Welcome back to the 46th annual TD Cowen Healthcare Conference. We're joined here by Biodesix and CFO Robin Cowie. Thank you for being here. Appreciate it.
Thanks very much for having me.
Starting off with just kind of a high-level question, if you could just talk about Biodesix, the opportunity in front of you with lung nodule management, as well as your pharma services business and where the company just sits today.
Yeah, absolutely. At Biodesix, our mission is to transform patient care and improve outcomes through personalized diagnostics. We use a multi-omic approach that includes proteomics, genomics, radiomics to develop innovative tests that helps healthcare providers, biopharma companies, and healthcare companies. Right now, our commercial focus is in the area of lung. We have five on-market tests with Medicare coverage. We're calling on pulmonologists and now most recently, their primary care referral network. Lung nodule management is a massive underserved population with about 6 million new nodules annually. Finding those cancers early is what will help improve patient outcomes. From a biopharma services side, we're a fairly unique company in that we have commercial expertise in both genomics and proteomics, and we can help discover tests, develop, validate, and take tests through regulatory and reimbursement for our partners.
Awesome. Just on the lung nodule management market, how penetrated do you view this market today? Do you have any predicate comparisons of, like, what penetration could look like in the long term?
Yeah, we're very early on. As I said, it's a massive market, six million people in the U.S. annually with a lung nodule. We estimate we're low to mid-single digits penetrated. While it's not a screening market, we compare it to screening markets from a size perspective. Some of the best penetrated screening tests are in the mid-teens, getting to 20%. In markets of this size, a single percentage point is a massive number of patients.
Zooming out a little bit, the Nodify portfolio just seems really differentiated and impactful, and there's evidence that Nodify shifts lung cancer diagnosis late stage to early stage. With lung cancer being the deadliest cancer in the U.S., especially given the strong prognosis when catching lung cancer early, you know, even though you're growing in the 20% range, given the strong value proposition of Nodify and the low market penetration, like you said, you think there could be a disconnect from an even higher growth rate where you sit today?
Yes, we do. What's unique about this market is that we're actually building it from scratch. In pulmonology, this area of medicine has not been used to ordering tests in the same way that oncologists and pathologists have. We're really building it from the beginning, and that takes time and energy to educate and get the market really poised to be able to adopt in a meaningful way. We're very proud of the 20%+ growth, especially as we're building this market. We think as we get bigger and are able to educate more, that we can really start to accelerate. Like we saw actually in 2025, we saw acceleration of growth.
Going back to kind of that stage shift dynamic and the performance of Nodify, I'm wondering just kind of would you consider any real-world evidence studies in physician practices to kind of further show that stage shift effect Nodify can provide, just given the huge impact it has going from late stage to early stage?
Yes, absolutely. We think that real-world evidence is critical to be able to show not just in a clinical trial setting that may be more theoretical, but actually in real-world practice what's happening. Our Clarify study is one that we launched fairly recently that is looking at 4,000 patients who received Nodify testing in the real world. The first data from Clarify was actually presented last fall, and we're continuing to publish interim studies and sub population analyses out of Clarify as fast as we possibly can.
Gotcha.
Oh, the other great component there is a lot of those practices that are noticing those stage shifts, they're publishing on their own.
Mm.
They are presenting data at events and conferences that are showing that through use of our tests, we can help them identify patients earlier and start diagnosing earlier.
Gotcha. I guess following up on that, like, have you seen any impact from those physicians that are doing these studies on their own and any impact that's maybe had on some of their, like, colleagues and others just seeing how Nodify is performing? Just wondering if you see any benefit there.
That peer-to-peer engagement.
Mm.
Is really important for in the adoption curve. It's one thing for us and for our sales team to be out talking about the tests and educating offices about something that's new. Something else entirely for well-recognized and respected peers to stand up on the podium and talk about tests, to publish on it, and even just have conversations. At our last CHEST meeting, I think we really saw a shift from push to pull. Us trying to bring physicians in to talk to us, to physicians saying, "Hey, we heard about you. We wanna come talk to you.
