Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Shayla Gorman, Senior Director, Investor Relations. Please go ahead.
Good afternoon, everyone. Thank you for joining us today for a discussion of our Fourth Quarter and Full Year 2025 Financial Results. With me today are Marc Stapley, Veracyte's Chief Executive Officer, and Rebecca Chambers, our Chief Financial Officer. Dr. John Leite, our Chief Commercial Officer, and Dr. Phil Febbo, our Chief Medical and Scientific Officer, will join us for Q&A. Veracyte issued a press release earlier this afternoon detailing our fourth quarter and full year 2025 financial results. This release, and a copy of the presentation we will review during the call today, are available in the Investors section of our website at veracyte.com. Before we begin, I'd like to remind you that statements we make during this call will include forward-looking statements as defined under applicable securities laws.
Forward-looking statements are subject to risks and uncertainties, and the company can give no assurance they will prove to be correct. Additionally, we are not under any obligation to provide further updates on our business trends or our performance during the quarter. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Veracyte files with the Securities and Exchange Commission, including the most recent Forms 10-Q and 10-K. In addition, this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures are included in today's earnings release, accessible from the Investors section of Veracyte's website. I will now turn the call over to Marc Stapley, Veracyte's CEO.
Thank you, Shayla, and thank you all for joining us today. Q4 capped off another outstanding year of strong execution for Veracyte, with performance across our core businesses that reinforces both the durability of our growth model and the opportunities ahead. I'll review our fourth quarter results, reflect briefly on 2025, and then focus on the growth drivers that give us confidence as we move into 2026. Fourth quarter total revenue was $141 million, representing 19% growth year-over-year. This performance was driven by continued strength in our core testing business, which grew 21% on strong volume and ASP. Decipher volume grew 21% and Afirma grew 12%, together contributing to 16% total testing volume growth.
For the full year, we delivered total revenue of $517 million at the high end of our preliminary range and representing 16% growth. During the year, we provided clinically actionable information to nearly 170,000 patients with over 800,000 patients served to date. We remain on track to testing our 1 millionth patient later this year, an important milestone for the company and our team that reflects both the scale and impact of our platform. In addition to our strong revenue and volume growth, we executed against all of the key milestones we set for 2025. We drove continued penetration and share gains, launched Decipher for metastatic patients, expanding our presence in advanced disease, and generating meaningful new clinical evidence across endocrinology and neurology.
We advanced our pipeline with positive Prosigna outcomes data from the OPTIMA prelim study, submitted the technical assessment for TruMRD, and completed enrollment for our NIGHTINGALE lung cancer study. Together, these accomplishments position us well for multiple product launches beginning in 2026. Importantly, we achieved this while delivering industry-leading profitability and cash generation. Adjusted EBITDA margin exceeded 27% in 2025, not only reaching but surpassing our 25% target more than a year ahead of plan. We also completed key operational priorities, including the restructuring of Veracyte SAS and the full transition of all Afirma volume to the more scalable, lower-cost v2 transcriptome platform, improving our operational efficiency in launching new transcriptome-based tests. These actions support the sustainability of our financial profile as we continue to invest in growth.
I'm extremely proud of our team's focus on execution and innovation, which enabled us to deliver an outstanding year and reach more patients than ever before. The foundation we've built through the Veracyte Diagnostics Platform supports a clear, phased expansion strategy, anchored by a focused set of drivers contributing to near, mid, and long-term growth. First is the ongoing durable expansion in our core business, Decipher and Afirma, which we believe will support double-digit revenue growth for the foreseeable future. The second phase is our 2026 product expansions, with two product launches planned by this summer. We are preparing to launch our inaugural TruMRD test for patients recovering from muscle-invasive bladder cancer, followed by the U.S. launch of Prosigna as an LDT to address early-stage breast cancer patients.
The third phase represents our longer-term commitments, including geographic expansion through our IVD strategy and addressing new cancer challenges across the care continuum. Today, I will focus on the first two phases, our core business momentum and the opportunities ahead with our 2026 launches. Starting with Afirma, we delivered approximately 18,250 tests in the fourth quarter, representing 12% volume growth. Throughout the year, we saw a steady pipeline of new account wins and increased utilization per account, with the fourth quarter continuing this trend. As of year-end, we believe we have grown Afirma to approximately 38% market share, with continued opportunity for further penetration. Importantly, as previously mentioned, we completed the full transition to our v2 transcriptome in the lab during the fourth quarter.
Besides being more scalable and cost-effective, this new platform enables us to deliver results in challenging cases where we were previously unable due to low RNA. In the fourth quarter, our no-result rate was 2% lower than in the prior quarter, directly contributing to more patients and physicians receiving actionable results to support clinical decision-making. We also saw a steady drumbeat of new publications leveraging data generated from our research use-only Afirma GRID, which further builds on our extensive body of clinical evidence. The majority of Afirma-related abstracts and publications in 2025 were GRID-related, reinforcing Afirma's position as not only the standard of care in clinical testing, but also what we believe is becoming the primary research platform advancing understanding of thyroid nodules and cancer.
This year, we plan to build on this momentum with an updated version of GRID that includes additional signatures designed to support ongoing thyroid nodule research. Given our recent progress, we're confident in Afirma's ability to sustain healthy growth in 2026 and beyond. Turning to Decipher, we delivered approximately 27,200 tests in Q4, marking our 15th consecutive quarter of more than 20% year-over-year volume growth. We reached another record for both the number of quarterly ordering providers and orders per physician. In fact, the number of ordering physicians increased 18% year-over-year in Q4, reflecting Decipher's expanding adoption and its role in supporting treatment decision-making. This momentum has been building throughout the year. Of the more than 300,000 prostate cancer patients tested with Decipher since launch, more than 100,000 were tested in 2025 alone.
