BIODESIX INC Q1 FY2025 earnings call

Management Statement and Operational Highlights:

• Biodesix focuses on growing top-line revenue, improving operational effectiveness, and advancing the pipeline. In Q1 2025, revenue grew 21% year-over-year while SG&A spend decreased, and gross margin improved to 79.4%.
• Progress in lung diagnostics with Nodify XL2 and CDT tests; conducted a commercial pilot in primary care to assess expansion. Reconfigured sales team to a territory-based approach, reducing sales reps from 71 to 65 in Q1.
• Pipeline progress includes an MRD test combination, expanded VeriStrat indications, and data presentations. Development services business shows strong interest with $10.9 million under contract but not yet recognized.

Segment Performance:

• Lung diagnostic testing revenue in Q1 2025 was $16.3 million from approximately 13,800 tests, representing 18% growth year-over-year. This contributed a significant portion of the revenue.
• Development services revenue was $1.7 million in Q1 2025, growing 61% over Q1 2024. The company ended the quarter with $10.9 million under contract but not yet recognized as revenue, which is a 21% increase over the prior year.

Guidance:

• Revised revenue guidance to $80 million to $85 million for the year due to sales team reconfiguration and hiring delays.
• Anticipate adjusted EBITDA positivity in the fourth quarter of 2025.

Risks:

• Hiring delays for primary care sales reps due to finding the right profile and network, causing a one-quarter delay in hiring and revenue.
• Potential impact of macroeconomic factors on development services and pipeline partnerships with biopharmaceutical companies.

Q: Dan Brennan asked about the sales force changes and revenue guidance.

A: Scott Hutton discussed the challenge of finding the right primary care sales rep profile and network, but they feel confident in the hiring process. Robin Harper Cowie mentioned an acceleration of growth in the second half of 2025 with planned sales rep hiring.

Q: Andrew Brackmann inquired about IDNs and sales force reconfiguration.

A: Scott Hutton talked about vetting different scenarios in primary care pilots and the potential for IDNs, noting primary care physicians have better access to phlebotomy services.

Q: Sung Ji Nam asked about Development Services impact and tariff effects.

A: Scott Hutton stated no direct impact from tariffs yet, and Development Services revenue is typically ~10% of total revenue.

Q: Kyle Mikson asked about sales force expansion and MRD commercialization.

A: Scott Hutton emphasized focus on lung diagnostics first, with MRD offering for biopharma research by end of 2025 and longer-term commercialization in 2026-2027.

Q: Thomas Flaten questioned sales rep numbers and territory thinking.

A: Scott Hutton explained the territory-based approach with pulmonology sales consultants and targeted primary care sales reps based on claims data and practice capabilities.

Q: Bill Bonello asked about sales rep attrition and primary care partnerships.

A: Scott Hutton discussed sales rep attrition due to territory reconfiguration and openness to partnerships in primary care if it aligns with their strategy.