Detailed narrative
Diagnostic Testing Momentum and Growth Drivers
Diagnostic testing revenue surged 42% year-over-year to $25.4 million, driven by a 38% increase in total test volumes to approximately 20,900. This growth was fueled by accelerating adoption from both primary care (up 133% YoY) and pulmonology (up 31% YoY). A key catalyst was the publication in March of a lung nodule biomarker validation study, demonstrating NotifyCDT's ability to detect cancer in nodules as small as 4 millimeters, which significantly increased orders for smaller nodules and expanded utilization across the broader lung nodule continuum.
Operational Efficiency and Margin Expansion
The company achieved its fifth consecutive quarter of gross margins at or above 80%, reaching 82% in Q2 FY26, a 200 basis point improvement year-over-year. This was attributed to growth in lung diagnostic testing, improved average revenue per test, and decreased average cost per test. Operating expenses, excluding direct costs, increased by only 7% to $27.4 million, supporting the 34% revenue growth and demonstrating strong operating leverage.
Sales Force Expansion and Productivity
Biodesix maintained an average of 104 sales representatives in the field during the quarter and plans to expand to approximately 120 by year-end. Salesforce productivity continues to improve across the organization, with newer representatives advancing along expected productivity curves and more tenured reps expanding their contribution. The company is opportunistically hiring, with the majority of new hires this year focused on primary care.
Clinical Evidence and Market Building
Beyond the significant March publication, Biodesix continues to present and publish clinical data. Real-world clinical and economic data were presented at the American Thoracic Society (ATS) annual meeting in May, highlighting the role of Notify lung testing in increasing stage 1 lung cancer detection and overcoming PET scan limitations. This growing body of evidence is crucial for driving deeper account penetration and increasing test utilization, especially in a market where guidelines have not been updated in over a decade.
Path to Profitability and Liquidity
The company reported a net loss of $7.3 million, a 37% improvement year-over-year, and an adjusted EBITDA loss of $3.2 million, a 56% improvement. Biodesix ended the quarter with $30 million in unrestricted cash and cash equivalents, a 17% increase from Q1, including $6.5 million from at-the-market proceeds. Excluding ATM proceeds, net cash used was $2.1 million, a 70% improvement year-over-year, indicating sufficient liquidity to execute its growth strategy and progress towards sustained adjusted EBITDA profitability.
Development Services and Biopharma Partnerships
Development services revenue for the quarter was $1.5 million, down from $2.1 million in the prior year, reflecting project timing. The company currently has approximately $8.5 million in contracted business, and demand for services remains strong. Management noted continued interest from major pharmaceutical companies following events like ASCO, with expectations for a robust pipeline of biopharma services agreements, though timing can be lumpy.
Anticipated CHEST Guidelines Update
Management highlighted the American College of Chest Physicians (ACCP) guidelines have not been updated in over 12 years and do not currently reference blood-based biomarkers. The ACCP has acknowledged this and stated a target to update guidelines in 2026. Biodesix continues to build a strong data package through publications and presentations, hoping for a favorable response when the guidelines are updated, with the next CHEST meeting in October being a key event.