Adaptive Biotechnologies (ADPT) Q3 2025: MRD Revenue Jumps 52% as Clinical Volume and ASPs Accelerate

2025-11-05 | By EarningsIQ Research

Adaptive Biotechnologies extended its lead in minimal residual disease (MRD) testing, with clinical revenue and test volumes both surging, and the MRD business achieving cash flow positivity ahead of plan. ClonoSeq, the company’s flagship MRD assay, saw broad-based adoption gains, improved reimbursement, and deeper EMR integration, all while sequencing gross margins climbed sharply due to operational leverage and cost discipline. Management raised guidance for MRD revenue and lowered cash burn expectations, signaling a durable growth trajectory into 2026 and beyond.

Summary

• MRD Business Surges: Clinical and pharma demand drove sustained growth and margin expansion in MRD testing.
• Operational Leverage Rises: Sequencing gross margins and cash flow improved as volumes scaled and cost efficiencies materialized.
• Guidance Lifted: Upward revision of MRD revenue and tighter expense controls set a strong foundation for continued outperformance.

Performance Analysis

Adaptive Biotechnologies delivered a breakout quarter in MRD, with revenue up 52% year-over-year, fueled by both clinical and pharma segments. Clinical MRD revenue grew 83% YoY, with test volumes increasing 38% to over 27,100, and average selling price (ASP) per test climbing 28% to more than $1,340. This performance was underpinned by broad-based adoption across multiple myeloma, acute lymphoblastic leukemia (ALL), chronic lymphocytic leukemia (CLL), and non-Hodgkin lymphoma indications.

Sequencing gross margin improved by 10 percentage points to 66%, reflecting operational leverage from higher volumes, pricing gains, and cost reductions from NovaSeq-X platform adoption. Operating expenses remained flat sequentially, and cash burn was cut by 51% year-to-date, ending Q3 with $217 million in cash. The immune medicine business lagged, with revenue declining to $3.4 million, but the MRD segment’s profitability and cash flow more than offset this drag.

• Test Volume Expansion: 38% YoY growth in MRD test volumes, with blood-based testing now 45% of total volume.
• Reimbursement and ASP Gains: Multiple new payer wins and improved collections pushed ASPs higher, trending toward the $1,700–$1,800 target.
• Pharma Backlog Strength: MRD pharma backlog exceeded $200 million, supporting multi-year revenue visibility.

Overall, Adaptive’s MRD engine is now both profitable and scaling, with clear operating leverage and a robust payer and clinical adoption tailwind.

Executive Commentary

Strategic Positioning

1. MRD as Core Growth Engine

MRD testing, particularly via ClonoSeq, is now Adaptive’s primary revenue and profit driver, contributing 67% of MRD revenue from clinical and 33% from pharma. The business is benefitting from guideline updates, payer wins, and a growing base of ordering healthcare providers. Community-based and blood-based testing are both expanding, cementing MRD’s role in routine patient management.

2. EMR Integration as Competitive Moat

Deepening integration with electronic medical records (EMR), including Flatiron and Epic, is driving stickier volumes and enabling serial test ordering. Integrated accounts contributed nearly 40% of commercial tests and grew faster than non-integrated accounts, supporting both order frequency and account retention. These integrations also help democratize ordering, reduce staff workload, and protect against competitive encroachment.

3. Pharma Backlog and Endpoints

The MRD pharma segment’s $200 million backlog provides multi-year visibility, with momentum in multiple myeloma and expanding into CLL and DLBCL. Regulatory acceptance of MRD as a clinical trial endpoint is broadening, and 2025 CLL bookings are already more than double last year’s, underscoring pharma’s growing reliance on ClonoSeq for accelerated approvals.

4. Margin Expansion and Operating Discipline

Sequencing gross margin gains are driven by the NovaSeq-X platform, higher ASPs, and disciplined cost management. The company is achieving positive adjusted EBITDA and cash flow in MRD ahead of plan, while keeping headcount and operating expenses tightly controlled. This positions Adaptive to selectively reinvest in growth without sacrificing profitability.

5. Immune Medicine as Optionality

While immune medicine revenue declined, the business continues to develop proprietary data and AI-driven TCR prediction models, with a focus on preclinical antibody programs in autoimmunity. The conclusion of the Genentech partnership frees Adaptive to pursue new collaborations, but near-term financial impact remains limited.

Key Considerations

Adaptive’s Q3 results reflect a business in transition from high-growth to profitable scale, with clear leadership in MRD and a disciplined approach to capital allocation. Investors should weigh the following:

Key Considerations:

• MRD Penetration Opportunity: Community and blood-based testing are still underpenetrated, offering significant runway for volume and ASP growth.
• EMR Integration Benefits: Serial test ordering, workflow automation, and account retention are boosting test frequency and competitive insulation.
• Pharma Revenue Visibility: The $200 million backlog and expanding indications support durable pharma revenue, even as regulatory endpoints evolve.
• Margin and Cash Flow Leverage: Sequencing gross margin and cash flow improvements provide flexibility to reinvest or accelerate growth initiatives.
• Immune Medicine Optionality: R&D progress in TCR modeling and antibody programs could unlock future value but is not yet a financial driver.

Risks

Adaptive faces risks from emerging competition in DLBCL, potential changes in regulatory acceptance of MRD endpoints, and the need to maintain payer coverage and ASP momentum. While EMR integration creates a moat, further penetration and sustained clinical adoption are necessary to defend leadership. Immune medicine remains a longer-term bet with uncertain near-term impact.

Forward Outlook

For Q4 2025, Adaptive guided to:

• MRD revenue between $202 million and $207 million for the full year (raised from $190–$200 million).
• MRD test volume of approximately 104,000, exceeding the prior 35% growth target.
• MRD milestone revenue of $18–$19 million, up from $14–$15 million.
• Operating expense range narrowed to $335–$340 million, with cash burn guidance lowered to $45–$50 million.

Management emphasized sustained MRD volume momentum, ongoing payer wins, and continued margin expansion as drivers of guidance confidence. Seasonality in Q4 is expected due to holidays, but the long-term outlook remains robust.

Takeaways

Adaptive Biotechnologies has crossed a strategic inflection point, with MRD now a profitable, cash-generating growth engine and EMR integration deepening its competitive moat.

• MRD Leadership Cemented: ClonoSeq adoption, payer wins, and pharma demand reinforce Adaptive’s first-mover advantage in MRD.
• Operational Leverage Realized: Sequencing margin expansion and cash flow positivity provide capital flexibility and support reinvestment.
• 2026 Growth Catalysts: Watch for further EMR integration, blood-based testing penetration, and regulatory progress in new indications to drive upside.

Conclusion

Adaptive’s third quarter marked a decisive shift to profitable scale in MRD, with accelerating clinical adoption, robust pharma backlog, and strong operating leverage. The company is executing on all major growth levers while maintaining financial discipline, setting the stage for durable leadership in the MRD market.

Industry Read-Through

Adaptive’s performance signals a maturation of the MRD testing market, with clinical guidelines, payer coverage, and EMR integration now critical differentiators. Competitors aiming to enter MRD or expand in blood-based oncology diagnostics will need to match both clinical evidence and workflow integration to gain share. Pharma’s reliance on MRD as a trial endpoint is likely to expand, reinforcing the importance of robust, regulatory-accepted assays. For the broader diagnostics sector, the quarter underscores the importance of operational leverage, payer alignment, and digital integration as drivers of sustainable growth and margin expansion.

ADPT Healthcare Diagnostics MRD Sequencing EMR Integration Pharma Partnerships