Natera, Inc. Stock

Good afternoon, everyone. Thanks for joining us. My name is Robby Bamberger, senior research analyst, Life Sciences Tools & Diagnostics at Baird. I'm pleased to have Mike Brophy, CFO, here with us.

Yes. I guess before we get into specific segments, it would be great for you to just giving a quick snapshot of the company coming off of Q2 print, what went right in Q2? Anything you'd point out to investors about this quarter?

Yes. I mean we had a very strong quarter, all-time record revenue growth. We had -- we grew something like 40% year-on-year on the top line, which is quite amazing just given the scale of the revenue that we're at now. Another strong gross margin quarter made progress on kind of leverage on OpEx, record units kind of across the board, had a very strong women's health quarter. Usually Q2, as many of you know, is a softer quarter for us seasonally.

And NIPT was up mid- to high single digits year-on-year. Carrier screening was up low double digits year-on-year on volumes. And both -- on both metrics, we did a little better than that on revenues. So that was a really outstanding outcome driven by a couple of key product features that we've launched over the last year. Prospera, the transplant business continues to ramp, continues to be kind of a secular transition in our favor in favor of cell-free DNA testing for transplant patients.

And then, of course, Signatera had an all-time record growth quarter. The prior sequential growth units quarter had been Q1, and we did something like 25,000 growth units, 24,000 growth units, something like that, and we did 34,000 growth units in Q2. That was somewhat aided by weather. The compare versus Q1, Q1 was a little bit deflated just by some bad weather in the Midwest in Q1. But even taking effect of that outstanding momentum in that business, fueled by all the things coming together. I mean you've got outstanding clinical trial data continuing to read out, getting into guidelines in muscle invasive bladder cancer.

And then just more generally, I think we're benefiting from a -- from a generalized wave of adoption for MRD as it increasingly becomes part of the standard of care for cancer, which is very gratifying to say as I've been coming to the Baird conference for 11 years. And so -- and we've gone from this being a glimmer of an idea to being a reality. So happy to be here.

Yes. That's a great overview. Maybe focusing on Signatera units, which is what everyone has been focusing on. You added 34,000 tests last quarter sequentially against the prior record of 25,000 tests. You told us the right way to model this is use the trailing 4-quarter average of sequential adds, and it's now 25,000 to 26,000 sequentially. Is that the right bar for us going forward? And how do you think about the shape of that from here?

Yes, I think that's the right bar. I mean I think that that's the way that we measure things internally. And the reason why we do the rolling 4 quarters average is that just smooths out all these kinds of random events in terms of number of receiving days or holidays or weather or anything like that. If you're willing to do that, the growth in units seems very smooth. It looks like it's just kind of up and to the right. And it does give effect for the fact that this is a repeat monitoring test.

So you have this kind of installed base, new patients starting every quarter, but then they stay with you for a number of years and deliver repeat tests over time. And so that rolling 4 quarters average continually gets bigger, and I support that. I mean I think that's something that the business can continue to clear that bar, but it does kind of smooth out randomness quarter-to-quarter, as I described.

And you flagged weather depressed first quarter a little bit of the base, and that's why 34,000 looked a little bit larger. So stripping out weather, what would you call clean underlying adds for this past quarter?

It's hard to measure weather exactly. It's kind of -- it's a judgment call. Is it 5,000, 6,000 units that we missed in Q1 that we ended up showing up in Q2. It's something on that in that range. So that does kind of get you back to the bar -- a good bar, I think, being kind of the rolling 4 quarters average again.

And then you attributed Signatera drivers in the quarter to a few things. It was FDA halo effect, 2025 commercial and medical affairs hires reaching productivity there and then the cadence of data readouts, a little bit of weather benefit as well. And then if you had to rank all of those, how would you essentially rank them by what contributed the most to the quarter?

It's hard to know because when the units come in the door, they don't come attached with the note describing which of those factors drove the order. I mean you have -- I'll just summarize a couple or expand on a couple of those drivers. So at the beginning of 2025, having been intentionally subscale in the commercial business in the commercial kind of sales staffing effort, we decided to go on a large sales force expansion.

So we had something like 150 to 200 reps, something in that ZIP code, selling Signatera, and we're now north of 300 reps. We got most of those people hired in the first half of 2025, and we take a long time to have these -- to see these -- the reps kind of get to full productivity. It takes 9 to 12 months. So that just means that Q2 of this year is the first year -- first quarter where we really had fully productive quarter with the sales rep. So surely, that was an important driver.

In addition to that, last November, we were in the New England Journal of Medicine, along with Roche in the IMvigor011 study in muscle invasive bladder cancer. That was a landmark study for us. I do think that there's a halo effect that happens when you have outstanding data in Signatera in a particular tumor type. I think that does kind of drive kind of general adoption across the franchise, which I can get into more.

And then we've just continued to have a drumbeat of additional tumor types getting submitted from MolDX and a bunch of other things happening in the business, additional feature sets getting launched. We finally -- we did get into the clinical practice guidelines, the NCCN guidelines for muscle invasive bladder cancer, but that really didn't happen until June. So I think that was probably a modest benefit in Q2, and hopefully, that can help us in the back half of the year.