Decipher is recognized as the only gene expression test with high-quality evidence in NCCN guidelines, which we believe has been an important contributor to this impressive growth. Looking ahead, with the market now penetrated by Decipher at approximately 33%, we remain extremely confident in its ability to sustain strong double-digit growth in 2026 and beyond. This growth outlook is supported by several key drivers. As GRID-enabled research establishes clinical utility for new prostate signatures, we plan to expand our clinical reporting to incorporate these insights. Our first examples are three new predictive signatures, PORTOS, PTEN, and PAM50, that are now widely recognized by key opinion leaders as having utility based on recently published studies. Patients with higher PORTOS scores have been shown to benefit from higher doses of radiation in both post biopsy and post RP salvage settings.
PTEN, used alongside the Decipher score, showed promise in the STAMPEDE study for identifying which metastatic patients would benefit from adding chemotherapy. The BALANCE trial, whose results were presented at ASTRO last fall, found that the PAM50 molecular signature confidently predicts which patients with recurrent prostate cancer may benefit from hormone therapy with apalutamide in addition to salvage radiation therapy. We are working to add these molecular features to the Decipher report as optional insights, providing additional information for men with high-risk biopsy and RP disease, including those with biochemical recurrence. A reminder, this patient population has been underserved to date, a trend that we have been focused on improving with augmented clinical evidence supporting Decipher in advanced disease, where its predictive power has been shown to improve patient outcomes.
This focus, paired with the launch of Decipher Metastatic, has led to another quarter of more than 30% growth in the combined high-risk RP and metastatic categories. We believe there remains significant opportunity to expand Decipher's use in advanced disease. Additionally, we view digital pathology and AI-powered analysis as complementary to molecular analysis, with the potential for additional data points to provide a more comprehensive assessment of tumor histology. To support further research, we made our digital pathology services and associated AI models available to collaborators last year and have implemented slide scanning as a standard production workflow. We have now scanned over 210,000 slides from over 150,000 patients with outcomes data, representing the majority of our historical data set on Decipher.
We plan to leverage this extensive database in combination with whole transcriptomes in an expanding number of collaborations with top academic centers to understand the complementary nature of these two data types in order to continue to evolve our clinical offerings. Generating clinical evidence is a core pillar of our Veracyte Diagnostics Platform, and we continue to fuel this flywheel. Decipher Prostate now has more than 100 publications demonstrating its clinical utility and validity across the prostate cancer risk spectrum, plus an additional 100 publications leveraging our research use only GRID platform. At ASCO GU, data to be presented, including more than 15 abstracts across prostate and bladder cancer, highlight how our platform is contributing to advances in urologic oncology. Multiple abstracts will showcase the power of Decipher GRID to enable novel research, including studies demonstrating how signatures derived from GRID predict adverse outcomes in men on active surveillance.
Several abstracts will be presented leveraging real-world data on the usage of the Decipher Prostate score in our patient population, including those with metastatic prostate cancer. Moving to bladder cancer, our Decipher Bladder classifier and associated research use only grid data is increasingly being integrated into studies that aim to help researchers identify critical signatures to guide the future of bladder cancer treatment. We're seeing strong momentum generating new clinical evidence for this indication, with 5 abstracts highlighting Decipher Bladder at ASCO GU. We're particularly excited about the findings from the SURE-02 trial, which underscore the importance of molecular subtyping in muscle-invasive bladder cancer, or MIBC, and support integrating genomic classifiers like Decipher Bladder into clinical trial design and treatment planning. The field transitions towards more biologically informed evaluation of novel treatment strategies in bladder cancer, we plan to continue investing in this indication to drive future growth.
Collectively, these studies highlight how our Decipher tests are increasingly helping guide clinical decision-making, advance biological understanding, and accelerate innovation in urologic cancer care. This momentum in bladder cancer extends to our TruMRD platform, our whole genome sequencing approach to MRD. We remain on track to launch our first indication for MIBC in the first half of this year, after completing our technology assessment with MolDX to receive reimbursement, which is in progress. We intend to leverage our strong Decipher brand and channel to serve patients that are treated in the urology and radiation oncology setting, which we believe reaches approximately 70% of MIBC cases. Our initial focus will be on recurrence monitoring in those patients who have completed their initial therapy for MIBC and are not undergoing adjuvant chemotherapy, which we believe is the majority of MIBC patients treated in this setting.
We're building a strong and growing body of clinical evidence around our MRD platform. At ASCO GU, TruMRD will be featured in an oral presentation on a phase 2 trial evaluating pembro combined with serial CTDNA monitoring in patients with MIBC that did not undergo radical cystectomy. In this trial, TruMRD's whole genome sequencing was used during neoadjuvant therapy, at restaging, and during surveillance to monitor for residual disease, providing more confidence that the cancer was responding to therapy. The results demonstrate that many patients with MIBC may be successfully treated without bladder removal and maintain very low risk of metastatic recurrence. These findings highlight how molecular monitoring may support bladder-sparing treatment strategies while maintaining confidence in managing disease. This therapeutic strategy is being prospectively evaluated in the actively accruing NeoBLAST study conducted at the University of British Columbia.
In addition, there are several other studies that have already been completed across bladder, colorectal, and lung cancer, as well as other indications. We have a deep pipeline of additional studies underway, with 10 in testing or analysis, 13 in contracting, and 17 in active planning, spanning MIBC as well as non-muscle invasive bladder cancer, breast, lung, colorectal, and immunotherapy treatment response. TruMRD is a platform that is extensible into other cancer types, and we plan to launch additional indications each year going forward. Our MIBC launch addresses a clinically important market and will serve, we believe, as a foundational proof point that Veracyte is a credible player in this large and expanding space. With strong engagement from leading institutions and encouraging early results, we believe TruMRD's differentiated approach positions us well to capture meaningful share in the MRD market.
Turning now to Prosigna, our second major product launch plan for 2026. Prosigna is based on the well-established and scientifically validated PAM50 signature, which provides physicians and patients with deeper insights into the biological classification of their cancer and the risk of recurrence to help inform treatment decisions. The opportunity in the U.S. breast cancer market is significant, with over 300,000 patients diagnosed each year. Approximately 75% of these patients have early-stage hormone receptor-positive disease and would be eligible for Prosigna testing. Clinical data will be an important driver of adoption, and we look forward to the full OPTIMA trial readout, which we expect to be presented at ASCO in June.
