Freenome Swings to $60.1 Million Profit on Abbott License Revenue

Freenome reported third-quarter revenue of $183.5 million, up from $1 million a year earlier, with nearly all of it flowing from a single regulatory event. The company's first earnings call as a public company doubled as a lesson in how license accounting can flatter a quarter. The forward view, by contrast, is modest: management guided fourth-quarter revenue to just $2 million to $4 million.

What drove the $183.5 million?

License and collaboration revenue totaled $182.5 million, including $180 million recognized after the U.S. Food and Drug Administration approved SimpleScreen CRC, Freenome's blood-based colorectal cancer screening test, under its agreement with Abbott. Chief Financial Officer Linh Le detailed the split:

• $157.5 million for an exclusive commercialization license;
• a $22.5 million cumulative catch-up adjustment (an accounting correction that books revenue from earlier periods once it becomes recognizable);
• a separate $100 million Abbott milestone payment for the approval, which entered third-quarter free cash flow rather than revenue.

Net income reached $60.1 million, or $0.58 per diluted share, against a net loss of $64.5 million, or $0.95 per share, a year earlier. Operating expenses rose to $113 million from $65.7 million, an increase Le attributed primarily to noncash stock-based compensation. Freenome ended September with roughly $430 million in cash, cash equivalents and marketable securities, which it continues to expect will fund operations into 2028.

How is the Abbott launch progressing?

Chief Executive Officer Aaron Elliott said Abbott began marketing and selling SimpleScreen CRC on September 30. More than 2,000 clinical sites requested blood collection kits in the first 30 days, he said, though the company declined to offer test volume guidance.

"It is too early to really provide any specific volume guidance," Elliott said. He added that Freenome and Abbott are developing commercial metrics to track the launch and expect a fuller update on the next earnings call.

Abbott holds exclusive U.S. commercialization rights when SimpleScreen CRC is ordered as a standalone test; Freenome retains U.S. rights when the CRC test is ordered alongside another Freenome test for an eligible patient. The agreement provides for up to $885 million in potential payments, of which Freenome has received $242.2 million. Under the economics, Freenome receives 50% of gross margin before a 20% gross-margin threshold is reached, after which a 10% royalty on net sales applies. Elliott offered no timeline for reaching that threshold.

On commercial readiness, Elliott said Abbott has trained approximately 800 sales representatives and is pursuing provider education, electronic medical record integrations and payer negotiations. Abbott is engaged with most of the top 20 payers, and Freenome expects to discuss progress with larger payers over the next couple of quarters. Medicare set an initial price of $920 for the test, Elliott said, and he cited recent coverage or policy developments involving UnitedHealthcare, Carelon and Cigna. Abbott is following American Cancer Society guidelines that position colonoscopy and stool-based testing as preferred options, with blood testing offered to individuals unwilling to use those options.

What comes next in the pipeline?

Co-Founder and Chief Product Officer Riley Ennis said Freenome plans to submit an application for its second-generation CRC test by year-end, with approval anticipated in the second half of 2027. The updated test improved detection of advanced precancerous lesions in a pivotal study, with sensitivity (the share of true positives correctly identified) rising to 18.2% from 13.7% for the first version.

Approval and a successful technology transfer to Abbott would trigger a $70 million milestone payment, currently expected in the first half of 2028, Ennis said. Until the transfer, Freenome will process Abbott's samples in its own lab.

Freenome recently launched SimpleScreen Lung as a laboratory-developed test (a test run and validated within a single lab, without FDA review) for eligible adults not up to date with annual low-dose CT screening. Top-line results showed 85% sensitivity and 50% specificity, including 82% sensitivity for stage 1 disease, Elliott said. Ennis framed the goal as directing more patients into low-dose CT screening and follow-up care. A multiomics version for a future FDA submission is in development, with the PROACT LUNG study expected to complete enrollment in the first half of 2027 and report results toward the end of that year.

The company expects validation data for two additional single-cancer tests in December and potential launches in the first half of 2027; Elliott declined to identify the indications. Data for an asymptomatic multi-cancer detection test is expected in the second quarter of 2027, with a launch in the second half of that year. Freenome's full-year revenue outlook stands at $192 million to $194 million, anchored almost entirely by a quarter that has already closed. The launch, in other words, has barely started paying its way.