Biodesix's Q3 2025 Earnings Call: Emerging Contradictions in Primary Care Strategy, Sales Rep Productivity, Medicare Payments, and Pipeline Expansion

Date of Call: November 3, 2025

Financials Results

• Revenue: $21.8M, up 20% YOY
• Gross Margin: 81%, up 400 basis points vs 77% in Q3 2024

Guidance:

• Full-year 2025 revenue guidance raised to $84M–$86M.
• Expect adjusted EBITDA positivity in Q4 2025.
• Anticipate gross margins to remain near ~80% to finish the year.
• Plan to have an average of 93–97 sales reps in Q4 and add ~6 reps per quarter into 2026.

Business Commentary:

* Revenue Growth and Strategic Initiatives: - Biodesix reported revenue of $21.8 million for Q3 2025, up 20% year-over-year. - Growth was driven by strategic initiatives such as expanding into primary care, improving gross margins, and successful market access efforts.

• Gross Margin Improvement:
• The company's gross margin percentage increased to 81% in Q3 2025, up 400 basis points from the previous year.

• This improvement was due to process enhancements and more favorable contract terms secured by the market access team.

• Development Services Revenue Expansion:

• Biodesix's development services revenue reached $1.9 million in Q3 2025, marking a 97% year-over-year increase.

• Growth in this area was driven by strong interest and partnerships with biopharma, life science tools, and diagnostic companies.

• Product Pipeline and Partnerships:

• Biodesix's product pipeline includes a combination proteomic and genomic MRD test, expanded VeriStrat indications, and digital diagnostics.

• Strategic partnerships, such as with Bio-Rad Laboratories, are advancing development and regulatory submissions for new assays.

• Adjusted EBITDA and Financial Performance:

• Biodesix reported an improvement of 18% in adjusted EBITDA year-over-year, with a loss of $4.6 million in Q3 2025.
• The improvement was supported by cost management and increased revenue, positioning the company for adjusted EBITDA positivity in Q4.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted accelerating growth (revenue up 20%), gross margin expansion to 81% (+400 bps YOY), adjusted EBITDA improvement and a raised 2025 revenue guide to $84M–$86M, and stated confidence in achieving adjusted EBITDA positivity in Q4.

Q&A:

• Question from Margarate Boeye (William Blair & Company L.L.C.): Can you discuss signals or proof points that the primary care expansion is working beyond the volume growth commentary?
  Response: Primary-care expansion is driven by warm handoffs from pulmonologists, showing a consistent ramp vs. the pilot and early evidence of earlier detection and higher utilization (PCP share rose to 11%; primary care test orders grew 75% YoY in Q3).

• Question from Margarate Boeye (William Blair & Company L.L.C.): Any color on ways you plan to expand the product portfolio into 2026 and what investors should watch for?
  Response: Expect R&D updates at AMP highlighting partnerships (Bio‑Rad, Thermo Fisher, MSK) and pipeline progress with potential additional commercializable tests in coming years; recordings and follow‑up with the Chief Development Officer to provide details.

• Question from Alexander Vukasin (Canaccord Genuity Corp.): Can you elaborate on ramp-up of new sales reps and what peak average sales per rep could be at full productivity?
  Response: Ramp mirrors the pilot with consistent onboarding; management targets returning to a minimum ~$1M revenue per rep and will scale territories (50 territories exiting Q4) while hiring ~6 reps per quarter.

• Question from Alexander Vukasin (Canaccord Genuity Corp.): Does increased competition and new tests in the lung cancer continuum help or hurt milestones like HEDIS updates or guideline adoption?
  Response: Competition and new tests increase awareness and screening adoption, which management expects to be net positive for Nodify; they cite first‑mover advantage and view a rising tide as beneficial despite HEDIS timing disappointments.

• Question from Thomas Flaten (Lake Street Capital Markets, LLC): Can you quantify the Medicare Advantage back pay you received in Q3?
  Response: There was minimal back pay in Q3; the primary impact was resumption of payments on new claims rather than collection of material past‑due claims.

• Question from Thomas Flaten (Lake Street Capital Markets, LLC): How sustainable is the ASP uptick tied to Medicare Advantage payments—will it normalize or persist?
  Response: Management says MA plans are now consistently paying current claims, and they feel good about the sustained ASP improvement while noting any material past‑claim collections will be called out if they occur.

• Question from Thomas Flaten (Lake Street Capital Markets, LLC): Of the guide increase, how much is driven by diagnostic revenue versus services revenue?
  Response: The guide increase is driven predominantly by diagnostics revenue, which is the lion's share of company revenue.

• Question from William Ruby (TD Cowen): How confident are you in achieving adjusted EBITDA positivity in Q4 and what are near‑term capital needs given current cash?
  Response: Management is confident in reaching adjusted EBITDA positivity in Q4 based on Q3 close and Q4 momentum; capital needs are manageable—cash improved via ATM and AR timing, gross margins strengthened and OpEx largely flat as they drive toward cash‑flow breakeven.

