I would like to welcome you to Adaptive Biotechnologies' second quarter 2026 earnings conference call. In addition, Non-GAAP financial measures will be discussed during the call, and a reconciliation from Non-GAAP to GAAP metrics can be found in our earnings release. Revenue, excluding milestones, increased 49% year-over-year, driven by growth across both clinical testing and pharma. Clinical testing volume grew 43%, adding more than 3,500 tests sequentially, while pharma sequencing continued its strong momentum.
We expanded MRD sequencing gross margin to 71%, up nine percentage points from a year ago, and we increased adjusted EBITDA margin to 14%. These results demonstrate the scalability of our MRD business and its ability to generate profitable growth. The transaction enabled us to retire the OrbiMed agreement, simplify our capital structure, increase our financial flexibility to execute our separation strategy, and invest in the compelling opportunities we see in MRD. Accordingly, we're raising our full year MRD revenue guidance to a range of $268 million-$278 million.
Now, let's take a closer look at the clinical business on slide five, which continues to be the primary driver of MRD growth. Clinical revenue increased 53% year-over-year, driven by a 43% increase in testing volumes and a 7% increase in ASP. During the quarter, we delivered more than 36,100 clonoSEQ tests, representing 11% sequential growth. CLL grew 16% sequentially, continuing to benefit from the 2025 NCCN guideline update.
| Metric | Period | Current guidance |
|---|---|---|
| MRD revenue | FY2026 | $268M-$278M (raised); midpoint implies ~29% YoY growth, or ~37% excluding milestones |
| Clinical (clonoSEQ) volume growth | FY2026 | 38%-40% |
| U.S. ASP per test | FY2026 | On track to approximately $1,400 (Q2 actual $1,382) |
| Total operating expenses | FY2026 | $350M-$355M (narrowed, on lower Immune Medicine spend) |
| MRD sequencing gross margin | FY2026 | On track to exceed 70% |
| MRD milestone revenue | FY2026 | $9M (all recognized in Q1; none assumed in second half) |
| Company-wide adjusted EBITDA and free cash flow | FY2026 (by year-end) | On track to reach positive adjusted EBITDA and positive free cash flow for the entire company by the end of 2026 |
| Immune Medicine separation | By year-end 2026 | Continue to expect to identify preferred path of separation by year-end (Morgan Stanley retained as advisor) |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +30% to $71.6M | Driven by continued strength in MRD, which represented 92% of total company revenue (Genentech amortization excluded from all prior-period comparisons). |
| MRD revenue | +33% to $66.2M (+49% excluding milestones) | Strength in both clinical and pharma; prior-year Q2 included $5.5M of milestones not repeated this quarter. Clinical and pharma were 75% and 25% of MRD revenue. |
| Clinical revenue | +53% | A 43% increase in testing volume plus a 7% increase in ASP, with broad-based growth across every reimbursed indication. |
| clonoSEQ test volume | +43% YoY (+11% sequential) | More than 36,100 tests delivered, reflecting expansion of the ordering-physician and account base, deeper penetration of existing accounts, and adoption across the care continuum. |
| MRD sequencing gross margin | +8 pts to 72% (from 64%) | Lower assay costs following the NovaSeq X transition plus operating leverage as volumes grow. |
| MRD adjusted EBITDA | $9.1M vs $1.9M a year ago (14% margin) | Combination of strong revenue growth and continued operating leverage. |
| MRD pharma sequencing revenue | +38% (excluding milestones) | Strength of the underlying sequencing business; no milestone revenue was recognized this quarter, unlike the prior year. Backlog reached ~$245M, up 12%, across 189 active trials. |
| Blood-based testing volume | +68% YoY (+14% sequential) | Reached 51% of total clonoSEQ volume for the first time; blood now contributes 30% of MRD testing in multiple myeloma and 42% in ALL. |
| Community testing | +65% YoY | Represented 36% of total volume (above the full-year target), supported by updated guidelines, standardized protocols, and EMR-enabled workflows. |
| Immune Medicine revenue | +8% to $5.4M | Primarily reflecting revenue recognized under the target-discovery agreement with Pfizer; segment posted a $6.3M adjusted EBITDA loss. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Separation of MRD and Immune Medicine | MRD and Immune Medicine operated together within one company; Immune Medicine framed as a call option | Adaptive announced a plan to separate the two businesses, retained Morgan Stanley to evaluate strategic and structural alternatives for Immune Medicine, expects to identify its preferred path by year-end, and has Harlan Robins transitioning from CSO to a consultant role to help advance the separation; MRD would go 'free and clear' to pursue its growth strategy. | — |
| Blood-based testing shift | Blood-based testing a growing but sub-half share of volume | Blood exceeded half of all clonoSEQ tests for the first time at 51% (up 68% YoY), including 30% of MRD testing in multiple myeloma and 42% in ALL, expanding the opportunity in the community setting and supporting more frequent serial monitoring. | — |
| Community adoption and serial monitoring | Flatiron integration launched; serial pull-through 60% in Q4 (first full quarter), 72% last quarter | Community testing reached 36% of volume (up 65% YoY, above the full-year target); one year after Flatiron integration, 75% of repeat orders are being fulfilled, and Adaptive completed its first Epic integration with a custom serial-testing interface. | — |
| Pricing, reimbursement and ASP | ASP building toward the ~$1,400 target via reimbursement gains | U.S. ASP rose to $1,382 (up 7%), aided by recent MCL coverage expansion with Concert and in-house revenue-cycle management; management is in productive dialogue with MolDX/Medicare to expand tests per episode and with two large commercial payers on recontracting, with $1,400 seen as de-risked. | — |
| Pharma registrational portfolio | Regulated-endpoint studies were about 40% of active studies a couple of years ago | Regulated-endpoint (primary or secondary) studies now comprise about 60% of active studies, carrying higher economic value and future milestone potential; multiple myeloma remains the largest registrational share with expansion in CLL and ALL, and MRD is increasingly used to guide enrollment, stratification, and treatment decisions. | — |
| Balance sheet and capital structure | OrbiMed financing agreement in place | A $340 million zero-coupon convertible note offering retired OrbiMed, was paired with a cap call and share repurchase to reduce dilution, and left the company with ~$357 million in cash and going-forward net interest income; the added capital also supports evaluating platform expansion into solid tumors and other disease areas under a disciplined M&A framework. | — |
| Competitive environment in DLBCL | clonoSEQ the established purpose-built heme MRD platform | Management sees competition (notably Natera's Foresight) in the field, mostly in the early, underdeveloped DLBCL market, but reports no attributable impact on growth or its customer base, citing its purpose-built technology, evidence base, reimbursement, and EMR integrations, with the enhanced ctDNA assay a focus later this year. | — |