We believe this data will further strengthen the clinical evidence supporting Prosigna, differentiating it as the next standard in breast cancer prognosis, and that numerous ongoing studies will further demonstrate the differentiation of Prosigna in this setting, building on the optimal results. We believe this body of evidence supports the opportunity for Prosigna to capture meaningful share in this market over the next five years. We remain on track to launch our LDT for Prosigna over the summer on our new Transcriptome Lab workflow, the same analytical platform we have built and fully launched for Afirma. To prepare for this, we've begun building out our commercial team, starting with appointing a strong leader for the sales force, while also growing our medical science liaison team and engaging KOLs.
Meanwhile, our talented marketing team is busy working on all of our pre-launch activities, while our fantastic market access team is working on the Medicare and commercial reimbursement coverage. I couldn't be more excited about our two major product launches this year. The foundation we have built over the last five years, including our track record of meeting or exceeding our expectations while expanding our leadership across the cancer care continuum, reinforces the durability of our growth outlook. Our execution across Decipher and Afirma, combined with our ability to navigate through evolving market dynamics, reflects the strength and resilience of our operating model.
We are entering 2026 with a clear path to sustain double-digit growth, served by a portfolio of tests in prostate, thyroid, bladder, and breast. This momentum positions us to deliver lasting value for the patients we serve, the employees who power our mission, and our shareholders. With that, I will now turn the call over to Rebecca to review our financial results for the fourth quarter and full year, as well as our outlook for 2026.
Thanks, Marc. Q4 was another exceptional quarter, with $140.6 million in revenue, an increase of 19% over the prior year period. We grew total volume to approximately 48,000 tests, a 16% increase over the same period in 2024, and generated $52.6 million of cash from operations to end the quarter with $412.9 million of cash and cash equivalents on hand. Testing revenue during the quarter was $135.8 million, an increase of 21% year over year, driven by Decipher and Afirma revenue growth of 27% and 16%, respectively. Total testing volume was approximately 45,500 tests, an increase of 16% over the prior year period.
Testing ASP was approximately $2,984, an increase of 4% compared to the prior year, driven primarily by the impact of higher prior period collections, or PPCs. Normalized ASP was also higher at $2,875, a 1% increase compared to the prior year period, after adjusting for the approximate impact of $5 million of PPCs in the quarter. Moving to gross margin operating expenses, I will discuss our non-GAAP results. Non-GAAP gross margin was 75.1%, up 580 basis points compared to the prior year period. Testing gross margin increased 380 basis points compared to the prior year to 76.1%, driven by operational efficiencies from our v2 transcriptome and higher PPCs.
non-GAAP operating expenses were up 12% year-over-year to $65.1 million. Compared to the prior year, research and development expenses increased by $1.6 million to $19 million, driven primarily by clinical investments. Sales and marketing expenses increased slightly to $23.9 million, given higher travel expense. G&A expenses were up $4.7 million to $22.3 million, primarily due to hiring and expenses in our customer service function to support revenue growth and software teams to support new product development. Moving to profitability, we recorded quarterly GAAP net income of $41.1 million and $66.4 million for the full year of 2025. Adjusted EBITDA for the quarter was $42.3 million, or 30.1% of revenue, well above our expectations, given the benefit of prior period collections.
For the full year 2025, our adjusted EBITDA margin was 27.6%, ahead of our target of 25%, which was achieved more than a year ahead of our projections. We increased our cash balance by more than $120 million over the course of the year. These results give us the flexibility to invest in our growth drivers and are a testament to our differentiated financial profile. Turning now to our 2026 outlook, we are reiterating our 2026 total revenue guidance of $570 million-$582 million, or 10%-13% year-over-year growth. This reflects testing revenue growth of 14%-16% for the year, with Afirma growth expected to be in the mid to high single digits and Decipher growth to be approximately 20%.
As always, we have not included PPCs in our guidance, but do have a headwind of approximately $10 million of PPCs we recognized in 2025. We expect adjusted EBITDA margin to be approximately 25% in 2026 and in future years, barring any bespoke investments we decide to make, which of course, we would communicate as appropriate. We expect Q1 adjusted EBITDA margin to be lower, given typical seasonality of expenses, including increased compensation, benefits, and payroll tax. As always, we plan our expenses on an annual rather than quarterly basis. In closing, I am thrilled with our progress over the course of 2025. As Marc shared, we delivered on or exceeded all of our 2025 goals, including the Decipher metastatic launch and the transition of Afirma to the v2 transcriptome.
With a number of exciting catalysts on the horizon for 2026 and beyond, paired with our differentiated financial position, I am more confident than ever in Veracyte's future and proud to be serving more patients at pivotal points in their cancer journey. We'll now go into the Q&A portion of the call. Operator, please open the lines.
Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We please ask that you limit your questions to one question and one follow-up question. Please stand on by while we compile the Q&A roster. Our first question comes from the line of Subbu Nambi of Guggenheim. Your line is now open.
Hey, guys. Thank you for the question. I have two topics, starting with the guidance question. As we sit here eight weeks into the year, h as your conviction in the guidance evolved in any way? What are the assumptions that drive the high end or low end of the range, and maybe some details on the quarterly guidance?
Yeah, thanks, Subbu. I'll start. I mean, obviously, you know, we're eight weeks into the quarter, but only eight weeks into the year. We've reiterated our guidance, you know, that we gave earlier in the year. You can see from there, our conviction in our guidance is continued to be strong. I'll ask Rebecca to talk a little bit about the seasonality and the potential drivers of, you know, the high and low-end range.
Happy to do so. Thanks, Marc, and thanks, Subbu. Great to hear your voice. I think the first thing to be aware of is for the first quarter sequentially, this is a quarter where we do see seasonal trends. We had obviously an incredibly large prior period collection quarter in the fourth quarter. Historically, using last year as a proxy, that does not typically tend to repeat in the first quarter. That's typically, last year, it was around $500,000. That is one thing to be aware of, from a sequential trend perspective. From a volume perspective, Afirma is typically the lowest in the first quarter and followed by the third quarter, with the second and fourth quarter being stronger. With Decipher, it's highly dependent in the first quarter on weather.
