Champions Oncology Inc posted record services revenue of $16.6 million in Q3FY26, up 32% from $12.6 million in the prior-year period, while delivering its third consecutive quarter of positive adjusted EBITDA of $575,000.

Total revenue for the quarter came in at $16.6 million, compared to $17 million in the prior-year period, a decline of approximately 3%. The year-over-year dip was entirely attributable to the absence of data revenue in Q3FY26, versus $4.5 million recognised from a large data licensing transaction in the same quarter of the prior year. The core Translational Oncology Services (TOS) business more than held its ground, with study revenue nearly offsetting that comparison.

Q3FY26 Financial Performance

The following table summarises key financial metrics for the quarter:

Gross margin contracted to 47% from 61% in the prior-year period. CFO David Miller noted that more than $2 million of cost of sales in the quarter was attributable to outsourced laboratory work, primarily related to radiolabeling workflows. Had this work been performed internally, gross margin would have been in excess of 50%. Prior-year margins also benefited from the high-margin data license transaction recognised in that period. Operating expenses rose to $7.2 million from $5.3 million, driven by increased investment in research and development, sales and marketing, and general and administrative costs including leadership transitions and IT infrastructure.

Operational Drivers and Segment Analysis

The TOS business delivered record quarterly services revenue, reflecting strong study execution and conversion of previously booked work, including some backlog from prior quarters. CEO Rob Brainin attributed the performance to the quality of the company's PDX bank and the resilience of customer relationships, noting that growth was achieved without material additions to headcount. Management cautioned that quarterly revenue can fluctuate depending on study completion timing and is expected to normalise in the near term.

No data revenue was recognised in Q3FY26. However, the company closed a six-figure data deal during the quarter that is expected to be recognised in Q4FY26. Management also noted continued progress on a large data deal originally announced in Q3FY25, with incremental revenue from that transaction also expected in Q4FY26. The customer base for the data platform is expanding through smaller licensing agreements, which management views as a foundation for larger strategic transactions.

Corellia, the wholly owned Target Discovery subsidiary, continues to generate engagement with potential venture capital funding partners and licensing counterparts. Management stated that external funding discussions remain active and that the underlying data continues to strengthen the investment case, though no specific timing estimate for a financing was provided. If external funding is secured, capital currently allocated to Corellia would be redeployed toward other growth initiatives, particularly in data, or flow through to the bottom line.

What the Numbers Show

The Q3FY26 results highlight a structural divergence within Champions Oncology's revenue mix. The 32% surge in services revenue demonstrates the operational strength of the core TOS platform, yet the reported gross margin of 47% understates underlying efficiency. Management's disclosure that outsourced radiolabeling costs alone accounted for more than $2 million of cost of sales, and that internalising this work would push gross margin above 50%, points to a near-term margin recovery pathway as the radiopharmaceutical transition progresses. This dynamic was also visible in the full-year FY26 results, where Q4FY26 gross margin expanded to 51% from 41% in the prior-year quarter, confirming that the internalization effort is yielding tangible financial benefits.

Full-Year FY26 Performance and Balance Sheet

For the full fiscal year FY26, Champions Oncology reported record annual revenue of $59.4 million, marking a 12% increase in services revenue, with the TOS business contributing services revenue of $58.7 million. The company achieved positive adjusted EBITDA of $1.6 million for the full year, with positive adjusted EBITDA in each of the four quarters. Full-year gross margin expanded modestly to 48% from 46%, with Q4FY26 gross margin reaching 51%. The Data segment's revenue declined to approximately $800,000 from $4.7 million in FY25, as the prior year included one large transaction that did not recur.

Champions Oncology ended Q3FY26 with $7.1 million in cash and no debt. The company ended the full fiscal year FY26 with $4.9 million in cash and no debt. Management plans to continue investing in the data platform and sales organisation while targeting stronger growth and expanding profitability, with services growth expected to moderate to a more normalised pace following the strong study conversion in FY26.

Champions Oncology (NASDAQ: CSBR) reported record fiscal year 2026 revenue of $59.4 million, driven by a 12% increase in its core translational oncology services business. The company achieved positive adjusted EBITDA for the full year, totaling $1.6 million, marking the first time it has posted positive adjusted EBITDA in all four quarters since fiscal 2022.

Financial Performance

Fourth quarter revenue rose 12% year-over-year to $13.8 million. This growth was primarily fueled by the translational oncology services (TOS) segment, which delivered its strongest annual performance with services revenue reaching a record $58.7 million. Management attributed this growth to strong conversion of previously booked studies and the differentiation provided by its patient-derived xenograft (PDX) bank.

The company’s gross margin improved significantly during the period. Fourth quarter gross margin expanded to 51%, up from 41% in the prior-year quarter. For the full fiscal year, gross margin increased to 48% from 46% in fiscal 2025. CFO David Miller noted that this improvement reflected cost discipline and a meaningful reduction in outsourced radiopharmaceutical costs as the company transitions these activities in-house.

*Derived from 12% YoY growth statement.

Business Segment Updates

The data business experienced a revenue decline, with license revenue falling to approximately $800,000 in fiscal 2026 from $4.7 million in fiscal 2025. CEO Rob Brainin explained that the prior-year figure included one large transaction that did not recur. While fourth quarter data revenue was minimal, the company expanded its customer base through smaller licensing agreements and continues to pursue larger strategic opportunities. Some expected revenue shifted into the first quarter of fiscal 2027.

Corellia, the company’s wholly owned therapeutic subsidiary, remains unfunded by external capital but is generating compelling data. Management is actively discussing potential funding and partnerships with venture capital groups and pharmaceutical partners. The fiscal 2027 budget assumes Corellia will be funded for the full year, with any secured external capital potentially redeployed to other growth initiatives or the bottom line.

What the Numbers Show

The divergence between GAAP net loss and positive adjusted EBITDA highlights the company’s investment strategy. While operational profitability improved via margin expansion, the GAAP net loss reflects deliberate investments in the Data platform and Corellia subsidiary. Approximately $3 million of the increase in operating expenses was attributed to temporarily outsourced radiopharma activities, indicating that while margins are improving, the transition costs are still impacting the bottom line.

Balance Sheet Outlook

Champions Oncology ended fiscal 2026 with $4.9 million in cash and no debt. The company maintained financial flexibility while investing in sales and marketing expansion and platform development. Management expects services growth to moderate to a more normalized pace in the near term following the strong conversion rates seen in fiscal 2026.