Adaptive Biotechnologies Leans on MRD in Earnings Call

Adaptive Biotechnologies ((ADPT)) has held its Q1 earnings call. Read on for the main highlights of the call.

Adaptive Biotechnologies’ latest earnings call struck a cautiously optimistic tone as management highlighted powerful momentum in its MRD business alongside lingering headwinds elsewhere. Executives emphasized accelerating revenue growth, record testing volumes, rising margins, and a healthier cash profile, while openly acknowledging losses in immune medicine, overall net losses, and reimbursement uncertainties that could inject volatility.

Strong Top-Line Growth Powered by MRD Engine

Adaptive reported total revenue of $70.9 million, up 45% year over year, with minimal contribution from its struggling immune medicine segment. The quarter underscored just how central MRD has become to the story, as this business contributed roughly 95% of the company’s revenue base and is setting the pace for overall growth.

MRD Revenue Surge and Upward Guidance Revision

MRD revenue jumped 53% year over year to $67.1 million, reflecting expanding clinical adoption and pharma demand. On the back of this strength, management raised full-year MRD revenue guidance to $260–$270 million, implying about 25% growth at the midpoint and roughly 33% growth when excluding milestone revenue.

clonoSEQ Volumes and Clinical Adoption Accelerate

The clonoSEQ test continued to scale rapidly, with clinical volumes reaching about 32,600 in the quarter, up 41% from a year ago and 9% sequentially. Clinical business revenue climbed 54% year over year, as the number of ordering clinicians rose 43% to nearly 5,000, signaling durable, broadening usage in real-world practice.

Community and Blood-Based Testing Gain Traction

Use of MRD testing outside major academic centers is ramping, with community volumes growing 67% year over year and now comprising 35% of total tests. Blood-based MRD testing reached 49% of MRD volume overall, and in multiple myeloma its share rose to 29%, an 8-point increase that supports easier, more frequent monitoring.

Pricing Strength and Reimbursement Progress

U.S. average selling price for clonoSEQ rose 11% year over year to about $1,360 per test, helping support revenue growth and margins. The test was also added to the Texas Medicaid policy manual with allowance for up to six tests annually, and the company signed 10 new commercial payer agreements during the quarter.

Margin Expansion and Sequencing Efficiencies

Sequencing gross margin improved by 8 percentage points to 70%, aided by efficiencies from NovaSeq X, increasing scale, and favorable pricing trends. Management reiterated a target of sustaining margins above 70% and ultimately pushing toward a long-term “north star” level of roughly 75% as volumes grow.

MRD Profitability and Growing Pharma Backlog

MRD segment profitability turned a corner, with adjusted EBITDA of $12.1 million compared with a $4.1 million loss a year earlier, underscoring operating leverage in the core business. On the pharma side, bookings and backlog reached about $254 million, up 24% year over year, with roughly 190 active studies providing solid visibility into future demand.

Cash Position Supports Disciplined Growth Plan

The company ended the quarter with about $222 million in cash, which management believes is sufficient to support its current operating roadmap. The plan is to hold cash burn in the $15–$20 million range in 2026 while targeting company-wide positive adjusted EBITDA and free cash flow in that same year.

Immune Medicine Data Assets and Partnerships Advance

Despite revenue pressure, Adaptive continues to build a sizable immune medicine data moat, now exceeding 6 million functional TCR–antigen pairs across roughly 50,000 antigens and more than 50 HLA types. Management highlighted that its digital AI model outperformed public benchmarks and cited a new rheumatoid arthritis discovery partnership with Pfizer using over 1,000 patient samples.

Operational Execution: EMR Integration and Repeat Use

Operationally, the company is deepening its integration into clinical workflows, adding six new Epic accounts year to date and fully integrating seven of its top 10 accounts. Through its Flatiron collaboration, serial monitoring is driving strong pull-through, with about 72% of repeat orders that are due actually being fulfilled, reinforcing ongoing utilization.

Immune Medicine Revenue and Profitability Drag

Immune medicine revenue fell 26% year over year to $3.8 million, reflecting timing of sample flow and processing as well as slower commercial scaling. The segment posted an adjusted EBITDA loss of $10.4 million, underscoring that it remains an investment area that weighs meaningfully on consolidated profitability.

Company-Level Losses and Rising Operating Expenses

At the consolidated level, Adaptive reported a net loss of $20 million for the quarter as higher spending outpaced margin gains. Total operating expenses, including cost of revenue, grew 10% year over year to $90.1 million, leaving company-wide adjusted EBITDA still in the red at a loss of $2.5 million.

Milestone Revenue Concentration and Ceiling

The quarter benefited from $9 million in MRD milestone revenue, including the first primary-endpoint payment tied to the CEPHIUS study. However, management does not expect further milestone revenue in 2026, underscoring the inherent lumpiness of these payments and creating a near-term ceiling on this component of growth.

Reimbursement and Regulatory Overhangs

Management flagged potential exposure to reimbursement policy changes, particularly around MolDX and broader discussions related to fee schedules. While the company is not currently reporting under certain panel pricing rules and is pursuing Medicare bundle increases alongside ongoing MolDX talks, the timing and ultimate impact of these regulatory processes remain uncertain.

Pharma Seasonality, Revenue Lumpiness, and Concentration

Pharma MRD revenue and bookings remain inherently lumpy, and management was cautious about assuming rapid in-year conversion of new deals despite a strong backlog. The business is also highly concentrated, with MRD contributing roughly 95% of total revenue and leaving the company with limited near-term diversification if that engine slows.

Guidance and Outlook Emphasize MRD Momentum

Looking ahead, management’s guidance centers on MRD, with full-year revenue now pegged at $260–$270 million and volumes expected to grow at least 35% in 2026, skewed roughly 45% in the first half and 55% in the second. They aim to lift U.S. ASP toward $1,400 per test, keep sequencing gross margins above 70%, maintain tight operating expense control at $350–$360 million, and achieve positive adjusted EBITDA and free cash flow in 2026.

Adaptive’s call painted a picture of a company increasingly defined by a fast-growing, margin-expanding MRD franchise that is edging toward sustainable profitability. Investors will need to weigh this momentum and expanding backlog against the drag from immune medicine, regulatory and reimbursement risk, and the company’s heavy dependence on a single product area for growth.