If you use last year as a proxy, we had maybe we were up maybe 100 samples or so sequentially, and had a pretty big weather impact in the first quarter of last year. This year, you know, tracking to date is around the same from a weather impact, you know, obviously, we'll catch that up throughout the course of the year, but that is something to be aware of on a go-forward basis. What would get us to the high end of the range would be a couple of different things. The first, you know, we do have a no result rate assumption for Afirma in guidance. At the low end, we would assume little to no benefit from the no result rate.
At the high end, we would assume about the same level we saw in the fourth quarter. That would be one thing to take into account. If we do get prior period collections, that's not baked in, that could bias us to the high end. Obviously, volume outperformance, specifically, you know, I think Decipher has more, the error bars are wider on Decipher than Afirma, given the nature of the kind of portion of the adoption curve of where we are at. From Decipher perspective, if we were to see more penetration or more share gains, that would obviously lend itself to the high end of the guide as well. Hopefully, that helps. Anything else to add, Marc?
No, just a reminder that, you know, we're not, in our guide for revenue, we're not guiding for the new product launches, for the very simple reason that, you know, we expect those to be more of a revenue driver in 2027, but those, of course, are included in the guidance either.
Thanks for the reminder.
Super helpful, both. Thank you for that. One of the goals of the OPTIMA study is to expand the intended use population. What readout is required for this to occur, and if successful, how big would this market be? Thank you so much, guys.
I'll start, and then I'll hand over to John to talk about the market opportunity here. The, you know, the way we describe this is, there's, you know, the patients, 300,000 patients a year with breast cancer, there's about 75% of them, or 225,000 of them, that are addressed by what we believe will be the Prosigna indication there. Our first and foremost goal is to penetrate that market, as it currently stands, and then obviously, you know, expand from there. You can expand, you know, into, for example, premenopausal, you can expand into all the different risk categories within that 225. John, maybe you can just give a little bit more commentary on how, you know, OPTIMA is going to address this.
Yeah. Thanks, Subbu. OPTIMA has included in their enrollment criteria up to nine nodes. Currently, Oncotype is approved up to three. You know, we'll have to see what the performance of the test ultimately will be with the OPTIMA trial results before we can provide very directed commentary on how we expect to leverage that data.
Great. Remember, OPTIMA is expected to read out, we hope, at ASCO. Of course, we're, you know, we're hoping that the and expecting that the results are positive and that it reads out when we're looking for it to, and we're ready to launch when that happens. Thanks for that question, Subbu.
Thank you. Our next question comes from the line of Puneet Souda of Leerink Partners. Your line is now open.
Hey, folks. This is Carlos on for Puneet. I've got two questions. The first one is, you had a really healthy beat of your 25% margin target. You were at, I think, 27.6% for the year, but you're guiding to go back down to long-term target of 25% in 2026. If you could just walk through some of the push and pulls there, is that just conservativism? Is it true ups? Is there an increase in OpEx that we should be looking out for? Anything there would be helpful. Thank you.
Yeah, thanks for the question. At a high level, you know, we've got two product launches coming this year, you know, the way I think about it is, as we launch those products, if we see an opportunity to invest faster, to go faster, we will absolutely want to be able to take that. That's one. Obviously, building clinical evidence and clinical studies and so on, especially in MRD, as we expand into more indications, is important. I think for us, it's really important to have the flexibility to be able to do that while remaining, you know, extremely profitable relative to the industry. I'm proud of the fact that we got there about a year earlier than we anticipated.
We set a well-run business in this, you know, diagnostics industry should be able to get to 25% and sustainably remain there. Rebecca, do you want to add?
Yeah, I would just say specifically to the 25% guide versus the 27.6 and over the course of 2025. Recall, we did have $10 million of prior period collections over the course of 2025, and given we don't imply that in the guide, we wouldn't include that in our, in our OpEx guide either. We do have significant investments, per Marc's point, that all have an incredibly high ROI associated with them. Given, you know, our goal here is to serve as many cancer patients as we can with high-value, quality products, we're going to invest in those things.
While they're, you know, not necessarily going to be impactful, you know, and aren't included in our guide in 2026, they're absolutely critical for the long-term performance of this organization, and we feel very positively about, you know, the benefit they will have, both, you know, to all of our stakeholders, including patients. You know, when it comes down to it, that's what we're focused on, driving revenue growth, driving patient adoption, and really serving as many folks as we can. Everything we're investing in here is very high ROI. That's what I would add.
I would just say, you know, what we are investing in specifically are those new product introductions, the software and bioinformatics resources required, the commercial resources required, the revenue growth support, through our customer service, billing, and lab operations team. Again, remember, last year, we did invest in the back half, more so than the first half, obviously you have the full year annualization of that impact as well.
I think, you can see kind of the opportunity breadth of what we have in front of us is so high, it would almost be foolish not to do our best to invest these dollars in things like, you know, further Decipher penetration, bolstering Afirma for the long term, the MRD platform, as well as Prosigna, obviously the long-term growth drivers, which are a much smaller percentage of the pie vis-a-vis IBD enabled swab at this point in time.
Okay, thanks. That's really helpful. Just as one other question. When we're looking at the Decipher market, you know, you've had really great momentum, 27% growth in the fourth quarter. Still plenty of penetration to go, with the market only 40% penetrated, but the penetration, you know, is growing quickly, and we're seeing competitors investing a lot more into their competing assays. You know, one of them that had struggled a bit managed to return to double-digit volume growth that they announced earlier this week, for example. If you could just give a little update on the competitive space that Decipher operates in, what you're seeing, that would be very helpful. Appreciate it.
