All right. Great. I am Puneet Souda. I cover life science tools and diagnostics here at Leerink, and it is my pleasure to be hosting Team NeoGenomics. Joining us on the stage here is, first of all, Chris Smith, current CEO; Jeff Sherman, CFO; also incoming CEO, Tony Zook; and Warren Stone, head of clinical services, president. Great to have you guys here.
Thank you.
Thank you.
Good to be here.
Maybe just to, as I was looking at the discussion we had during the quarter, obviously solid quarter with revenues up 11%, some challenges in what is now called, I'm calling it Pharma Services division, or you're calling it non-clinical. And NGS, again, impressive. Overall quarter, from my perspective, was relatively good, but I think from a street perspective, maybe slightly weaker. You have raised your LRP ahead of that. The key question, however, that keeps coming back, as I'm sure, and Chris, you have addressed that in other forums, is really sort of the timing of the CEO transition. Maybe what I've, I mean, I would love if you could provide any additional comments on that, but I want to hear more from Tony and his thinking and his strategy on that point. Chris, go ahead.
Yeah. Why don't we take it, if it's okay, in three pieces? I'll talk a little bit about the whole thing, then maybe Jeff the quarter, and then Tony can talk about his transition with the LRP. Look, I think at the end of the day, you're right, it was a very good quarter. We hit right in the middle of guidance. I think reputationally, candidly, we had put kind of nine quarters on the board, and most of those had been beat and raised type of things. I think as we started building out the business, we feel very good. I told the analyst on the call that we said we'd win the football game between six and eight points, and we won by seven. You wanted us to win by nine. I think overall, really good quarter.
I think the thing that impacted it was the non-clinical business. We had thought about that business turning once Warren took it over last summer, really in the fourth quarter. I think we were a quarter too late, right? I think it's taken us a little bit longer to turn that business. Very robust growth in clinical. We grew 9% in our units. We continued to grow the AUP, and the clinical business really grew well. Look, as far as LRP, I want Tony to talk about it. I think our view was we had worked through that LRP, and I think from a confidence to the market, we continued to feel good about it. We went out and shared that. We were always going to come out and talk about it.
I think it took us time to get to that 12%-13% growth. When we first had an investor day in early 2023, it was 7%-9%. We raised it to 10%. We then said 11%-13%. I just do not think you can keep going back and raising the LRP. Since Tony was a part of the process with the strategy, that is why we kind of went out. Maybe can you give more color on the quarter? Tony, are you good to talk about your thoughts on the LRP?
Yeah. I think with respect to Q4, as Chris said, I mean, our clinical revenue continued to be very strong. We grew clinical revenue 15% in the fourth quarter, 15% for the year.
Which is 85% of the total.
Which is 85% of our total business. The non-clinical piece, as we said, we were expecting a typical budget flush for the pharma business. We thought we had budgeted that or forecasted that conservatively. We just did not see it. We do not think that is a NeoGenomics-specific issue. That was really, we have seen other input and reports. That was more of a macro issue. For the year, we had started the year at 10%-12% revenue growth and $21 million-$24 million in adjusted EBITDA. During the year, we raised our adjusted EBITDA twice to $37 million-$40 million, and we raised our revenue to 11%-13%. We finished at the top end of our original revenue guidance, the midpoint of our revised guidance, and at the top end of our adjusted EBITDA guidance.
If you look at our non-clinical revenue for the year, it was down 12% in the fourth quarter, 7% for the year. Half of that decline in the non-clinical revenue was really the inability to sell RaDaR. We were not able to go on and sell to new clients for RaDaR. If you look at that business just being flat for the year, that would have given us 13%-14% growth. As we kind of fast forward to 2025, we finished the year with very strong clinical growth. Expect that strong growth to continue into 2025. We do expect that the non-clinical business will return to growth, nominal growth, moderate growth. Even doing that, I think it gives us confidence that we have the positioning and the market presence to grow.
We've also added over 30% more to our sales force. That really happened at the end of Q4, into Q4, into the beginning of Q1. That will be maturing in the back half of the year. Finally, we have new product coming out, liquid biopsy, that we think is going to be similar in impact as the Neo Comp solid tumor product was. Pretty significant impact. Finally, I would just say, if you look at Q1 last year, that was really the third quarter, third or fourth quarter where the Neo Comp solid tumor product was ramping. Our Q1 last year, we had 14% revenue growth. It was by far our strongest quarter last year because we had this product ramping. Even the 8%-10% growth that we've said for Q1 of 2025 is really on top of the strongest quarter last year.
