be able to meet these numbers. And then we will, of course, see if the people pan out as we are anticipating, it gives us some room to actually do better than the expectation. Yeah. Okay. That is helpful. And then. I would say, Andrew, again, this is foundational for us because it affords us then the opportunity to build on that, which is why I maintain that we are still in the early innings relative to gross margin expansion opportunities for ourselves. So, you know, we throw in LIMS and then we look out of the platform off opportunities like, you know, transaction and things that Warren and his team can do with digital pathology and automation. We believe that the gross margins are in early, and we can continue to build not just revenue but margin expansion as well.
Thank you.
Your next question is coming from Subbu Nambi with Guggenheim. Please pose your question. Your line is live.
Given some longer selling cycles and maybe some easing of the funding pressure, where do you see pharma ordering playing out this year between the first half and second half? And what products do you expect to lead the order book from Carmel?
Could you repeat the second half of the question, please?
What products do you expect to lead the order book for pharma?
Okay. Got it. So relative to pharma, I would say that my views certainly have not changed from where we were about six to eight months ago. We anticipated that there is some erosion that we were experiencing on the pharma side of the business would continue into 2026, albeit not at the same rate we saw in 2025. So I have always been of the belief that it would be 2027 before we would see a return to growth for that book of business. And that is how we built the guide. So we expect still to see modest erosion in the pharma book of business for 2026. Certainly, it will be much reduced from where it was but still in that, you know, mid to upper, you know, 5% to 10% range for the pharma side of business. I think the big part of return to growth there is based on RADAR ST. That will be one of the key growth drivers for us in that book of business. There, you know, we have had, you know, pretty good conversations. We have been well received. Know, we are back at the table with RADAR ST. There seems to be a really good sense of interest in it. And that portfolio of opportunities continues to grow. And so relative to the year, again, the guide would still anticipate a modest erosion in the pharma side of the business. If we can get that back flat, that would then represent upside opportunity for us.
So first and foremost, in terms of the focus, you know, a little bit like on the clinical side, really our focus is to protect our position in diagnosis, but really look to grow in therapy selection in MRD. We we look at pharma in a very similar way. You know, we are we are very well known from an immunohistochemistry perspective, and we continue to focus on IHC because it is very relevant for pharma from an antibody-drug conjugate perspective. And it is a good door opener for us, but expect our focus to really lie towards therapy selection and MRD. So there is a strong alignment here between what we are doing in clinical and with pharma. As Tony said, we have a robust opportunity pipeline developing with regard to RADAR ST and pharma. Some legacy users and many new users, and expect first bookings to materialize shortly.
And I do appreciate the question. You know, this gives us the opportunity to clarify. The other thing I just would remind the group is that this is a relatively small portion of our overall business—talking about 5% to 6% of our overall business. And so we continue to put our primary focus and energies on the clinical side of the business with the intent to stabilize this business and return to growth in 2027.
Absolutely. Thank you for clarifying this. Can you talk about the framework for LIMS integration this year? What is being finished? What is left to go? And then maybe how that will show up in earnings in 2026?
So I would say where our focus is today. So we have completed flow. So one of our key modalities. Our next step right now is around accessioning, and NGS is really where our focus is. Again, aligning to our strategic priority, looking to be able to provide increased value both from an efficiency perspective and customer traceability. Those would certainly be things that you would look to conclude in 2026. Probably for other modalities as well rolling into that. But we can certainly take it offline and provide more granular detail if you like. But those are the key focus areas for us from 2026 is molecular and accessioning.
And I would say, Andrew, again, this is foundational for us because it affords us then the opportunity to build on that which is why I maintain that we are still in the early innings relative to gross margin expansion opportunities for ourselves. So, you know, we throw in LIMS, and then we look out of the platform off opportunities like, you know, transaction and things that Warren and his team can do with digital pathology and automation. We believe that the gross margins are in early, and we can continue to build not just revenue but margin expansion as well.
Thank you.
Your next question is coming from Mike Matson with Needham. Please pose your question. Your line is live.
Hi. Thanks, everybody, for taking our questions. This is Joseph on for Mike. Just, I guess, in terms of the guide for RADAR for 2026 in the mid-single digit millions, I am just kind of wondering framing up your guys' confidence and the ability to hit that mid-single digit number. I guess just trying to understand how much of that is the clinical side versus the bio side. You know, maybe for both of those, you know, which do you see to have the higher potential to drive upside to that mid-single digit number?
Yeah. Thanks for the question, Mike. I would say, first and foremost, we do have a high degree of confidence in that. That is why it is in the guide at the midpoint level. So we do have a high degree of confidence.
Relative to the mix, you know, I think it would be fair to say in the early part of the launch, you would expect a heavier component of that to probably be more on the pharma side than the clinical side, only because the clinical launch just takes time to build. Right? Know, we will have the indications of head and neck and breast, and then you will build and you will start to see a slow build of that activity. And just with the lead times of the product, you start to see the clinical effect of that probably in the latter part of the year. Whereas pharma can take on a little bit more of a pan orientation and can secure pricing sooner. And then as we build the indications over time, you are going to see the clinical side of the business certainly accelerate, and that would be the largest of the drivers moving into the outer years with RADAR ST. Abhishek, anything else?
No. I think Tony, you have covered it very well.
This does conclude today's question and answer session. I would now like to turn the floor over to Tony Zook.
I would just like to thank everybody for joining us on the call, and I would also like to thank our roughly 2,400 teammates for their unwavering commitment to our mission and their hard work throughout all of 2025. I am very excited for the year ahead for our company, our oncology physician customers, and their patients. I look forward to our next quarterly update in April, where we will report our first-quarter results. Thank you again, and have a great day.
Thank you, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.