Gotcha. Shifting over to the sales force expansion plans and shift into primary care, I know in response to pulmonologist feedback, you began targeting primary care physicians within the pulmonology referral networks last year to unlock a larger market and to begin lung nodule management further upstream. How is this plan going so far, and how do you see it evolving over the next one to three years? My second question would be, expect to see PCP reps continue to be a significant part of new sales rep hires?
Yes, is the quick answer to that question. About a year ago, we started hearing from some of our more experienced pulmonologists that they wanted us to begin calling on their referral network. That while they were very busy with their practice, they thought maybe we could optimize the patient population that was being referred to pulmonology by having primary care start running the tests. For those that are likely benign and can do CT surveillance, they stay in primary care, and those that are higher risk moving on to pulmonology. This was an organic occurrence that was happening across the country, we knew we needed to be a part of this engagement and help with the logistical pull-through of the ordering.
We also looked at claims data and found that about 50% of the patients who are diagnosed with a lung nodule never make it to pulmonology. They really are at primary care. By following this referral network, we're able to access about 50% of the market, which was a big, big improvement for us and really opens up our opportunity. We had our first real class of primary care reps in the Q3, added more in the Q4 and anticipate that we continue to add primary care through 2026 and into 2027.
Gotcha. Just on rep productivity, I know you've been able to maintain roughly a $1 million revenue per rep, despite adding 23 reps in the H2 of 2025, and I know typical cadence is around six per quarter. Just thinking about reps from H2 2025 ramping throughout this year, how confident are you that you can maintain productivity at these levels? Following up on that, how has turnover kind of been in general?
We feel very confident about the rep productivity, mainly because we've seen it repeat itself over and over for the last several quarters. Well, beginning of 2025, we had about 65 sales reps. Ended the year just under 100, and we're able to maintain about that $1 million mark with that steep ramp in number of sales reps. We've learned a lot over the year. We've improved our hiring, and our sales reps are ramping really nicely. We feel confident about those numbers.
Gotcha. Just on the primary care market, does penetrating this market give you a better opportunity to grow more within each practice, given primary cares would have more patients and more incidental nodules? Or is it more just about moving upstream within the pulmonology referral network and just risk stratifying those patients earlier?
Primary care can be intimidating because we know there's so many of them, right? There's over 250,000 primary care physicians out there, and we want to be very sure that people know we are not calling on 250,000 physicians, nor is it our intent to build a sales organization large enough to do that. Through claims data, we identified the 15,000 or so that manage over 80% of the nodules and their referral networks. We're really managing into those physicians. We think by opening up this untapped market, we can go deeper, maybe not necessarily with an individual physician, but in a hospital network and in an account, to capture more of their patients who need this type of testing.
Gotcha. Kinda going back to productivity, just thinking about, like, revenue per rep for the primary care reps, long term, do you expect that revenue per rep to be comparable to the pulmonology and associate reps, or would it be a little bit less?
So far what we've seen is that it's comparable. Now we are building and growing, and each territory can be different, but so far they've been able to be as productive as the other reps.
Gotcha. Moving on to guidance for 2026. You guided to 23% revenue growth for the year. Just wondering where you see the most upside levers to potentially exceed your guide.
We really have 3 levers for revenue. On the lung diagnostic side, it's volume and ASPs, on the biopharma and development services side, it's the funnel, and it's converting those contract $ into revenue. From a lung diagnostic side, we finished the year with very strong uptick in ASP. We're very pleased with the additional coverage policies and the improvements in our revenue cycle management that led to those strong increases. We're not predicting significant increases, but if we maintain those ASPs, we'll be in great shape. We think that the volume guide is fairly conservative, especially now that we have a much larger sales organization that is gaining more tenure and experience. We think that the volume lever could be one that could really trigger some significant upside.