As that starts maturing, the annualization will get much easier as we go Q2, Q3, Q4. Those are really all the things that give us confidence that the 2025 guide of 11%-13% is very achievable, just continuing to do what we're doing, seeing some stabilization in the non-clinical business, particularly pharma, and then new sales reps and new products all are going to come together, we think, to give us that revenue growth for the year. We expect that growth will accelerate as the year progresses.
As it relates to my own confidence in the LRP, for me, this transition has been actually quite easy because I've been on the board for two years. As part of that, Chris has created a process where we were openly discussing the budget for any given year as well as the LRP. All the underlying core assumptions have been discussed and rediscussed on multiple occasions. I focus very much on the key drivers. I spent a lot of time with Warren as we were, I wanted to understand the sales force expansion activities from the very beginning, just upsizing the hospital side. When it came to the oncology sales force expansion as well, I was very comfortable with the sales force effectiveness work streams that were ongoing.
I had the opportunity to see the launch planning, the timelines for each of those, which are key drivers. The NGS growth rate was another. The financial discipline that's across the organization has been well instilled, and now we see opportunities to get even further enhancements with programs like LIMS, etc. From my perspective, I was fully on board with the LRP, and therefore there was no reason to delay so that I could do it as opposed to what's right for the business and what's right for the normal timing. I'm fully aligned to it.
Yeah. No, that's helpful perspective. Tony, I mean, you're obviously familiar with the business. You've sat through a lot of the meetings and understood, as you described, you had a clearer picture into what this LRP means. I mean, now you'll be owning that LRP. Maybe just give us a view on what do you see as your priorities, which part of the organization or which part of the process and whatnot, where you'll be spending a lot of your time.
Yeah. I'd be happy to. Again, if I look to what I've seen over the last two years, what Chris and the management team have done is nothing short of stellar. They were taking over a company in transition, and the initial focus was we got to do what we have to do to align the strategy and drive revenue. I'm fully aligned to the patient-centric strategy and remaining in oncology and this strong foundation that we have in the community hospital environment. It's actually a position of strength. I don't know that we emphasize it enough. I very much believed in that as the underpinning. As I mentioned, I believe very strongly as well in some of the financial discipline that's been embedded across the company.
I see the strategy moving forward very consistent to what is already in place, so do not expect a big change there. My points of emphasis will be slightly different than where Chris is only because of this point in time. We did not have the luxury over the last two years to spend a lot of energy in R&D. We now have an outstanding leader in Andrew that has come on board. For my focus, it is going to be over the next couple of years. Let's make sure we have the portfolio that we are going to thrive in three, four, and five years from now, which means getting our programs through the current system with MRD, PanTracer, and then build from that foundation, but to do it in a very responsible way.
If you could elaborate in terms of the communication to the rest of the organization, the employees, and I think this is a bit of a broader question, if I may ask, is really what's been that conversation like on the employee side with the transition? The second aspect of that is, I mean, a number of the senior leaders have signed retention agreements and retention plans for several of the key employees. Just I think that's the question that we continue to get is with any transition, what departures that one must expect from an investor point of view or anticipate from an investor point of view, and then the employee side too, if you could cover both of those.
Yeah. Look, I would say, first of all, I think there was a mass overreaction to the market with transitioning. I think a company is always bigger than one person. I think at the end of the day, the leadership team we built is stellar, probably for a business that can do $2 billion or $3 billion. It was always our intent. I think that's one. I'd say the second thing would be, I'm a big believer if the business is going well, you stay inside the company. If the business is not, you go outside. We felt very good, even though why we did look external, I think internally looking at some people, including Tony. I think the team felt very good about that. I think if you go outside, what happens to the management team, what happens to strategy?
I think the goal was to keep that kind of consistent. Pete, when I think about this, I think companies are life cycles, right? They're breathing organisms. We always talk about that we're stewards of this business, why we're here, and our goal is to leave it better when we leave. In our life journey, we really went through a really heavy three-year lift to turn this business around. That got us to what we're talking about now in this 12%-13% or 11%-13% this year growth. The next phase is really about the product and how do you accelerate that growth.
I think it was important from a leadership perspective to bring in someone who had extensive experience in R&D, so organic development, but also commercialization of launching products because so much of the next three years is kind of around the product. I think for me, it was either leave now or leave three years from now. That was really, I think, where it came down to. We tried to pick a good transition where Tony could get out and meet investors while I was still here, get to meet the teammates. I think team generally feels pretty good about it. It is definitely different, but I think the team generally feels good. I leave it to Jeff and Warren, who are obviously key members of that team.