Contradiction Point 1

Primary Care Expansion Strategy and Feedback

It highlights differing perspectives on the effectiveness and feedback from the primary care expansion strategy, which is a key growth initiative for the company.

Are there additional signals or proof points that your primary care expansion is effective, beyond the PCP volume growth mentioned in prepared remarks? - Margarate Boeye(William Blair & Company L.L.C., Research Division)

2025Q3: The primary care expansion is not about cold calling; it involves warm handoffs and introductions by pulmonologists. Feedback aligns with pilot results. Marketing materials are tailored for PCPs. Early detection and diagnosis support enhance value. Primary care physicians track earlier diagnosis, indicating potential long-term impact on patient lives. - Scott Hutton(CEO)

Can you provide an update on the primary care opportunity and current observations? Why the increased confidence in the strategy’s effectiveness, and have trends diverged from the pilot? - Andrew Brackmann(William Blair)

2025Q2: We have a couple of markets that are leading this primary care expansion. We're seeing in some markets, the number of primary care doctors that are using our test is actually pretty strong. We've had some really good experiences there, we've had some markets where it's been a little slower. No major surprises, we think we're actually getting there as we expected to. - Scott Hutton(CEO)

Contradiction Point 2

Revenue Growth Drivers and Sales Rep Productivity

It involves differing expectations regarding the primary drivers of revenue growth and the productivity of new sales reps, which are critical for the company's financial performance.

Can you explain the ramp-up process for new sales reps and the expected peak average sales per rep at full productivity? - Alexander Vukasin(Canaccord Genuity Corp., Research Division)

2025Q3: Ramp-up consistent with pilot and current expansion. Aiming for each sales rep to achieve minimum $1 million productivity. 50 territories established and expansion continues at 6 reps per quarter. Mix of associate and primary care-focused sales consultants. - Scott Hutton(CEO)

How confident are you that new primary care reps will maintain $1 million in productivity per rep after ramping? - William Ruby(TD Cowen, Research Division)

2025Q2: The sales rep productivity is important. I am very, very comfortable with the $1 million plus target that we've set for each sales rep. - Scott Hutton(CEO)

Contradiction Point 3

Primary Care Sales Rep Ramp-up and Productivity

It highlights differing expectations and progress regarding the ramp-up and productivity of primary care sales reps, which directly impacts revenue growth and market expansion strategies.

How will new sales reps scale, and what is the projected peak average sales per rep at full productivity? - Alexander Vukasin (Canaccord Genuity Corp., Research Division)

2025Q3: We believe that once we have 6 sales reps in each territory, they can be productive in the neighborhood of $1 million each. - Scott Hutton(CEO)

Are most new hires in primary care? Will PC reps take longer to ramp up than pulmonology reps? - Sung Ji Nam (Scotiabank)

2025Q1: The ramp-up is expected to be consistent with pulmonology reps, with no anticipated delay. Primary care physicians are aware of lung nodule patients and have access to phlebotomy. - Scott Hutton(CEO)

Contradiction Point 4

Medicare Advantage Payment Stability

It involves a shift in reported payment stability for Medicare Advantage claims, which is crucial for financial forecasting and revenue projections.

How sustainable is the increase in ASP? Is a rebound expected? - Thomas Flaten (Lake Street Capital Markets, LLC, Research Division)

2025Q3: Consistent payment on Medicare Advantage claims expected to continue. - Robin Cowie(CFO)

Can you quantify the Medicare Advantage back pay received in the third quarter? - Dan Brennan (TD Cowen)

2025Q1: Not much back pay in the third quarter; focus on new claims payment. No unusual revenue from back claims. - Robin Cowie(CFO)

Contradiction Point 5

Pipeline and Product Expansion

It involves the emphasis on the potential of the pipeline and product expansion, which is crucial for future revenue growth and investor expectations.

What key factors should investors monitor regarding product portfolio expansion in 2026? How should we approach investments in these expansions? - Margarate Boeye(William Blair & Company L.L.C., Research Division)

2025Q3: Excited about upcoming R&D Day, showcasing partnerships with Bio-Rad, Thermo Fisher, and Memorial Sloan Kettering. Pipeline underappreciated, with potential for new test commercialization. Partnerships demonstrate strength and uniqueness of Biodesix's development services. - Scott Hutton(CEO)

Can you provide an update on the pipeline status and the company's investment capacity as it approaches cash flow sustainability? - Kyle Mikson(Canaccord)

2024Q4: The company is not planning to launch any new tests in 2025 but will provide updates on progress. We're engaged in promising partnerships, like those with Memorial Sloan Kettering, focusing on risk of recurrence and MRD, which will be highlighted as they progress. - Scott Hutton(CEO)