On the biopharma services side, we have seen increases in numbers of customers that are coming to us, but also in numbers of contracts with existing customers. We're very pleased with the with the growth with the existing customers and new, and think that could be an upside for us as well.
Gotcha. Moving over to, like, margins, you've been able to consistently keep gross margins around 80% for a while. At scale, like, where do you think you could see operating margins go long term?
Well, we've spent a lot of time at Biodesix building the infrastructure needed to support this organization, from educating the physicians to being able to collect the tests, run the tests, customer service, billing, quality, the whole nine yards. We've gotten to a point where we think there's real operating leverage as evidenced by reaching adjusted EBITDA positivity for the first time in the Q4. The work that we've done doesn't stop here, so we have several other initiatives underway in 2026 to further improve not just our operating margin, but also our gross margins as well, and so see if we can continue to improve on those. Our goal is to get to cash flow positivity, and we're continuing to drive towards that goal. It's also to continue to invest in our pipeline.
We have several tests that are in validation and development that we think could not only benefit patients but also supplement what our existing sales team is selling and further improve productivity.
Gotcha. You mentioned there are actually further initiatives of improved gross margin. 80%'s pretty high. I'm just wondering, you still see more upside there and kinda where are you looking to improve it?
We do. We think there's additional automation opportunities, and various projects that we can work on in the lab to not just improve ASPs, and improve that side, but actually decrease cost per test. Now, you're right, 80% is pretty high, and each point above 80% is hard-won, but every $1 that we're able to save on those cost side goes to the rest of the organization, and that's an important focus for us.
Gotcha. Just on 2026, how should investors be thinking about the pacing, both from a revenue and OpEx perspective?
We've seen pretty consistent seasonality in the last couple of years with Q1 starting off with slightly higher OpEx as we reset the year, you reset payroll taxes, as we add headcount across sales. Also seasonality from a revenue standpoint with weather that we've seen here in the Northeast for sure, respiratory illnesses, things like that. We expect actually the pacing of both revenue and OpEx to mirror similar years with that step in the Q1 and then fairly steady OpEx across the year, and increasing revenues across the year as we move through.
Gotcha. As far as the weather in Q1, do you expect to see a larger impact this year than previous years just given the big winter storm events?
I think the big winter storm events and the number of big winter storm events. We did incorporate that into our guide because, yes, when you get, you know, 30, 40 inches of snow, that shuts down folks from going to offices. We do expect to capture those patients as we move through the year and get into warmer temperatures as they can get back into their doctors.
Gotcha. yeah, you achieved adjusted EBITDA positivity for the first time in Q4. Just wondering if you could discuss a little bit the importance of this milestone and why you think it will be sustainable going forward.
I think it's always important to control your own destiny and be able to pay for your investments and cover your own expenses. It's something we've focused on very heavily within the organization, we're very pleased to reach that. We think we're one of the fastest in diagnostics to reach that milestone and think that that's also important, that we demonstrate what we're building is sustainable and that there's real operational leverage. We're continuing to drive towards cash flow positivity, and that'll take a little bit more time, but it is a major area of focus. We're growing the top line, and we're getting to cash flow positivity.
Gotcha. Do you believe you've de-risked some of the cash concerns with your recent, $14.7 million raise? Also, if you could go into a little bit more detail on your debt refinancing that extended your term loan maturity?
Absolutely. I think more cash on the balance sheet is always a good thing. We're very pleased to raise those funds this past couple of months after the close of the quarter. Extending our debt extended our interest-only period. Those two things in combination help strengthen and de-risk our balance sheet, and we were pleased to get those done, be able to talk about them at earnings and here.
Cool. Cool. Moving over to competition. First off, are there any other players in this space, and how insulated are you from that competition? Then a follow-up to that is just would you view MCED players as... that are looking to get into lung cancer screening as complementary to Biodesix or as additional competition?
