CAI — Q2 2026 Financial Report Analysis

Caris Life Sciences, which sequences tumours and blood samples to help oncologists pick cancer treatments, grew second-quarter 2026 revenue 45% to $263.7 million and posted its first meaningful operating profit, $26.9 million, against an $18.0 million operating loss a year earlier. The driver was not just more tests: clinical cases rose about 18%, but molecular profiling revenue rose 55%, because Caris is now getting paid more per test, mainly by commercial insurers. The bottom line still shows a small net loss ($0.6 million), almost entirely because of a one-time $25.2 million accounting charge from refinancing its debt.

At a glance

• Revenue per clinical case rose roughly 31% (about $4,260 vs. about $3,260, our calculation from profiling revenue and case counts) — pricing, not volume, did most of the work this quarter.
• Operating margin swung from -9.9% to +10.2%. Operating margin is the share of revenue left after running the business, before interest and tax; costs grew 16% while revenue grew 45%.
• 2026 revenue guidance raised to $1.03–$1.04 billion from $1.00–$1.02 billion — but that still implies second-half growth of only about 8–10%, a sharp slowdown from 59% in the first half.

Key metrics

n/m = not meaningful. The year-ago EPS of $(7.97) reflects a $384.4 million deemed dividend on preferred stock and only 64.9 million weighted shares before the June 2025 IPO, versus 282.9 million shares now, so the EPS comparison says nothing about operations.

Where the growth came from: price more than volume

Caris sells two things. Molecular profiling services — its MI Profile tissue test (whole exome and whole transcriptome sequencing, i.e. reading all the protein-coding genes and the genes that are actually switched on in a tumour) and its Caris Assure blood test — are 96% of revenue. Pharma research and development services, work done for drug companies, are the rest.

The 10-Q attributes the 54.8% jump in profiling revenue to "higher clinical case volume and higher reimbursement, including improved average selling prices resulting from enhanced contracting." Average selling price (ASP) is simply what Caris actually collects per test. Cases rose from about 50,000 to about 59,200 (MI Profile about 48,300, Caris Assure about 10,700), so volume explains only about a third of the growth.

One disclosure shows where the price gains came from. Medicare patients accounted for 38.9% of profiling revenue, down from 49.7% a year ago. Applying those shares, Medicare-related profiling revenue grew about 21% (to roughly $98 million) while everything else — mostly commercial insurers — grew about 88% (to roughly $154 million). Medicare pays a set fee, so a falling Medicare share alongside soaring revenue is consistent with Caris negotiating better contracts with private payers. That is a more durable source of growth than a one-off catch-up payment, but it is also the kind of gain that does not repeat at the same rate once the contracts are signed.

Sequentially (versus the first quarter of 2026), revenue rose 22% and cases rose 12%. The first quarter had included a January sales-force re-alignment, after which management said February–March ran at about 56,000 cases a quarter; the second quarter beat that run-rate.

Pharma services revenue fell 38% to $11.5 million, which the company puts down to "the timing of delivery of services under the applicable agreements." It is small enough that it barely dents the total.

Margins: costs grew a third as fast as revenue

• Cost of profiling services rose 24.5% to $81.3 million, with the blood lab adding $10.4 million (mostly materials) and the tissue lab $5.5 million. Per case, that is about $1,374 versus about $1,306 a year ago (+5%) — while revenue per case rose about 31%. That gap is the whole gross-margin story: gross margin (revenue minus the direct cost of running the tests) went from 62.7% to 68.1%.
• Selling and marketing rose 27% to $53.8 million, led by $6.9 million more in sales-team pay.
• General and administrative rose only 3.4% to $66.5 million: higher salaries, fees and utilities were mostly offset by an $11.5 million drop in stock-based pay, because the year-ago quarter carried awards that vested at the IPO.
• Research and development rose 29% to $32.4 million.

Total operating expenses grew 16% against 45% revenue growth, taking them from 73% of revenue to 58%. That is what turned an $18.0 million operating loss into a $26.9 million operating profit.

