Third quarter earnings call, November 4, 2026

Caris Life Sciences reported third quarter revenue of $275 million, up 27% year over year, on clinical volume of roughly 61,500 cases, up 21%. That is the third consecutive quarter of acceleration, following 15% in the first quarter and 18% in the second, and management said it is the fastest volume growth in over a year. Management attributes the improvement to the sales realignment completed in January, which expanded territories from 82 to 146. The commercial team now stands at 325, up from 270 at the end of the first quarter. Reps typically take 6 to 9 months to reach full productivity, so a meaningful share of the 2026 hiring has yet to contribute fully.

Management raised full-year revenue guidance to $1.04 billion-$1.05 billion from $1.03 billion-$1.04 billion, implying growth of 28% to 29%. Fourth quarter revenue is guided to $285 million-$295 million, roughly flat on a reported basis against a fourth quarter of 2025 that included about $90 million of true-ups tied to the FDA approval of MI Cancer Seek. Fourth quarter therapy selection volume is guided to about 65,000 cases, which would put full-year volume growth at roughly 20%. Management beat its 20% volume milestone for the third quarter by a point and suggested the fourth quarter guide is the expected outcome rather than a padded number.

A Large Step-Up in the Caris Assure Fee Schedule Rate

The most financially important new data point may be reimbursement. In the preliminary 2027 clinical lab fee schedule under PAMA, Caris Assure was raised to $5,250 from $3,650, effective January 1, 2027 and subject to the final schedule. MI Cancer Seek was held at $8,455. CFO Luke Power said commercial contracts are generally priced as a percentage of the fee schedule rate, so the increase should lift realized ASP across the contracted book. He expects the step-up to arrive "primarily" in the first quarter and to a lesser degree in the second, and said it will also strengthen negotiating leverage with payers that do not yet cover the test. Covered lives now stand at about 264.4 million for MI Cancer Seek and 134.6 million for Caris Assure.

The rate increase also matters for margins. Management is launching three products without reimbursement, and Power said the higher Assure rate will "soften the blow." Gross margin was 66% in the third quarter, reflecting product mix, and is expected at a similar level in the fourth. Management also signaled that the upgraded Assure, which now runs at 40,000x depth on the Illumina NovaSeq X, was deliberately not optimized for cost. Power said the company "could have made that and improved the margin," but chose to prioritize data quality. He indicated that margin benefits from cheaper sequencing, whether from existing or competing suppliers, would come in 2027 and beyond.

Pricing Quality Is Harder to Read Than Headline ASP

Headline blended ASP was $4,272, up 5%, but prior-period collections flatter the comparison, because the year-ago quarter carried a large true-up benefit. On a pre-true-up basis, blended ASP was about $3,990, up 19%. Management said it expects the fourth quarter to be near $4,000 on that base measure, which would be a record. On a pro forma basis excluding true-ups, revenue growth was about 45%. Adjusted EBITDA of $44.4 million fell from $51.2 million a year ago for the same reason, though it was the sixth consecutive positive quarter. GAAP net income was $15.3 million versus $24.3 million.

Monitoring and MRD Complete the Portfolio, but Revenue Is a 2027 Story

Caris Assure Therapy Response Monitoring launched this quarter and Caris Confirm, a tumor-informed whole-genome MRD assay, is on track for December. The monitoring assay runs on the same whole-exome, 23,000-gene liquid platform as Assure therapy selection, with a matched buffy coat to remove clonal hematopoiesis. Serial draws classify patients as molecular responders, stable or progressing, with a readout management says arrives 4 to 8 weeks ahead of the scheduled scan. In a 90-patient landmark cohort, 96% of molecular responders (49 of 51) showed disease control on imaging, and molecular progression carried a hazard of subsequent radiographic progression of 8.99 versus responders, or 7.16 after adjustment. In an early independent real-world cohort of 1,037 patients, the hazard was 2.35x. The assay detects tumor fractions down to 0.1%.

Confirm sequences the tumor and a matched normal across the whole genome to define patient-specific trackers from a search space of roughly 2.5 billion bases, then follows them in serial blood draws. The company cites a minimum positivity threshold of 1.38 parts per million. The intended use is pan-tumor, Stage 1 through 3 solid tumors after curative-intent treatment, with surveillance draws every 3 to 4 months. President David Spetzler noted that both products are recurring tests on infrastructure already in place.

