Caris Life Sciences,�Inc. (CAI) Earnings & Analysis

Latest quarter

Caris Life Sciences reported third-quarter revenue of $275.4 million, up 27.0% from $216.8 million a year earlier. Diluted earnings per share fell to $0.05 from $0.08.

The filing said molecular profiling services revenue rose to $262.7 million from $207.6 million, driven primarily by higher clinical case volume and reimbursement. Clinical cases increased to approximately 61,500 from approximately 50,800. Pharma research and development services revenue rose to $12.7 million from $9.2 million, which the company attributed to the timing of service delivery.

CFO Luke Power said gross margin was 66% in the quarter. The filing said selling and marketing expenses rose to $59.9 million from $41.3 million, partly because of sales team expansion and higher marketing expenses.

Power reported negative free cash flow of $39.7 million, including $17.5 million in capital expenditures. He said Caris ended the quarter with $769.2 million in cash and investments.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO David Dean Halbert said Caris had realigned and expanded its sales organization and invested in the laboratory ahead of expected demand. CFO Luke Power said both tissue and blood therapy selection volumes grew faster year over year than they had in the second quarter. In response to a question about the mix, Power said blood was growing faster from a smaller base, but Caris would report clinical volume on a total basis rather than disclose separate growth rates.

On pricing, Power said the base average selling price for molecular profiling surpassed $3,990, while the blended price, including prior-period collections, was $4,272. He said a preliminary 2027 clinical laboratory fee schedule increased the rate for Caris Assure to $5,250 from $3,650, subject to the final schedule. Power said commercial contracts are generally priced as a percentage of that schedule.

Power said the expanding product portfolio affected gross margin and that he expected a similar level in the fourth quarter. Asked about sequencing costs, he said Caris was technology agnostic and continued to assess its options, but that its immediate focus was on the technology rather than cost. He said improvements in sequencing technology could benefit margins as Caris progressed into 2027.

Power attributed the quarter’s negative free cash flow partly to inventory investment and said the company had used cash generated in the first half to fund inventory and pipeline initiatives. Halbert said Caris was expanding marketing for its Detect test without overspending.

Asked about new products and the fourth-quarter outlook, Power said the guidance did not include Detect. On minimal residual disease testing, he said, “we’ll launch this in a smart way with select customers” while working through reimbursement. Vice Chairman Brian Brille said Caris was also building out its specialty sales teams.

Guidance

Power said Caris raised its FY2026 revenue outlook to approximately $1.04 billion to $1.05 billion, from $1.03 to $1.04 billion. He also said Caris now expects approximately $620 million in GAAP operating expenses for the year, up from approximately $600 million. Power said the spending increase funds the expanded commercial organization, Detect marketing, therapy response monitoring and other development work.