Yeah, happy to. A couple of, kind of macro-level things. I mean, the way we see the market growing is at about, from an incidence standpoint, is about 6%. Decipher represents, based on our math now, coming out of the year 2025, about 33% market penetration. As you can see, you know, one-third of patients are getting Decipher. More importantly, 2/3 are not. We haven't seen any change in the competitive dynamics or competitive environment at all. In fact, you know, if you look at the way Decipher grew in, 2025 and our guide going forward, you know, it's continuing to represent very strong growth. That's driven by the, you know, masses of evidence that we talk about regularly, the NCCN guidelines that we have, and where Decipher sits in that.
You know, we remain extremely confident in Decipher's ongoing growth trajectory. You know, we're very encouraged when we see, you know, how that's even, you know, coming into this quarter, how that's progressing in the marketplace.
Just one thing to add, I mean, we grew 22,000 tests in 2025 versus 2024. If you look at the other players in the market and do an extrapolation of what you think their total year volumes were, they aren't that far off of what our peer growth was. You know, that's just an exclamation point to Marc's point, that we really are not seeing a difference in competitive dynamics. Recall, there are three players in this market, and at least vis-a-vis the pre-announcement, I do believe, you know, we're seeing kind of maybe share move from one to the other in any given quarter. Again, our competitive dynamics are such that, are so strong that we don't necessarily even see that noise.
Maybe just to, you know, Rebecca, remind me, just punctuate one other point. As you look across the NCCN risk spectrum, you know, Decipher is doing, and always has done extremely well, in the intermediate and low. Low has been, I would say, our second highest, and high has probably been the lowest. I think we've mentioned a few times over the last couple of quarters how we're seeing, since the launch of Decipher Metastatic, a nice increase in growth in the high risk. Of course, you've got the RP and the metastatic population there as well.
You know, with that growing in, like, the 30% range, it's actually really exciting to see further penetration across the care continuum, which has always been our strategy, with all of our tests and particularly with the type of evidence that we generate.
Thanks, really appreciate it, and congrats again on the quarter.
Thank you.
Welcome. Thanks.
Thank you. Our next question comes from the line of Bill Bonello of Craig-Hallum Capital Group. Your line is now open.
Hey, yeah, two things. To start with, I might come also at the margin question, but probably from the opposite point of view. I mean, just sort of back-of-the-envelope math, it looks like you're giving yourself, you know, $10 million-$15 million of incremental investment to launch two products. At some point, you have to, you know, put together an entirely new sales force, I would imagine, for breast cancer. You know, help us understand why that's enough spend to allow you to be competitive with those two products.
I love your question, Bill. Marc's going to answer it.
You know, I mean, and if anything, I would say, you know, when you talk about the room, you know, that might be room for us to, you know, add incremental spend if we need it. Remember what I said, if we see an opportunity to go faster, we have the room to go faster. The baseline assumption might even be a little bit less than that. The reason for that is, you know, as we launch these new products, if you think about how 2026 shapes out, we need to add maybe, you know, 12 sales reps, beget at the beginning for the Prosigna side. Then, of course, MRD plays into our existing channel in urology, where the majority of patients are served in that setting.
There's not a significant amount of incremental investment there. Beyond the sales team and the market development activities, you know, the bulk of actually launching a new product is in clinical evidence development, and that's been ongoing and is already in the run rate for us and has been for years. You know, again, it's playing the similar formula to Decipher. Many of the studies that are actually going to drive these products are studies that, you know, others will do over time. I'd say, Bill, the answer to the question is, we're confident we can do it with that, and if we need to spend more, we will spend more, and we will go faster.
I've absolutely agreed with Marc. Bill, let's take the math offline because the amount we will be spending, year over versus 2025 is significantly higher than the $10 million you cited. Marc's absolutely right on the drivers of that investment. Yes, the investment, given the gross margin expansion that we expect from the v2 transcriptome transition, allows the math to be decently higher than that $10 million cited.
Excellent. Thanks. I've never been good at math. The follow-up, which is sort of cheating, because it's really a different question, can you just talk about how you're thinking about capital allocation? I mean, you're sitting with a lot of cash and generating really strong cash flow, and it looks like you will continue to do that.
Absolutely.
Absolutely. Happy to do that. No change in our philosophy around capital allocation. You know, we've been generating cash for a while now. We've had a strong balance sheet. We've made some important decisions, including, you know, acquiring C2i in order to drive our MRD platform. We're continuing to look at opportunities in the marketplace, but our philosophy and our bar hasn't changed one bit. You know, other than that, there's, as you can see, and we just talked about, there's investment in our ongoing business. We're, you know, obviously spending money, as you would expect us to, on, you know, organic discovery type of activities and building infrastructure, things like software development and so on.
Those are kind of the main ways we think about allocating capital. Yeah, we'll continue to be very deliberate about that.
Great. Thank you.
Thank you. Our next question comes from the line of Doug Schenkel of Wolfe Research. Your line is now open.
Hey, good afternoon, guys, thank you for taking my questions. The first topic I wanted to dig in on is gross margin, which stepped up by about 200 basis points in the fourth quarter. How much of that can be directly attributed to the v2 transcriptome? Just one clarification also on gross margin. Rebecca, in your prepared remarks on Q1 adjusted EBITDA margin being lower, is that an expectation of being lower than the target guidance number for the year or down sequentially from Q4?
Let me take the back part of that first. Yes, it would be. We would expect Q1 to be below the guide for the year and definitely lower sequentially, right? You have to remove the PPCs and then obviously, the start of the year costs, whether it's benefits, comp, taxes, healthcare, et cetera, will impact that. Absolutely, and then obviously, PPC. Yes, absolutely, Q1 should be down sequentially for sure. Vis-a-vis your question on growth margin in Q4, that really is the two things that you the thing you cited and the thing I cited. Together, we have the perfect answer, Doug. No result rate benefit in the cost benefit from the v2 transcriptome as well as the PPCs.
The no result rate is the larger impact of the 2.