The only point I'll add, and then they could jump in.
I know whenever a new CEO comes in, there's always this anticipated, "Oh, well, and he's going to bring in," or, "She's going to bring in." I can only tell you what I've told people, which is one of the biggest attractions for me in taking this role is, A, I love the culture of Neo. I love the passion that everybody has. I really respect the management team here. It's a management team that was built not just for the business of today, but for the business of tomorrow. I have been very impressed with their skills. I have been very impressed with the people that they have onboarded. We have outstanding talent at NeoGenomics. I'm not coming in thinking, "Oh my goodness, here's a problem that we have." I do not feel that at all. There will be change.
It's inevitable, but it's not going to be driven because I don't think people are capable in the roles that they have. They're more than capable. I have tried to convey that to people. You just get to know people one on one, and you start to build relationships.
Yeah. I think I would just add, Warren and I joined around the same time a little bit over two years ago. I think there's been a significant upgrade in the leadership below us as well. As Tony said, we've brought in a lot of new people in the company. The mission is the same. Our strategy is the same. I think the core team executing is the same. I think we're energized coming off of two very strong years of continuing the momentum and are very operative. I think very open to the growth pattern potential we see. I think the confidence of the team going forward, it's a team that's worked together. We enjoy working together, expect to be working together in the future.
I think the new people we have brought on, which have been significant, probably more than half of our top 100 leaders have joined in the last two years, they have all contributed to the growth. Our expectation is we'll continue to do that.
Where do you stand in, Chris, from your perspective in the revenue cycle management? I am asking that because the prior management team, that was a big question mark. You came in, you said that in, and this is an industry where, as I think you pointed out before, and we have talked about it, that this is a lot of maybe it is the hobby genetics or however you framed it.
We're not a nonprofit.
You're not a nonprofit.
Starbucks didn't give me my coffee this morning.
That's right. Yeah. You put in that discipline and process. I'm trying to understand how much of that discipline and process, I think that's one of the key questions from the investor side, is how much of that discipline and process stays and sticks and continues on in a market that is more competitive every year versus when you came in.
Look, I would say for a couple of things, I think 100% of it stays. I would say, look, at the end of the day, I may have come in and talked about that. Jeff and his team are the ones that executed it. I would say that we're only probably at halftime of the game. There's still a lot of runway and revenue cycle management. It is also contracting. I think especially as you bring out some of these large panels like with biopsy, MRD, it's going to be more important that you're with third-party payers. We have a unique position in the market that two-thirds of our business is directly to hospitals. We are not going through the third-party payers. Really, probably what, 15% is through third-party payers. Very different than our competitors.
I would say, look, I don't want to speak for Tony, but I think we're 100% committed, but really it was Jeff and his team that drove that. I don't know if you have anything else.
Yeah. I would add, I would say from a question from a process standpoint, there's been a lot more rigor, process, analytics across the company over the last two and a half years. I think we have taken a look at the whole company. I mean, Chris really brought a sense of urgency and accountability, and I certainly expect that to continue. On the RCM front, there continues to be a significant opportunity there. I think we've done a good job of closing the gap between expected payment and what we should be paid. There are still challenges that we and others in the space face, particularly with large panel tests. As you look at large panel tests being denied, the state biomarker legislation will be a tailwind there. More states are passing it.
I've been also careful to say, just because a state passes biomarker legislation, the payers don't flip a switch and start paying us. We still have to be in the trenches kind of on a state-by-state, payer-by-payer basis. That is a long-term tailwind, and that will be 100% accretive to revenue, gross margin, and earnings because we're doing that work today. For that managed care book of business, we're not being paid or it's being denied at significantly higher rates. That will be a tailwind. We're also continuing to do rate increases. As Chris said, we're also negotiating managed care increases. When we say we're doing rate increases, that's for that hospital business where we can implement a rate increase. For our managed care negotiation, obviously it is more complex, and we have to go through a negotiation process when contracts are up.
That still represents an opportunity. We have over 300 contracts. We've added resources for our managed care contracting as well. It still represents a multi-year opportunity to make sure we're getting paid market rates and getting paid for the work we're doing.
Great. I want to touch on a number of points. I mean, NGS being an important one, but before that, maybe just on Pathline since that was announced recently. Simply put, it looks like it helps you gain share in the market with the capabilities that they had, I mean, in the Northeast. Maybe just walk us through sort of how much in your view is that sort of share gain? What do you do in terms of what opportunity this unlocks for you? What do you do with some of those assets that are non-core to oncology?