What the headline numbers hide

• The net loss is a refinancing charge, not an operating loss. On April 1 Caris repaid its 2023 term loan ($406.3 million) and borrowed $400 million from Blackstone and Blue Owl under a new loan maturing in 2031. Writing off the old loan's unamortized costs produced a $25.2 million non-cash "loss on debt extinguishment," booked in other expense. Without it, pre-tax income would have been about $24.6 million rather than a $0.6 million loss. The year-ago quarter had its own one-offs: a $17.9 million fair-value loss and a $17.9 million debt-extinguishment loss, both tied to the IPO.
• Interest costs halved. Interest expense fell from $19.2 million to $9.2 million, because the refinancing cut term-loan interest by $4.2 million and the convertible notes that existed before the IPO are gone ($5.8 million). The new loan is floating-rate (SOFR plus 5.00%, 8.7% at June 30), so each 1-point rise in rates adds about $4 million a year. Interest income on the cash pile was $6.8 million.
• Adjusted EBITDA is flattered mainly by stock pay. The $55.7 million figure adds back depreciation ($6.5 million) and stock-based compensation ($22.2 million, about 8% of revenue) on top of the debt and interest items. Stock pay is a real cost to shareholders through dilution; the GAAP operating profit of $26.9 million, which is after it, is the cleaner measure of how the business is doing.
• Cash flow is real but leaning on suppliers. First-half operating cash flow was $61.4 million on a $1.1 million net loss, good conversion on the surface. But supplies (lab reagents and materials) nearly doubled in six months, from $63.6 million to $123.8 million, a $61.6 million cash use, and most of that was offset by accounts payable rising $39.6 million to $86.0 million. Caris is stocking up on reagents and paying for them later. That is not a problem in itself, but it is a working-capital build that will need to be paid for, and the filing does not say why the stockpile doubled.
• Receivables are under control. Accounts receivable rose only 4% since December ($112.1 million to $116.9 million) while first-half revenue grew 59%, so revenue is turning into cash rather than piling up as unpaid bills.
• Free cash flow was thin because capital spending jumped. Capitalized software and equipment purchases were $22.1 million in the quarter versus $1.4 million a year ago, leaving free cash flow of $6.4 million. Caris has launched several whole-genome products (below), which need lab capacity.
• Buybacks. The board authorized up to $100 million of repurchases on June 7; Caris bought 1 million shares for $17.9 million by June 30. With 282.6 million shares outstanding, that is not yet material to per-share figures.

New products: early detection is the long-term bet

During the quarter Caris launched three products: Caris Detect, a blood test meant to find several cancers early using ultra-deep whole genome and transcriptome sequencing plus AI; Caris ChromoSeq, a whole-genome test for blood cancers such as acute myeloid leukemia, which received approval from MolDX (the Medicare program that decides coverage for many molecular tests); and Caris MI Clarity, an AI tool that estimates recurrence risk in a type of early-stage breast cancer from digitized pathology slides, with no extra sequencing. None of these shows up as a separate revenue line yet. Multi-cancer early detection is a crowded field where reimbursement is unproven, so for now these are costs (part of the R&D and capex increases) rather than revenue.

Outlook

Management raised 2026 revenue guidance to $1.03–$1.04 billion (27–28% growth over 2025's $812.0 million) from $1.00–$1.02 billion, and reaffirmed clinical therapy-selection volume growth of about 20%.

Two things in that guidance deserve attention:

1. It implies a steep slowdown. First-half revenue was $479.9 million, so the second half needs only $550–$560 million, versus $509.7 million in the second half of 2025 — growth of about 8–10%. Part of the reason is a hard comparison: fourth-quarter 2025 revenue was $292.9 million (derived from the 2025 annual total and nine-month figure), more than this record second quarter. Even so, simply holding the second-quarter level of $263.7 million for two more quarters would put the year near $1.007 billion, so the raised range assumes some further growth, but much less than the first half delivered.
2. Volume has to speed up. Cases grew about 16.8% in the first half (112,000 vs. 95,900). Reaching about 20% for the year means faster volume growth in the second half than in the first.

Our read: the margin step-up looks durable as long as commercial reimbursement holds, because the cost per test is barely moving. The weak spot is the comparison against a very strong late 2025; if pricing gains have largely annualized, growth will rely more on case volume, which is running below the company's own 20% target so far.

Takeaway: Caris has crossed into operating profitability because it is collecting about 31% more per test while the cost of running each test rose only about 5% — but its own raised guidance implies revenue growth slows to single digits in the second half, so the next leg depends on case volume, not price.

What to watch in Q3: whether cases keep growing faster than the 16.8% first-half pace; whether revenue per case holds near the second-quarter level; whether the doubled supplies balance starts to come down; and the first sign of revenue from Caris Detect and ChromoSeq.

Source: Caris Life Sciences Form 10-Q for the quarter ended June 30, 2026 (filed August 5, 2026), and the company's Q2 2026 earnings release (Form 8-K Exhibit 99.1). Revenue-per-case, cost-per-case, Medicare/non-Medicare split and implied second-half figures are our calculations from disclosed numbers; 2025 quarterly revenue is from the company's XBRL filings.