Okay. Thank you for that. Second topic is Decipher Bladder. Data coming out of ASCO GU looks pretty impressive. You know, our understanding is most of your Decipher volume is still in Prostate today. Can you comment on roughly what % of Decipher is bladder, then how you expect that to trend over time? You know, I guess, you know, a big reason, you know, it's probably obvious, but a big reason I'm asking this is, you know, on the bladder-sparing data being presented at ASCO GU, it does seem like that could support increased use of Decipher into earlier stage or potentially neoadjuvant chemo decision-making workflows. That could actually support multiple Decipher-informed decision points across the bladder care continuum over time.
If that's the case, I could see where this could, you know, turn into a much bigger growth driver over time, if I'm thinking about this the right way. Any help there would be appreciated. Thank you.
Yeah, Doug, I think your question is spot on. you know, the way to think about the bladder in the numbers today, it's a very small portion of the total Decipher number that we talk about. you know, I think we've been relatively consistent in describing how we think about the bladder classifier. We need more evidence, exactly the type of evidence that's coming out at ASCO GU in order to drive the clinical utility of that test. In, for example, the neoadjuvant setting that you just described. what I really love about it is then you've got this, you know, Decipher classifier that can be used at that very early stage.
I've always said, you know, as you move the patient through the care continuum, you have patients who need MRD as well. We have the Decipher, we will have the TruMRD tests as well for those patients. I love that we're filling out that care continuum, and I think it's kind of important to have these, you know, be part of a diagnostic and prognostic and predictive workflow as well. Phi l, you want to talk a little bit about some of the interesting things that we're going to see at ASCO GU?
Thanks for the question. I would say the ASCO GU abstracts and aggregate really demonstrate how understanding the different subtypes of earlier stage bladder cancer is increasingly becoming part of care. You know, bladder cancer is in this transition where we're really looking at how to maximize response to neoadjuvant therapy to move patients to a bladder-sparing approach. The studies we'll be presenting kind of shows how our Decipher Bladder can inform those decisions, and where we see higher proportion responses in kind of non, and luminal versus non-luminal subtypes. Not only managing that, additionally, you know, you're seeing how we're, with Decipher Bladder also pairs nicely with the follow-on with our muscle-invasive bladder cancer MRD.
Again, trying to identifying the how patients are doing when patients are working towards a bladder-sparing approach. The bottom line is our portfolio of studies showing that understanding the subtypes of bladder cancer help inform that neoadjuvant therapy. It just increases the interest, and we're getting a lot of interest on that bladder test.
Thanks.
Thank you. Our next question comes from the line of Kyle Mikson of Canaccord Genuity. Your line is now open.
Hey, guys. Thanks for the questions. Congrats on a strong year. I want to start on the 2026 guidance. I think, Rebecca, in response to Subbu's question, you parsed out, Afirma and Decipher expectations for the year with respect to revenue. I think you said mid-single digit to high single digit for Afirma, and then Decipher, 20% growth, you kind of left. Could you just talk about the volume expectations for both of those products for 2026, and then any, you know, puts and takes for each of those? Like, for Afirma, you know, maybe some volume shifts because of the v2 or Decipher, you know, on the digital pathology stuff going on. Would love to hear that. Thank you.
Yeah, happy to do so, Kyle. Thanks for the question. Effectively, given the prior period, you can effectively assume that the volume growth number embedded in the guide is higher than the revenue growth guide because of the $10 million of prior period collection impact. That's the easiest way to think about it. Remind me what the second part of your question was. Sorry.
I mean, it was just kind of like puts and takes for volume growth for the year. There's a lot of kind of exciting stuff, [inaudible] especially.
Oh, yeah.
On the new transcriptome, at the low end of the Afirma guide, we would assume no benefit. At the high end, we'd assume kind of what we saw in the fourth quarter. On Decipher, there's a lot of different things that we're working on. Obviously, the continuous drum beat of publications and podium presentations. Obviously, the ASCO GU showing was incredibly strong. We would expect, you know, just that flywheel to continue throughout the year. The other thing on the Decipher front is we are working on new signatures that Marc cited in his prepared remarks. Those may not be necessarily additive to 2026, but will be important as we think about looking to 2027 and beyond and continued competitive differentiation.
The last one I would cite is really kind of on the high risk biochemical recurrence metastatic side. We've seen a lot of traction there since the ASTRO presentations back in Q3, I would suspect that that trend continues, if not even becomes even stronger as we go throughout the course of 2026 and beyond.
Perfect. I had a follow-up on MRD. I was curious what you're doing now to seed the market for the launch TruMRD and MIBC in the first half of the year. There's a lot going on in bladder cancer, whether it's on the therapeutic approval side or, you know, the clinical trial side, MRD. How are you going to make sure that your voice is heard other than these, you know, the data and things like that, and presentations?
Yeah, I think that's a great question. There are a couple of layers to it. I mean, first and foremost, as you know, our initial test in Tru MRD, which is a platform, is going to be in muscle-invasive bladder cancer. For that, you know, we really already have a lot of the voice of the customer, and that we are visiting those customers, you know, because of Decipher. At the appropriate time. Remember, we don't want to obviously distract from our very, very well-run Decipher business on the prostate side. At the appropriate time and the appropriate accounts, we will be spending time with those customers.
We will be, you know, describing the clinical studies that have already been done in that setting, and we'll be helping those customers to understand what our TruMRD offering is and how they're able to use it. John, do you want to add anything with respect to that?
No, I think you answered it well. I mean, the only thing that I would add is, we have a standing policy that we would only pursue tests commercially once they're reimbursed. I think what you're hearing here is a prudence, not conservatism. We are confident in the performance of the test as we've seen, as we've published. It addresses a meaningful clinical question that physicians are a sking, which is how many patients are going to recur post-surgery, that after neoadjuvant treatment, after surgery, are intended to be curative. Beyond that, we have lots of studies in the hopper that we continue to pull the Decipher play on, which is to continue to expand clinical utility through evidence.
It's a good time to remind everybody why our test is differentiated. You know, our TruMRD test is a whole genome-based approach, and you know, to John's point, the whole genome data that we're going to generate for every single patient at every single incidence of care during their treatment journey is, and their recovery journey, more importantly, is going to be valuable data and valuable information that will drive future clinical studies. Over time, you know, you see the Decipher playbook play out over and over again in MRD as well as it does in our whole-transcriptome business.