Investors should not model meaningful revenue from either product soon. Both lack coverage. The monitoring MolDX submission awaits publication of a completed trial and is expected in the next several months. Confirm will follow a cancer-type-by-cancer-type strategy, beginning with a colorectal cancer study that must also be published before MolDX submission. Spetzler agreed that 2027 is the realistic timing. Power said both will be rolled out customer by customer rather than broadly. Management declined to give an attach-rate assumption for monitoring against therapy selection. Brian Brille called it "quite significant" but offered no figure. About 42% of blood tests were attached to tissue tests in the quarter, little changed from prior levels.

Caris Detect: Strong Interest, No Disclosed Volumes

Management repeatedly declined to say how many Caris Detect tests were sold, and nothing is included in the fourth quarter guide. Detect revenue is booked in the pharma research and development services line until it is large enough to break out. The test is self-pay and direct to consumer, supported by national campaigns featuring Kevin Costner and Jordan Spieth, and by channel partners including digital platforms, concierge medicine groups and longevity companies. Brille said partners are in the onboarding stage. The ad campaigns are running only in selected markets, and management said it will pace the rollout against sequencing capacity, as whole-genome testing is sequencing-intensive. Founder David Halbert said interest ran ahead of his own expectations but that "we're not going to chase it by overspending."

The company has expanded its ACHIEVE evidence program to four studies totaling 63,000 patients. ACHIEVE 1 showed 99.2% specificity and 60.3% sensitivity in Stage I and II cancers. ACHIEVE 2 has enrolled about 20,000 of a targeted 25,000 participants and is expected to deliver an interim readout in the first quarter of 2027. ACHIEVE 3, a 10,000-patient high-risk prospective study with a repeat test at 12 months, and ACHIEVE 4, a 25,000-patient general-risk study, are still in planning. Management said capacity is being built toward roughly $1 billion of Detect revenue potential, which at a $3,500 ASP implies around 300,000 tests, but acknowledged this is not in place today. Capital expenditures of $17.5 million in the quarter reflect that buildout.

Management has no near-term plans to seek FDA approval for Detect, arguing that designing around a reimbursement pathway can constrain test performance. Halbert was blunt about competitors, saying methylation-only approaches do not work in early-stage disease for most cancers. That claim is unproven in head-to-head data, and ACHIEVE 2 will be the first large test of the company's own assertions.

A Pathology Foundation Model and an Interception Concept

Caris detailed HERO, its pathology foundation model, trained on 248,606 H&E slides across 52 cancer lineages, with more than 243,000 of them paired with RNA sequencing as well as DNA sequencing and IHC. From a single slide, three models predict 297 DNA alterations, 368 RNA expression levels and 21 protein stains. The paired molecular data supplies the labels, and the company's dataset has now reached more than 1.2 million profiled cases, including about 796,000 whole exomes and 849,000 transcriptomes. Management said it is evaluating AI partners for both internal capabilities and external data partnerships, but gave no commercial terms or revenue expectations.

On personalized mutation interception, Caris described a ranking model for selecting vaccine target mutations with 83.8% positive predictive value, and 86.5% for the top-ranked variant per patient, measured against a paired biopsy cohort of more than 42,000 patients. This remains a concept in development, and no clinical vaccine timeline was provided.

Cash Flow, Costs and the Pharma Line

Free cash flow was negative $39.7 million in the quarter, which management described as planned inventory build ahead of launches and for ACHIEVE 2 sample processing. Accounts payable fell by close to $38 million. Year-to-date free cash flow is negative $10.8 million, and management expects it to turn positive in the fourth quarter and modestly positive for the year. Cash and investments were $769.2 million, and the company repurchased about $10 million of stock.

GAAP operating expenses were $163 million, up $48.1 million from a year ago, and full-year guidance rose to about $620 million from $600 million, an increase of roughly 26%. The fourth quarter breakdown is about $265 million from molecular profiling and $20 million-$30 million from pharma, a wide range that Power attributed to the timing of a couple of larger deals in the pipeline. Pharma R&D services revenue was $12.7 million in the quarter, up 37%. Management said it has shifted away from smaller deals toward larger, longer-cycle contracts and expects over 100% growth in the fourth quarter.

Reporting Changes and 2027 Visibility

Caris will move to reporting total clinical volume only, ending the separate tissue and blood growth disclosure and obscuring the contribution of newer products such as ChromoSeq and MI Clarity, which management called immaterial this year. Investors will have less visibility into whether growth is coming from core therapy selection or newly launched assays. Management said a 2027 volume acceleration beyond 20% is a "fair assumption" but declined to guide, and said it will decide at year-end how to treat new products in guidance. It said it prefers to wait a couple of quarters before including new launches.

On M&A, Brille said sector consolidation is under way and that many companies without a commercial channel lack standalone viability, but Caris has found nothing technologically incremental to its own platform. The company remains focused on organic expansion, though management did not rule out a deal.