Biodesix, Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead. Thank you, operator, and good afternoon, everyone.

Today, Biodesix released results from the second quarter of 2026. Leading the call today will be Scott Hutton, Chief Executive Officer. He's joined by Robin Harper Cowie, Chief Financial Officer. An audio recording of today's call and the press release announcement with the quarterly results can be found in the investor relations section of the company's website at biodesix.com. As today's call includes forward-looking statements, we encourage you to review the statements contained in today's press release and the risks and uncertainties described in our SEC filings, which identify certain factors that may cause the company's actual events, performance, and results to differ materially from those contained in the forward-looking statements made on today's webcast. In addition, we will discuss non-GAAP financial measures on this call.

Descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release. I would now like to turn the call over to Scott Hutton, Chief Executive Officer.

Scott? Thank you, Chris, and thank you all for joining today.

I'm proud to share that the Biodesix team delivered another quarter of strong growth, expanding margins, and improving operating leverage, reflecting the strength of our commercial strategy as we continue to progress towards profitability. In the second quarter, total revenue was $26.9 million, representing 34% growth year-over-year, accompanied by strong operating discipline and execution. Starting with our diagnostic testing business, revenue grew 42%, driven by accelerating test volume growth and improved ASPs over the second quarter of 2025. Total test volumes grew 38% year-over-year due to increased adoption from both primary care and pulmonology, which grew 133% and 31% over the prior year, respectively.

We're pleased with the growth from both primary care and pulmonology, not only from new physicians beginning to order the Nodify CDT and Nodify XL2 tests, but from increases in the number of patients tested from existing accounts. As a reminder, since the second quarter of last year, we've been ramping our efforts in the primary care market to address the approximately 50% of nodules that are managed by general practitioners. We've seen strong demand for Nodify testing in patients with smaller lung nodules. This population carries an inherently low risk of malignancy, but early detection of cancers significantly improves patient outcomes. Demand accelerated through the quarter following publication in March of the largest lung nodule biomarker validation study to date, which demonstrated that Nodify CDT can detect cancer in nodules as small as 4 millimeters while maintaining a low false positive rate.

This clinical evidence drove a significant increase in Nodify CDT orders in smaller nodules during the quarter. Importantly, adoption within this patient population is also expanding utilization across the broader lung nodule continuum. Healthcare professionals who begin ordering Nodify CDT for smaller nodules subsequently increase their use of both Nodify CDT and Nodify XL2 for patients with larger nodules. We are seeing this pattern consistently across customer segments, including both primary care and pulmonology. In addition to the publication at the end of the first quarter, we continue to present and publish clinical data for our on-market test. In May at the American Thoracic Society, or ATS, annual meeting, real-world clinical and economic data was presented, including an independent study showing an increase in stage 1 lung cancer detection after the implementation of a lung nodule program using Nodify Lung testing systematically to guide clinical decisions.

Two others highlighted the role of Nodify Lung testing to overcome limitations with PET scans for nodule evaluation. The presentations at ATS continue to highlight the real-world clinical value and economic advantages of lung nodule management programs that use Nodify Lung testing for risk stratification. This growing body of clinical evidence is driving deeper account penetration and increasing test utilization. The result is continued commercial expansion of the Nodify franchise and further validation of its role in addressing this significant unmet clinical need. As we are growing our top line, our team's ongoing operational focus continues to yield improvements in gross margin and operational leverage. We delivered our fifth consecutive quarter of gross margins at or above 80%. Our total revenue grew 34%, and operating expenses, excluding direct costs, only grew 7%, which included the expansion of our commercial team.

With that, let me now turn it over to Robin to review our financial performance.

Robin? Thanks, Scott. Good afternoon, everyone.

Total revenue for the second quarter was $26.9 million, representing a 34% increase over the prior year period. Diagnostic testing revenue was $25.4 million, an increase of 42% year-over-year. The increase in diagnostic testing revenue was driven by growth in test volumes and higher average revenue per test. Test volumes were approximately 20,900, an increase of 38% year-over-year, supported by an average of 104 sales representatives in the field in the quarter. We plan to continue our commercial expansion and end the year with approximately 120 sales representatives in the field. Sales force productivity continues to improve across the entire sales organization, with newer representatives advancing along expected productivity curves while more tenured reps continue to expand their contribution.

Improvements in average revenue per test over the prior year were primarily driven by additional payer coverage and improvements to revenue cycle management, continuing the trend that began in the third quarter of 2025, rather than any one-time item. The difference in average revenue per test versus the first quarter of 2026 was driven by the mix in test volumes between Nodify CDT and Nodify XL2, with average revenue per test for both Nodify XL2 and Nodify CDT improving over the prior quarter. Development services revenue for the second quarter was $1.5 million as compared to $2.1 million in the prior year period, reflecting timing of project completion and revenue recognition. We currently have approximately $8.5 million in contracted business. The demand for our services remains strong. We have discussed previously, the timing of development services project execution and revenue recognition can shift between quarters.

Gross margin for the second quarter was 82%, a 200-basis point improvement over the second quarter of 2025. Margin improvement and strength was driven by growth in lung diagnostic testing, improvements in average revenue per test versus the prior year, and decrease in average cost per test. Operating expenses, excluding direct costs and expenses, were $27.4 million, an increase of 7% year-over-year, supporting a 34% revenue growth delivered during the quarter. The increase in operating expenses was driven by an 8% increase in sales, marketing, and general administrative expenses due to our planned commercial organization expansion, partially offset by a 4% decrease in research and development costs in the quarter. The company expects continued operating leverage as our expanded sales team advances along the productivity curve and converts growing experience into sustained performance, combined with our focus on operational leverage and efficiencies.