Perfect. Thanks, guys.
Thanks.
Thank you. Our next question comes from the line of Andrew Brackmann of William Blair. Your line is now open.
Hi, guys. Good afternoon. Thanks for taking the questions. Maybe we can actually just pick up where you left off there, Marc, sort of using the Decipher playbook for TruMRD as well. I think in the past, you talked about sort of driving some collaborations through Grid on TruMRD. Can you just remind us sort of how you can sort of replicate some of the learnings on using that Grid platform from other tests like Decipher into TruMRD? Any similarities or differences as you move from Decipher to TruMRD? Thanks.
I mean, I don't. It's a great question. I don't think there's a ton of lessons learned other than the high level one, that, you know, making that great information available is certainly driving a, and has driven over the years, a lot of research. You know, that research is on the existing test, but also importantly, as you heard when we talked about PORTOS, PTEN, and PAM50, it actually drives research around other biomarkers as well, and, you know, we can expand those by adding them to the report, the clinical report over time.
You've got this great, you know, workflow of research, find the most interesting outcomes and clinical factors that or clinical information that can be deployed as a test. Then it's very simple for us to just add that without even changing the nature of our test at all. That's why we have this kind of, you know, uniform platform that we use across all of our tests. Do you wanna add something?
With respect to specifically our MRD, as Marc mentioned, it's whole genome on the tumor. It's also a whole genome on the germline, whole genome on the cell-free DNA. That whole genome across lets us really track the tumor. We use the whole genome to provide a clinically validated MRD test that says, tumor detected, not detected. If it's detected, it gives a tumor fraction. Because we're doing whole genome, the grid approach is that we will leverage that additional data through collaborations, through research, to look at things like tumor heterogeneity, clonal evolution, the emergence of genome-wide signatures associated with resistance to platinum or other therapies used.
That's how our MRD really aligns well with what we've done with Decipher, and what we're doing with Afirma, where we get paid for a, a transcription signature, but we use a whole transcriptome through research to look at the biology, and develop new biomarkers.
What I love about this, Andrew, is you start in one, you know, indication, or one risk category, and then you expand from there. You start in prognostic, and you expand into predictive and so on. So you fill out the care continuum, and you fill out the clinical uses of the test across that care continuum. I don't see it being any different in MRD than we've demonstrated already in transcriptome.
Okay. All that's great color here. I'll stick on TruMRD. This is more sort of housekeeping. Can you just sort of remind us on the reimbursement strategy here? I think you're going after two codes versus sort of the bundle. Can you just level-set us on expectations there? And as you sort of think about dollar amounts, I don't know if you're willing to share sort of what defines success for you there, but anything qualitatively you can share with respect to sort of where your mind's at on sort of levels of reimbursement there. Thanks.
Yeah. Too early on the dollars, but I'll ask John to talk a little bit about the process we're going through.
On the reimbursement side, Andrew, as I mentioned, we're looking to pursue recurrence detection post patients who have been treated either with or without neoadjuvant therapy and undergone a radical cystectomy. Those are management decisions that are made with curative intent, and so as such, it is presumed that the patient is cancer-free, and as such, it does not conform to the NCD 90.2 limitation of having to bundle testing for MRD. Those will be coded and billed individually. We'll have two main codes. One is the initial landmark setting test that determines the MRD signature, as Phil described earlier, as well as then each sequential plasma test is also billed independently.
As it relates to pricing, that's something that we're still negotiating through the MolDX process.
Andrew, the population that John laid out, based on our own research, we believe is about 70% of the patients that are seen in our channel.
Perfect. Thank you.
Thank you. Our next question comes from the line of Lu Li of UBS. Your line is now open.
Great. Thank you for taking my questions. First one on the new product, revenue contribution. Understand that it's not including the guide. I wonder whether you guys have, like, kind of an internal target that you wanted to hit. Secondly, on the MRD new indication, you have CRC and lung on the slide. I wonder, is it fair to assume that those will be the next indications?
Le t me start with the second one and then, you know, Rebecca, you can talk about the first one. I wouldn't assume, no. I, what I don't want to do yet, because it's so dependent on a couple of things, including cohorts, is, put out a roadmap, for exactly what's coming when. It's why we've been saying it the way we have, a new indication every year. We will want to flex and adjust that and have agility to be able to do so on an ongoing basis based on, you know, the channel, the clinical evidence, the cohorts, the publications of that evidence, the reimbursement, and so on. We're not going to be more specific about the indications at this point.
We have said you should expect us to focus first and foremost on indications where we have, you know, some channel reach, or we're building channel and, you know, that will certainly be a factor over time.
Yeah, on your new product introductions, of course, we have our internal goals. I would highlight them on the MRD front as being more around the customer experience and less around the revenue contribution over the course of 2026. That will obviously become more of a factor in 2027 and beyond. This year, we're really working on ensuring, you know, a great customer experience for MRD and various other critical deliverables that we're citing internally. On Prosigna, that is expected to be, you know, launched here over the summer, and the benefit of that and the expectations for that are going to be highly tied to, you know, the OPTIMA readout and the timing of the OPTIMA readout and how that all goes.
We have a range of outcomes internally, again, we're seeding the market, and we aren't going for volume from the get-go. What we're really focused on is KOL engagement and spreading the word, and really kind of taking the approach of a top-down, you know, KOL engagement and ensuring that that is where we're really focusing on volume growth from the get-go. Over, you know, a five-year timeframe, we do believe this will translate into strong share across the entirety of that market. Again, in 2026, we're looking to build a foundation more so than really amp revenue from Prosigna and MRD.
Yeah, that's very helpful. Maybe just a quick question on the Decipher Q4 volume. If you look at it sequential basis, I think that's only up by 500 units. Wondering if there was anything to call out or just like, why it's, like, slightly lower than, like, Q4 24 number?