I would say when we all came in together, you start to look at the business in one of the levers that people. One of the things that we find is that this is very much a service industry. You win and lose on customer experience. One of the key components is turnaround time. When you're doing a large panel, it's a 10-day turnaround time. A day to ship it across the country is not a big deal. Flow, which is usually patients in the hospital, published 20 people talk about 24 hours, but accounts went 12 hours. Losing overnighting something from New York down to Fort Myers is a challenge, I think. Number one, one of our big levers in the hospital is to win the flow business on turnaround time and then vertically integrate our full menu. That was a challenge.
When you looked at New York, we were about 50% penetrated from a market share as we would be in places like Florida, California, or Texas. I think the other thing that drove it is it is the number three state for cancer, just New York, and highly dense. It was like an obvious thing. At some point, if you are going to do your strategy, you are going to have to get to New York. We have been looking in New York for probably 15-18 months. We have been looking at labs. We also looked at turning dirt. I think the challenge with turning dirt, like we did in Raleigh, is it is $10 million-$12 million. We were able to go buy a $20 million business for 0.5 times revenue. Basically the same with a customer base, $20 million revenue.
Rather than some of the reference labs that maybe just want the customer list, we want the lab, we want the teammates, we want the whole fit. I think it's going to have a significant impact in the Northeast to implement the strategy that's worked incredibly well in places like Florida, Texas, California, and those surrounding states.
is also New York State approved, which is another big plus. We expect to see both revenue synergies and cost synergies. We said we expect it to be accretive in 2026. We will have some incremental transition costs and things, but we do expect it will be incremental to adjusted EBITDA in 2026.
I think it comes back to this discipline, right? We could have probably bought labs sooner at two times revenue. We realized that there would be an opportunity that was right, so we continued to work towards that. I think it helped a lot bringing Kareem to run BD to have a team that's focused indirectly on it. I think we feel really good about 85% of it is oncology. There is about 15%. We'll probably allow that to go for a while and just disappear because they are the same customers. We do not want to lose those customers. To be very clear, we're not getting the cholesterol, triglyceride, and pap smear business, right? We went after this for cancer. Our strategy hasn't changed, but we feel it was the right opportunity for the right people.
You want to talk about go-to-market?
Yeah. I was going to say, I think an important aspect is also a 30,000 sq ft lab. It is a large lab and creates a lot of opportunity for expansion and growth. We will move certain modalities that Pathline do not offer today into that lab.
Yeah, that was my next question.
After close so that we can offer a larger menu directly from that lab. Certainly, those elements, those tests which have a shorter turnaround time, which Chris was mentioning. That is an important part. There is probably about 40%-45% opportunity for growth and expansion there. We feel over the sort of medium and long term, it creates the capacity we need to serve the Northeast. Ultimately, the analysis that we have done is where the Northeast, we are 50% penetrated relative to the other markets in the United States. It is materially lower than what we see in other markets. When we did the analysis, there were two aspects. It was proximity to customer to provide the service and then New York State, which requires a different registration for portfolio. Those were the two elements that we addressed through the Pathline acquisition.
In a very short space of time, customer outreach has been very positive in terms of the announcement.
I would say remember also, very dense in the third margins. We are not talking about Fargo, Dubuque, or Northeast Coast. You can probably look at a map and see potential. Our goal is not to try to open 100 labs. It is to be very ripe and shot where we know that it will make immediate impact on customers.
Does it impact your ASP?
It will. Yeah. It will lower our ASP in 2025. It will lower our gross margins as well. We're not changing our adjusted EBITDA guidance. There will be a slight negative impact in 2025, and it will be accretive to adjusted EBITDA in 2026. You should expect a lower ASP because they're doing a lot less NGS type of testing. They're doing a lower level of testing. That is what we will hope to expect to expand over time and drive that ASP up over time.
Is there CapEx then?
We're not changing it by the way. We're not changing any of our guide. When Jeff said it, that specific $20 million is a lower gross margin. We're not lowering our guide to the market.
Yeah. We are not expecting—we have given a range for CapEx, $30 million-$35 million. No change to our CapEx range. So immaterial CapEx needs.
Got it. Okay. I mean, let's talk about NGS growth. I mean, what's interesting in this market is that a number of companies are growing. I mean, maybe I will start with Warren on this, and then I want others to chime in a bit too. You are growing. NGS growth was 25%. I think about 30% of your mix is NGS now.
Clinical side.
