Executive Summary / Key Takeaways

• Biodesix is a specialized diagnostic solutions company leveraging a multi-omic approach (genomics, proteomics, radiomics, AI) to address the significant unmet medical need in lung disease, particularly lung nodule management and cancer treatment guidance.
• The company is executing a strategic commercial expansion into primary care, building on a successful 2024 pilot, to broaden market access for its Nodify Lung Nodule Risk Assessment tests and drive volume growth.
• Recent financial performance demonstrates accelerating revenue growth, with Q3 2025 total revenue up 20% year-over-year to $21.8 million, and a robust gross margin of 81%, reflecting operational efficiencies and improved average revenue per test.
• Biodesix has raised its full-year 2025 revenue guidance to $84 million to $86 million and remains confident in achieving adjusted EBITDA positivity in the fourth quarter of 2025, driven by sales force expansion and disciplined cost management.
• Key risks include regulatory uncertainty surrounding laboratory developed tests (LDTs), intense competition from larger diagnostic players, and the ongoing need for capital to fuel pipeline development and commercial expansion.

A Multi-Omic Approach to Lung Disease Diagnostics

Biodesix, Inc. (NASDAQ:BDSX) is carving a distinct niche in the expansive and critically underserved market of lung disease diagnostics. The company's core mission is to revolutionize patient care and outcomes through personalized diagnostics that are not only timely and accessible but also directly address immediate clinical needs. This ambition is underpinned by a sophisticated multi-omic approach, integrating genomics, proteomics, and increasingly, radiomics with artificial intelligence (AI) to discover, develop, and commercialize innovative diagnostic tests.

The lung disease landscape presents a formidable challenge, with lung cancer alone responsible for one in five cancer deaths annually in the U.S. Pulmonologists manage over fifty different lung diseases, highlighting a massive unmet medical need for precise and actionable diagnostic tools. Biodesix's portfolio is strategically designed to meet this demand, offering five Medicare-covered blood-based tests across two critical areas: lung nodule management and treatment guidance following a lung cancer diagnosis.

At the heart of Biodesix's technological differentiation are its proprietary blood-based tests. The Nodify Lung Nodule Risk Assessment suite includes the Nodify CDT and Nodify XL2 tests. Nodify CDT detects seven autoantibodies associated with tumors, providing results with an average turnaround time of just one business day from sample receipt. The Nodify XL2 test, a proteomic assay, evaluates the likelihood of a lung nodule being benign, with an average turnaround time of five business days. Biodesix stands out as the only company to offer two commercial blood-based tests for reclassifying the risk of malignancy in suspicious lung nodules, offering physicians timely results to guide diagnostic planning.

For lung cancer treatment monitoring, the IQLung testing strategy comprises the GeneStrat ddPCR, GeneStrat NGS, and VeriStrat tests. GeneStrat ddPCR identifies actionable mutations in lung cancer and can be used multiple times per patient, delivering results in an average of two business days. The GeneStrat NGS offers a broader 52-gene panel, with a three-business-day turnaround. Complementing these is the VeriStrat test, a blood-based proteomic assay that provides a personalized view of a patient's immune response to lung cancer, also with a two-business-day turnaround. These rapid turnaround times are a significant operational advantage, enabling quicker clinical decisions and potentially improving patient outcomes. The company's structured product development framework, regulatory strategy, and proprietary technologies, including controlled specimen repositories and bioinformatics methods, further bolster its competitive moat.

Strategic Expansion and Market Penetration

Biodesix's journey, initially incorporated in 2005 and evolving through strategic acquisitions like Freenome's U.S. operations in 2019 (which led to the Nodify CDT test), has culminated in a focused commercial strategy. The company's initial sales efforts targeted interventional pulmonologists. Recognizing that nearly 50% of patients with lung nodules are first managed by primary care providers, Biodesix strategically expanded its reach. A successful pilot program in the second half of 2024 demonstrated the viability of engaging high-volume primary care physicians within referral networks. This led to a significant reconfiguration of the sales team in Q1 2025, adopting a territory-based "pod" approach where senior pulmonology representatives are supported by additional sales teammates, including primary care-focused representatives.

This expansion is already yielding results. In Q3 2025, Nodify tests ordered from primary care increased from 4% to 11% of total Nodify tests, with total primary care orders growing 75% year-over-year. This demonstrates the effectiveness of the strategy in tapping into a previously underserved segment. The company is also enhancing ease of use through digital ordering capabilities, which have increased by 43% over the last year, and on-site blood draw options, which result in 30% more tests delivered compared to off-site collections.

In the competitive landscape, Biodesix operates as a specialized challenger. While larger diagnostic players like Guardant Health (GH) and Exact Sciences (EXAS) pursue broader genomic profiling and multi-cancer screening, Biodesix's strength lies in its focused, lung-specific blood-based assays and rapid turnaround times. Its gross profit margin of 79.82% (TTM) is strong, but its negative operating and net profit margins highlight its growth stage and investment needs compared to more established, profitable players like Illumina (ILMN) and Thermo Fisher Scientific (TMO). Biodesix's strategy to expand market access through primary care and leverage partnerships, such as with Bio-Rad Laboratories (BIO) for ddPCR assays and Memorial Sloan Kettering Cancer Center for MRD test development, is crucial for sustaining growth and differentiating itself. The company acknowledges the "exceptionally crowded space" of NGS testing, positioning its GeneStrat NGS as a complementary tool within its broader lung diagnostic offering.