Yeah, I'm happy to take that one. Effectively, in any given quarter, you can have a day or two of volume that falls on either side of the quarter, right? In Q4 of 2024, that was a good guy, in Q4 of 2025, you know, we had a day that didn't get out, or day plus, actually, that didn't get out. You know, I think that all makes itself up, and that's typical. That is absolutely typically quarterly impact and quarterly volatility, and it's not any underlying trend. Over the course of the fourth quarter, we had, across every single metric we tracked, just an outstanding quarter. I definitely would not.
You know, 500 samples doesn't make me flinch one way or the other, 600, 700, whatever the course may be. You know, I think that's I wouldn't get overly wrapped around that axle. We've had many quarters like this before that fall on one side, folks tend to get a little excited about it, you know, a quarter or two or thee later, it all normalizes. I wouldn't read into it.
Got it. Thank you.
Thanks for asking that question.
Thank you. Our next question comes from the line of Tom DeBourcy of Nephron Research. Your line is now open.
Hi, thanks for taking the question. I actually wanted to ask, I guess, the DoD testing revenue, or I think you're guiding to $10 million-$12 million. It seems like, I guess in Q4, you still had biopharma revenue, what I would expect in 2026. Well, maybe not from the same source. You may also have biopharma revenue, whether it's from MRD or other clinical trials, just how to think about product versus, biopharma revenue as we, you know, I guess there's IVD launches or, just, I guess, biopharma, one-time revenue.
Yeah, happy to answer that, Tom. Implied in the guide is less than $1 million of biopharma revenue. Call it zero at the low end and one at the high end. That's an incredibly specific range, the reason why it's that specific is because unless something is signed and booked, we don't include it. That's just our philosophy. You know, obviously, with shutting down the French entity, that was where the vast majority of the biopharma revenue came from. We will, obviously, with the Decipher franchise, the MRD franchise, continue to go after biopharma. This, again, is less about a revenue strategy, it's much more about evidence strategy, that's really where we're focused. That's not necessarily the driving force.
On the product front, we have implied, you know, something closer to that around $10 million that you cited. That is down year-over-year. That's down year-over-year for two reasons. One is we have a new contract manufacturer and obviously the variable of their ability to produce. We wanted to give ourselves just some wiggle room around. The second is, you know, we are not selling to U.S. customers ahead of the LDT launch. Let me be very clear. We are not selling the IVD to U.S. customers ahead of the LDT launch, therefore, that contribution, which was quite small in nature, is not included in the guide.
Thank you. Our next question comes from the line of Keith Hinton of Freedom Capital Markets. Your line is now open.
Great, thanks. just wanted to follow up quickly on Decipher and Bladder. just make sure I, that I sort of understood the comment. Based on the exciting data, ASCO GU, you know, is investing additional commercial resources there, you know, becoming a near-term priority, you know, just based on what you've seen? Or do you feel like you need to see more data? If so, you know, is there more data that you're aware of in the near term? if you do decide to invest commercially there, you know, how much synergy is there with the existing Decipher franchise and the MRD franchise as well?
Yeah, I can take that one. Thank you for the question. No, the answer is no. The rate-limiting step in the growth of Decipher Bladder is not tied to commercial investments per se. As Marc mentioned earlier, there's a very high degree of overlap between bladder cancer patients who are currently managed by the physicians that we call on for Decipher Prostate. We feel we can manage that and have the bandwidth and capacity to manage that through our current channel and sales personnel and our systems. I think the parts that are rate-limiting are all this great evidence that you're seeing at ASCO-GU, still needs to be completed, still needs to be published.
Those are, in general, what allows us then to update our own clinical reports and to essentially leverage that great data to seed and create more demand.
Just broadly, you know, our investment in commercial this year will be mostly on the Prosigna LDT U.S. side, and then on MRD, to your question, because of the overlap in urology, I think about the MRD investment being in future years as we broaden into other indications.
Thank you. Our next question comes from the line of Mike Matson of Needham & Company. Your line is now open.
Yeah, thanks. I really just have two questions, not to pile on TruMRD, but I was wondering if you could just tell us the annual number of patients that you think are candidates, and then the number of tests per year you would expect to be used on those patients, on a given patient. The second question is really just on tax rate. Do you expect to start paying taxes in 2026, and what would be the appropriate rate to model?
I'll take the latter because it's fast and easy. We always have to pay some state taxes, where we've flown through our NOLs, but that's in the run rate, so I wouldn't think too hard about that. Effectively, we are expecting our GAAP and non-GAAP tax rate to be around the mid-single digits this year. We still have a decent chunk of our NOLs to get through. You know, one thing that we'll be talking about over the course of this year, as we look at the profitability profile going forward, is our valuation allowance, but more to come on that in the back half of the year, if we're looking like that might be something that gets released.
On the available market, we were estimating just around 20,000 patients for a SAM. You also have to factor that there's going to be some serial repeat testing on a per patient, per episode of care basis. The details of that are still under discussion through our tech assessment with MolDX.
Thank you. Our next question comes from the line of Kallum Titchmarsh of Morgan Stanley. Sorry, Morgan Stanley. Please go ahead.
Hi, this is Jason for Kallum. Thank you for taking our questions. A lot has been asked, so I'll just keep it to one. Maybe on Percepta Nasal Swab. You recently completed enrollment for the NIGHTINGALE trial. Can you just provide some color on what are the next milestones we should be looking at? Any color you can share on timeline for trial completion, data readouts, commercialization, and just any milestones we could track? Thank you.
Yeah, that was one of our key accomplishments in 2025, was getting the final patients enrolled through that study. Now it's a question of, I think, pick a couple of milestones. One is the follow-up. Of course, you've got to wait for at least a year, if not two, for those patients to be followed up to confirm, you know, benign. Then it's getting that publication ready, getting it published, which can take time, then it's a serial conversation then with MolDX and payers in order to get it reimbursed. This is why this one is very clearly in our... It's not in our, you know, five-year, three to five -year plan. It's more in our five to 10-year plan.
Thank you. This concludes the question and answer session. I'd like to thank you for your participation in today's conference. This does conclude the program. You may now disconnect.