Clinical side of the business, yeah. Clinical side of the business. It's a remarkable growth when you think about CGP market at this point in time. From sort of the genesis of the CGP market to now, it's relatively—one could say it's highly penetrated. Maybe just talk to us about what's driving the growth there. Is it concurrent testing? Is it sort of doing liquid and tissue? Is it indication expansion? Is it earlier lines of therapies? What is it?
Yeah. I think it's multiple factors. Today, we're not benefiting from the concurrent testing because we haven't actually launched a competitive product in order to do that. That's a Q2 launch for liquid this year, which we can touch on. Our current growth is really coming from three factors. I think first and foremost, it's important to point out that most of our targeting goes to the community. We don't spend a lot of time in academic medical centers. We address the community where roughly 80% of cancer patients are actually served and treated. That still remains, in terms of large CGP panels, relatively underpenetrated. The reason why it's underpenetrated is those treating physicians typically point to guidelines in terms of what tests to use. Today, large panel CGP isn't included in the guidelines for cancer therapy selection. That's why it's underpenetrated.
People are starting to adopt. That is convincing physicians to actually use CGP as one of the growth drivers for us. The second area of growth driver for us is we do have a number of single-gene and multi-modality solutions for therapy selection. Certain physicians are sort of upgrading to large panels. That is an upgrade for us. It often reflects in the mix that Jeff speaks about from an AUP point of view. That is a second lever. The third is competitive takeaway. We are seeing more and more in the community setting that just administrative burden is a major problem in terms of practice profitability. They are looking to streamline processes, reduce the number of vendors that they are dealing with. They are looking to consolidate their testing with as few providers as possible.
Because of our unique position around Heme, where they have few other alternatives for a company that can provide Heme and solid tumor NGS, we see a lot of customers migrating towards us. We try and wrap around services like interfaces and care pathways to make that workflow that much more seamless. When we introduce our PanTracer liquid test, which is latter part of Q2, that is going to allow for accelerated growth because we can then drive a concurrent testing strategy, particularly around early-stage lung, which is in the guidelines.
Yeah. When you think about that, because you're talking about it's penetrated, and NGS, I don't know, 10 years has been out there. A lot of the independent data has it only about 30% or 35% penetrated because a lot of it's not in the community. If you go to MD Anderson or Sloan Kettering, they're doing NGS testing. Remember, our sweet spot is really in that community. Until it becomes guidelines, look, one of the things I'm most excited about the business is the runway in NGS. We all love MRD, and it's a sexy big market that's going to evolve over the next 10- 20 years.
I have been telling you, the NGS business, if you really research it, for the next 5- 10 years, will become a significant player where we live every day in the community and at a much higher AUP. We love how that gives us that.
Yeah. No, it's interesting because we had a panel from oncologists from MD Anderson. They were saying on the flip side, they're seeing from their perspective, 30%-35% of oncologists are still not using.
Yeah. I kind of joke that you build your business in cancer in MD Anderson, but the money comes from Mobile, Alabama, and Greenville, South Carolina.
Yeah. That's where the volume is.
That's where the volume. 80% of them.
Yeah.
If you can imagine that 30%-35% of physicians in an academic center are not using it, imagine what's happening in the community.
Yeah. Maybe on that point, sort of NGS, if you look at that market, given the penetration where you're at and the growth we're seeing. When you think about the LRP, it kind of implies you would have to grow faster than what you're growing in 2024 and 2025, right? In the longer, I mean, if you put it, the longer LRP is even higher.
Yeah. I think we're going to hit 25%, right? I would say there were certain quarters last year where we had above 35%. I think 25% we believe is the sweet spot. We're also going to be bringing new products like liquid that will continue to live.
Continue to live that.
Our goal is still to grow those normal modalities, FISH, the Flow, the Cytos, which only grow 2%-4%, is still to grow those faster than market.
Yeah. Again, just to go back to, in 2023, we grew 16%. In 2024, we grew our clinical business 15%. We grew the overall business 12%. Our non-clinical business actually drove down the growth rate. As we look at 2025 and beyond, just getting that non-clinical business back to growing, even low single digits, and continuing the momentum we've seen in clinical gives us confidence in that long range, 12%-13% plus growth rate.
Yes. How core is non-clinical to you except RaDaR? Yeah. I mean, in terms of how important that is.
How is non-core? You mean with.
Meaning the pharma business that you have, where you're serving with immunohistochemistry or you're serving other products, flow, maybe, and some of the clinical trials. Maybe just help us understand sort of how, because obviously that's been, I mean, it's been a bit of a drag. That partly because of RaDaR. Maybe just help us understand what's been the drag there and why this business is still core.