Yeah. As I mentioned, we're building a market. We're first to market with nodules and nodule management, and we have the largest commercial organization. We're not alone. There are a lot of folks that are working on nodules because we know it's a major clinical problem and a very large market. I would say that those that are working on it are probably several years behind us, and so that's a real advantage, although we welcome additional companies coming and helping us educate the market and help build this market. From SCED or MCED perspective, we actually view them as complementary. Currently, lung cancer screening has very, very poor adoption, and there's a lot of people who are at risk of lung cancer who are not getting screened.
With the current performance of the MCEDs and some of the SCEDs, there's a lot of false positives, and so there's still a lot of questions that remain if someone comes back as positive. The first thing that any physician will do will be to get a CT scan, and that's where we come in. We can really help physicians triage those patients that come in, whether it's incidentally found nodules through traditional low-dose CT scanning or MCEDs, figure out which is the right path. Up-risking and moving on to intervention or low risk and being able to monitor through CT surveillance.
Gotcha. Moving over to, like, reimbursement, could you remind us your payer mix breakdown between Medicare fee-for-service, Medicare Advantage, and commercial? What % of the time are you getting paid on both Medicare fee-for-service and Medicare Advantage?
Yeah. Lung diseases are typically older and so a heavier Medicare population. We experience about 60% of our patients have Medicare or Medicare Advantage, and the split between the two is fairly equal in how patients are enrolled between Part B and Part C. As I mentioned at the beginning, all five of our tests have Medicare coverage, and our collection rates for Part B and Part C are very, very strong, very high, and very close to each other.
Gotcha. Do you think we can get any updates this year on the HEDIS measures or the CHEST guidelines?
Yeah. The HEDIS measures are a measurement that the government puts out to help incentivize and drive screening or other metrics. For us, we're referencing a measure that's been under discussion for several years about, improving lung cancer screening rates. Towards the end of last year, they came out and said they were putting it on hold because, systems are having difficulty being able to pull the necessary information to be able to adopt, which we understand. We live that every single day. We anticipate that there's still excitement and interest in it, but I would not anticipate that it comes out this year. When it does come, it will be beneficial to get more people in for screening earlier.
Gotcha. kind of what kind of ASP upside would you expect to see if you did get guideline inclusion, just given that a lot of your population is more in the Medicare age?
The guidelines are an interesting question. CHEST is the American College of Chest Physicians. They have not updated their guidelines on nodule management in over 15 years. They have a lot of work to do, and they've said they have a lot of work to do, and so it's taken them quite a long time. They had anticipated updating guidelines last year, and the latest that we heard from CHEST was sometime this year. Because it's been such a long time without guideline updates, we're not holding our breath. We're not planning on them. It will be upside when it comes. It's always beneficial to be able to spread the word, particularly to physicians that we may not have reached yet. It helps with private payers.
The private payer population is about a quarter of our population, and guidelines always help with private payers. But as you mentioned, with 60% being Medicare and Medicare Advantage, the actual swing in ASP won't be large, but every dollar counts.
Gotcha. Last one on guidelines. Just wondering.
Sure
... what the timeline would be on ASP update post guideline inclusion.
Payers don't move extraordinarily quickly. It takes some time to update policies. I would anticipate that if there was some event that caused a large shift in coverage policies, that we would see it in two to four quarters.
Gotcha. Moving over to, like, your pipeline and pharma services, I know that you're currently focused on a path to profitability.
Mm-hmm.
How do you view the long-term opportunity for your pharma services business and new products? Do you think your multiple accurately reflects the strength of your pipeline?
We have taken a unique approach to our pipeline, as you mentioned, as we're trying to get to cash flow positivity, where we've partnered with academic institutions like Memorial Sloan Kettering Cancer Center, and then life sciences partners like Thermo Fisher and Bio-Rad to help us drive our research and innovation, without significant costs and, in fact, in some instances, with revenue attached, which is my favorite method. We've been able to talk in the last Q4 at AMP. We did a presentation with MSK, Thermo, and Bio-Rad talking about those partnerships and the pipeline as it's advancing. We think there's great opportunity with that unique offering to be able to further expand, and we anticipate that this portion of the business sort of remains at about 10% of total revenues.