Financial Performance and Outlook

Biodesix's financial performance in 2025 reflects its strategic initiatives and operational improvements. For the third quarter ended September 30, 2025, total revenue increased by 20% year-over-year to $21.8 million. This growth was primarily fueled by a 16% increase in Lung Diagnostic Testing revenue to $19.8 million, driven by higher test volumes (15,700 tests, up 13% year-over-year) and an improved average revenue per test. The improvement in average revenue per test was notably boosted by a major Medicare Advantage plan restarting payments for current claims. Development Services revenue also saw significant growth, surging 97% year-over-year to $1.9 million, with $12.9 million under contract but not yet recognized, marking an all-time high.

The company's gross margin reached an impressive 81% in Q3 2025, a 400-basis point improvement over the prior year, attributed to growth in lung diagnostic testing, enhanced average revenue per test, and optimized testing workflows that reduced costs per test. Despite a planned expansion of the sales team, overall operating expenses (excluding direct costs) decreased by 4% quarter-over-quarter, demonstrating effective cost management. The net loss for Q3 2025 improved by 15% year-over-year to $8.7 million, and adjusted EBITDA loss improved by 18% year-over-year to $4.6 million.

Looking ahead, Biodesix has raised its full-year 2025 revenue guidance to $84 million to $86 million. This upward revision is heavily tied to the accelerating diagnostics revenue and the momentum observed in Q4. The company remains confident in achieving adjusted EBITDA positivity in the fourth quarter of 2025, a target supported by strong gross margins, the planned expansion of the sales team to an average of 93 to 97 representatives in Q4, and continued cost discipline. The deferred revenue of $2.80 million as of September 30, 2025, is expected to be recognized over the next twelve months, further contributing to future revenue.

Liquidity and capital resources are critical for Biodesix's growth trajectory. The company has historically funded operations through equity sales and debt. As of September 30, 2025, cash and cash equivalents stood at $16.6 million. The company recently drew down a $10 million Tranche C loan from Perceptive Credit Holdings IV, LP in May 2025, part of a $50 million facility maturing in November 2027. Additionally, Biodesix has an at-the-market (ATM) facility with $45 million in remaining capacity, providing further financial flexibility.

Net cash used in operating activities for the nine months ended September 30, 2025, decreased significantly by $20.6 million compared to the prior year, partly due to the completion of contingent consideration payments related to the Indi acquisition. Management believes existing capital is sufficient to reach cash flow breakeven.

Pipeline Innovation and Risk Considerations

Biodesix's commitment to innovation extends to its robust pipeline. A key initiative is the development of a novel combination proteomic and genomic Minimal Residual Disease (MRD) test. This unique approach combines proteomic insights into a patient's immune profile with tumor-informed genomics using droplet digital PCR (ddPCR) for highly sensitive disease monitoring. This MRD test is expected to be available for biopharma use through Development Services by the end of 2025, with commercial launch anticipated in the latter half of 2026 or 2027. The company is also expanding the indications for its VeriStrat test, exploring its utility in new tumor types and for immunotherapy selection, with promising data presented in metastatic castration-resistant prostate cancer and in predicting response to KEYTRUDA in metastatic solid tumors.

Clinical evidence generation remains a cornerstone of Biodesix's strategy. The CLARIFY study, a retrospective chart review of up to 4,000 patients, is evaluating Nodify testing in real-world settings, with interim data showing consistent performance of Nodify CDT. Independent analyses have also indicated Nodify testing's superior performance compared to PET scans in certain contexts. The prospective randomized ALTITUDE study, which reached patient enrollment requirements in July 2025, is expected to provide significant data that could influence lung nodule management guidelines, which CHEST leadership has indicated are due for updates in 2025.

Despite its promising trajectory, Biodesix faces several risks. Regulatory uncertainty surrounding laboratory developed tests (LDTs) is a notable concern. While a U.S. District Court recently struck down the FDA's rule to regulate LDTs as medical devices, and the FDA subsequently vacated its May 2024 rule, the regulatory landscape remains fluid with potential legislative changes. Such changes could impose additional costs or delays, impacting the company's ability to offer its tests. Competition from larger diagnostic companies with broader portfolios and greater resources also poses a challenge, particularly in the crowded NGS market. Furthermore, macroeconomic uncertainties, including potential federal government shutdowns, could disrupt Medicare and Medicaid payments, impacting revenue. The company's recent experience with hiring delays for its primary care sales force also underscores operational execution risks.

Conclusion

Biodesix is executing a compelling investment thesis centered on its differentiated multi-omic diagnostic platform for lung disease. By strategically expanding its commercial reach into primary care, optimizing operational efficiencies, and consistently generating robust clinical evidence, the company is demonstrating a clear and accelerating path toward profitability. The upward revision of its 2025 revenue guidance and the reaffirmed commitment to adjusted EBITDA positivity in Q4 underscore management's confidence in its strategy and execution.

While the competitive landscape is intense and regulatory uncertainties persist, Biodesix's first-mover advantage in blood-based lung nodule management, coupled with its innovative pipeline and strategic partnerships, positions it to capture a growing share of this critical market. Investors should monitor the continued ramp-up of the expanded sales force, the progress of its advanced pipeline, and the evolving regulatory environment as key indicators of the company's long-term success and its ability to sustain profitability.