CARIS THIRD QUARTER 2026 FINANCIAL RESULTS CONFERENCE CALL - CARIS LIFE SCIENCES INC

Explicit Guidance:

• Revenue: Raised full-year 2026 revenue guidance to $1.04 billion–$1.05 billion (up from $1.03B–$1.04B), representing ~28–29% growth; 4Q 2026 revenue guidance is $285 million–$295 million.
• Volume: Expects 4Q 2026 clinical therapy selection volume to be ~65,000 cases; anticipates ~20% full-year 2026 growth for therapy selection volume.
• Operating Expenses: Expects 2026 GAAP operating expenses of ~$620 million (up from ~$600 million), a ~26% increase.
• Profitability: Anticipates 2026 GAAP operating margin to remain positive; expects positive Adjusted EBITDA for the full year (9-month run rate $126.3M) and expects Free Cash Flow (FCF) to turn positive in 4Q 2026 and the full year, ending with modestly positive FCF.
• ASP: Expects 4Q 2026 blended ASP to reach a new record of ~$4,000 (base) to $4,272 (including prior period collections).
• PAMA Reimbursement: New Clinical Lab Fee Schedule effective Jan 1, 2027; MyCancerSeq maintained at $8,455; Caris Assure increased to $5,250 (from $3,650).

Business-Segment Outlook:

• MRD & Monitoring: Launched CARIS Assure Therapy Response Monitoring (whole exome) in Q3 2026; CARIS Confirm (whole genome MRD) scheduled for December 2026 launch; expects these to drive volume and appeal as a strategic partner.
• Early Stage Detection (MSED): CARES Detect launched; plans to expand campaigns and markets in Q4 and beyond; revenue remains in Pharma R&D line until material; targeting revenue capacity of ~$1B (implying ~300k tests) via capacity expansion over next few quarters.
• Molecular Profiling: Expecting sustained revenue growth driven by volume acceleration in both tissue and blood (Q3 blood growth accelerated past 40% attach rate with tissue); ASP expansion expected in H1 2027 due to PAMA rate increases.
• Platform Expansion: Completed continuum of care (Early Detection, Therapy Selection, Monitoring, MRD) by end of 2026; AI platform (HERO foundation model) enables rapid development of new digital AI applications (e.g., mutation prediction, survival prediction).

Market and Competitive Outlook:

• Demand Trends: Early-stage detection (MSED) interest exceeds expectations; channel partner discussions (digital platforms, concierge medicine) are "extremely well"; expect continued growth acceleration in therapy selection as precision medicine programs are implemented.
• Competitive Landscape: Differentiation based on "depth not cheaper" (whole genome/exome vs. methylation-only); expects sequencing unit costs (COGS) to decline in 2027 due to technology agnostic approach and competition; maintains that technology leadership is prioritized over short-term cost reduction.
• Market Share: Expecting to leverage existing relationships with 102 sites in the Karis Precision Oncology Alliance and ~3,500 EMR-ordered physicians; anticipate attach rates for monitoring to be "quite significant."
• Pricing Strategy: Pricing generally set as a percentage of Clinical Lab Fee Schedule; expecting immediate ASP uplift in Q1/Q2 2027 following PAMA cycle updates; MSED remains cash-pay/direct-to-consumer.

Macro / Industry Outlook:

• Reimbursement Environment: Anticipates Moldeix (CMS) submission for monitoring in coming months (post-publication); expects first indication reimbursement (colorectal cancer) for Confirm to be achievable in 2027; strategy focuses on reimbursement via clinical evidence rather than FDA pathway for Detect in the near term.
• Economic/Regulatory: No specific macroeconomic headwinds cited impacting growth; regulatory strategy prioritizes real-world evidence (Achieve program) over immediate FDA approval for Detect.

Strategic Initiatives:

• Product Launches: CARES Detect (MSED) campaigns in new markets Q4+; CARIS Confirm (MRD) launch Dec 2026; CARIS Assure (Monitoring) launched Q3 2026.
• Evidence Generation: Expanded "Achieve" program to 63,000 patients total; Achieve 2 (25k target, 20k enrolled) expects interim readout Q1 2027; Achieve 3 and 4 (prospective studies) currently in planning.
• Commercial Expansion: Sales force growth continues beyond 325 FTEs; expanding territories (146 total); adding reps to support new product lines (monitoring/MRD).
• Technology/Infrastructure: Investing in sequencing capacity to support $1B revenue potential; upgrading assays to Illumina NovaSeqX platform for deeper reads; building AI foundation (HERO) trained on 248k H&E slides.
• Capital Allocation: CapEx planned for inventory and pipeline initiatives; returned to positive FCF by 4Q 2026; $10M stock repurchase completed in Q3.

Risks and Headwinds to Outlook:

• Execution/Capacity: MSED rollout disciplined to avoid overspending; capacity constraints on sequencing may limit initial expansion; success dependent on "pull through" from ad campaigns.
• Reimbursement Timelines: MRD and Monitoring reimbursement pathways (Moldeix) and publication schedules carry timing uncertainty; initial launches may occur without immediate reimbursement, impacting near-term margins.
• Product Adoption: New products (Monitoring, Confirm, Detect) are not yet fully integrated into Q4 guidance; ramp-up pace depends on channel partner onboarding and physician acceptance.
• Cost Pressures: While COGS expected to decline, new product launches (non-reimbursed initially) and expanded commercial/marketing spend increase OpEx.
• Competition: Potential for sequencing cost deflation from competitors; market consolidation could alter competitive dynamics, though management views this as an opportunity.

Management Tone on the Future:

• Confidence: High confidence in the "plan working," citing two consecutive quarters of accelerating volume growth and the "best molecular technology across the entire cancer care continuum."
• Strategy: Commitment to "disciplined" growth; avoiding "chasing demand by overspending" on MSED; prioritizing "deeper, not cheaper" technology quality over immediate margin optimization.
• Financial Health: Emphasis on funding initiatives organically ("every bit of it ourselves") and maintaining financial strength; proud of reaching GAAP profitability and sustained positive Adjusted EBITDA.
• Guidance Hedges: Guidance excludes MSED revenue; management notes they are "not guiding to 2027" volume explicitly but expects contributions from new products to drive top-line growth.

Miscellaneous:

• AI/Technology: HERO foundation model (trained on 248k H&E slides) enables prediction of DNA, RNA, and IHC targets from pathology slides alone, accelerating R&D.
• Interception: Personalized mutation interception program leveraging platform for vaccine targets; ranking model achieves 83.8% PPV against biopsy cohort.
• M&A: No active M&A strategy currently; management prefers organic growth due to lack of "incrementally helpful" targets that match their technology standards, though capability and capital exist.
• Inventory: Elevated inventory levels due to pre-launch stocking for Detect and Achieve 2 samples; viewed as temporary step-up with repayment of working capital obligations in progress.