Yeah. Gotcha. I think coming out of that panel in the fall, just wondering, was there anything that excited you the most? I mean, I thought the VeriStrat data for metastatic prostate and immunotherapy for lung looked pretty compelling.
It does. VeriStrat is a really interesting test. It's our first test, and it is measuring the patient's immune system, measuring how the patient's body is fighting or, in some instances, actually supporting their cancer. We've actually studied it in 9 different tumor types. We chose to focus in lung, but the data that we're seeing out of MSK in prostate and in others, I think is a real opportunity to improve patient care, and we already have a pretty broad body of evidence that with this partnership with MSK, we think there's real potential. Now we don't plan on adding a urology-focused sales organization at this standpoint. For the tests in our pipeline that are outside of lung, we would anticipate partnering to distribute or sell those tests, without building an entirely new sales organization.
Gotcha. Moving back over to lung cancer screening, just wondering, do you have any plans to try to increase awareness for lung cancer screening? Would you look at any potential partnerships to do this?
There are a lot of groups working on increasing knowledge of lung cancer screening. It's a big problem. We have seen some improvements in lung cancer screening rates, but it's still very, very low. I think more where we're focused is on educating patients about lung nodules and helping them with the questions to ask their physician because nodules are found not just through screening, but most often through incidental means, and usually that means a patient is there for something else. It's important to give patients the education and the tools they need to be able to ask the right questions and to advocate on their own behalf with their physicians.
Gotcha. Talked a lot about Nodify today. I'm just wondering, how do you see the IQLung business going the next five years, and how is this business differentiated?
Yes. This, the IQLung portion of the business are blood-based tests to help with therapy guidance, so after lung diagnosis. We've got the two genomic tests that are looking at the genetic drivers of the tumor, and then VeriStrat looking at the patient's immune system, and that's a smaller piece of our business. It's a smaller focus for our sales organization, but it's actually a bigger focus for us from a development services standpoint. These tests are some of the most often used by our pharma partners and our academic partners, as you mentioned, VeriStrat with MSK. It's an important, an important piece of the business for us, but more in combination with partners than just as a standalone commercial piece.
Gotcha. As far as the ALTITUDE and Clarify studies, just wondering if you could give us an update on timelines there, and you think these studies would further your case for guideline inclusion, or do you feel comfortable with the data you've generated so far?
We feel good about the data we've generated so far, but more data is always better. We are constantly working with physicians on investigator-sponsored studies. We're putting out data from real-world use from other clinical trials. Clarify, we're publishing sort of constantly, which is really exciting to see how that data is being received. Altitude, our prospective study, that's a longer timeframe. They're just inherently slower. We finished enrollment in Altitude last year, and we're waiting on reaching the two-year follow-up for patients which we anticipate later this year, and then we'd get access to the data. Given the timelines of conferences, I bet we'll see something mid to late next year on Altitude. We don't think that we necessarily need Altitude for guidelines, but data always helps.
Gotcha. Just closing out here, what is one thing you wish investors better understood about the Biodesix story?
Yeah. I think going back, I didn't answer part of your question about, whether we think, you know, development services, or the pipeline is accurately reflected in our valuation. I would say I don't think any of our business or fundamentals is accurately reflected. We have an incredibly strong commercial organization. We've built an incredible asset. We've got five o n-market tests. We've got more in the pipeline. We have great capabilities from a development services. I don't think that any of those are captured in. Our value doesn't capture any of those. I think what makes us really special is our team and our culture. We are nimble, hardworking, and mission-driven to improve patients' lives and outcomes. I think that's what really sets us apart, is the strength of our team.
Awesome. Thank you very much. Appreciate it.
Thank you.