I think our go-to-market was wrong, candidly. We made a leadership change last summer, asked Warren to pick that up. It took time to—we probably changed out 60-70% of the sales force. Changed out that sales force. That was a sales force that used to be paid on bookings. We have pivoted to now bookings and revenue. I think a lot of that has to do with it. Remember, it absorbs a lot of overhead, pharma does. A lot of those tests are very similar to tests that we are running inside our clinical business either. It is easy. Look, at the end of the day, I think we have to execute on every single area that we are in. Unfortunately, we were not executing on pharma. We had to take measures to make a change. I feel good about that.
I think it's really in H2 is when you start to see that business.
Even if you look at the pharma business, our previous CDx business, I mean, our revenue was down last year, but the gross profit and gross margins were up significantly. We did do some rationalization of the business and got rid of unprofitable contracts. I think as we think about the growth prospects there as well, the ability to drive incremental revenue there, the LIMS project will also be helpful because historically, we've had separate lab staff working on the clinical business and the pharma business. On multiple different LIMS systems, the fact that we're moving to one LIMS system will actually allow us to optimize the business as well and get a lot more operating efficiencies because the same lab person can work on a clinical and a pharma sample together, whereas before, they have not been able to do that because of multiple LIMS systems.
Maybe I'll just build on that. As we changed the business model as of January this year that we've rolled out, we moved away from very much a bespoke business model for pharma. Everything was bespoke. We moved to a much more standardized model. What that allows is it's certainly going to help the buying process from a customer point of view. Operationally, it aligns so much more with what we do on the clinical side that it's really going to allow for us to leverage that scale along with the clinical business, which should obviously optimize workflows and help to drive down some of the fixed costs that we have within the lab. We've done a complete reposition to make that business much more attractive.
Maybe just touch on bookings in January.
Yeah, one of the things we—a leading indicator in terms of performance is bookings. January was particularly robust, as was February for that matter, was robust in terms of incoming bookings, not only in the value of the bookings, but also we look at the quality index of the bookings. What is the—how profitable are these bookings going to be for us? The leading indicators are all pointing very positively at this stage. Early days, but very positive indicator.
Got it. Given the time, let me just quick rapid fire on the RaDaR. What's the update there and RaDaR 2.0, so to speak?
Sure. Rapid fire. We've cleared validation and verification on 1.1. As you know, we settled with Natera on the one lawsuit last year. We feel really good about that. We'll submit a MolDX bridging study that shows equivalency, probably late Q2. We have the court case in October. A lot of things are moving towards that. I would say on next-gen or what you mentioned, 2.0, significant movement continuing on the next-gen technology. We believe that as we get through this court case, and if it's in our favor and we feel really good about that, it's going to position us well for several years with that product line while next-gens are coming.
Okay. On the ASP that you talked about earlier, obviously, there will be an impact. When do you expect the ASP to start recovering back again this year?
Yeah. I think there'll be, I would say, a several-quarter impact at least. I mean, I wouldn't expect it to start overall increase in just for the Pathline impact. I mean, it'll increase because of NGS growth and the RCM initiatives and price increases. The Pathline impact, I would expect as we start growing that NGS business more, we'll start getting some of that back in 2026 as that NGS growth starts to grow and it starts to approach more of a normalized Neo-ASP over time.
Just last one, in terms of you said, obviously, you're in a unique position with two-thirds of your continent revenue sort of on the clinical side coming from those contracts. How stable is that in terms of as you move more and more towards NGS, liquid, reimbursement of those products? Maybe can you talk to us? Because obviously, the tech-only model that was in place was well for the historical test.
I think it depends on how much of that business goes into the hospital versus the community oncologist. The hospital business we see is like today, our NGS, if we're billing into a hospital, we run it. It's similar. It's direct bill. They pay us. They file the reimbursement. If more of our business becomes third-party, then obviously, you have impact. It's a world—we today probably have over 300 payer contracts. It's not like we're new to the game. It's not like we have three tests. Because of our broad menu, we've been selling into third-party for a long time. It's just about adding a test onto an existing.
That is where we expect the biomarker legislation, particularly in the large panel tests, to be a tailwind for the next couple of years as well. As states mandate coverage of that, that will be helpful as well to get paid.
Got it.
Okay. All right, guys. We're at the.
Thank you.
Over the time. Thank you again.
Thank you very much.
Okay.