Yes. And as of the end of Q1, you had talked about 50% to 75% of sales force was ramped up. Now it seems like Q2 is fully ramped on your sales force. Looking forward, is there another commercial expansion plan? Or is the current team that you have right now in terms of reps, what you need going forward?

The current team is what we need. We're always running experiments. We're always plus or minus 10 or 15 reps trying to run experiments and see what works. But in terms of an intentional very large sales force expansion, that's not something that you want to undertake all the time.

I think it's the type of thing that we've seen a lot of different companies in our space and adjacent spaces they'll do a big sales force expansion, and it's actually a negative for a period of time. I think the commercial execution has been so smooth here that we kind of take that for granted, but it was a great achievement by Steve, our CEO, and the sales team to get that done. It's not something you want to do every quarter, though.

Can you talk about just the average patient and quantify for every new patient that comes on, roughly how many surveillance tests does that generate over the following 12 months?

Well, so over the course of a cancer patient's journey, we generally see that they end up ordering about 10 Signatera tests over the intervening 5 years once they start with us. That's -- the number of tests that they get is supposed to kind of match up with their normal clinical workflow for that cancer type. And so the numbers can vary tumor type by tumor type. And one thing we're not trying to do is to change that pre-existing clinical workflow. We're not trying to have the patients run a bunch of additional Signatera tests beyond what their normal checkup workflow would be.

We just want to -- we want to slot in there with the existing workflow. And so that's been quite sticky and quite consistent for us really from the get-go. I mean, really from 2020, 2021, we've seen a very consistent utilization on a per patient basis. What we've also seen is really from the beginning, we've had excellent retention of these patients over time. What we found is when we build a blood test that's specifically designed for an individual patient's tumor and we deliver that report to the patient, that's a very valuable piece of information that the patient really cares about.

Then they get these longitudinal reports from us over time, and they use these reports to help kind of triage what progress are they making? And so there's a lot of demand from the patient along with the physician to stay with us as they go into remission to continue to monitor just how they're doing in their life.

So Signatera ASP, it's moved up about $25 per quarter for 3 straight quarters. You're at $1,275. The 2026 guide assumes flat from here, maybe $25 of upside. Given everything you've described on coverage, why is the guide flat? And what would have to happen for that ASP to move up for the rest of the year?

Yes. I think when we set out the model for the beginning of the year, I mean, we were hoping to get to $1,250, and we're way ahead of schedule with being at $1,275 by Q2. Molecular Diagnostics is a tough business, and it doesn't always work out that you just get $25 as an entitlement as a bump to ASP every quarter. There's always puts and takes when it comes to realized pricing even in something as well validated as Signatera. I still think that the longer-term kind of realized pricing potential is still very much in place.

And we've talked about getting to kind of a $2,000 ASP over time. That effectively means very significant kind of list price erosion over time. So we'll see if that actually happens. But I think that we can get there as Signatera becomes more and more kind of a boring part of the standard of care and gets more broadly into clinical practice guidelines.

How many quarters from when a coverage decision happens to when it shows up actually in revenue with an ASP?

Well, for example, when you get MolDX coverage decisions, it should show up the following quarter because those are set up to turn on immediately upon the decision.

Yes. So then you have 7 MolDX indication submissions in. How much of the $725 ASP grind from $1275 up to $2,000 longer term comes from those 7. I guess I'll start off with that.

Yes. So we've quantified that previously. I mean we -- it's a judgment call because it depends on the evolution of your mix by cancer type. But I'd estimate that roughly $150 to $200 of ASP would come from just getting a broader swath of coverage decisions across a broader set of tumor types from MolDX. Beyond that, there's additional opportunity in driving those same coverage decisions to get compliance for commercial patients that live in a state where the state mandates that commercial payers offer their commercial patients the same level of care that Medicare patients get.

So you'll hear that referred to as a biomarker law, state. So that represents additional upside. I think from the $1,500 range to the $2,000 target, to make that second move, I think you're going to need to get into some additional clinical practice guidelines. So muscle invasive bladder cancer is a great start. It's actually our third tumor type in which we're included in the guidelines. It's probably the largest to date.

But I think to come over the next couple of years, we'd expect to get into the guidelines in colorectal cancer and in certain areas of breast cancer. So I think if you got those 2 things, along with the momentum from coverage decisions from Medicare and broader clinical adoption generally, I think that more than supports a $2,000 ASP.

And which of the smaller indications do you think becomes the next $100 million opportunity?

I don't think that there's any one indication per se that's particularly hot to trot as far as physicians are concerned. Our vision for Signatera is that you end up using it very much like a CT scan. If any one of your loved ones was undergoing cancer treatment and they made a comment to you around like, "Hey, you know what, I've never gotten one of those CT scans before." So looking at that you'd be quite concerned with like the level of -- I mean, of course, you're going to get a CT scan. We need to check on how you're doing as you go through your cancer journey.

And we view Signatera very much the same way. It's increasingly becoming that in particular cancer types. So what we're seeing in terms of the adoption of the product is much more generalized adoption in the clinic, where it used to be very rifle shot, hey, we've got this new Stage III colorectal cancer data. And so that's going to drive adoption in that specific indication. We're seeing much more general adoption where the doctor kind of understands how Signatera works. They've got some familiarity with it. It's the same assay. It's a pan-tumor assay by definition. They understand the patient reports. They understand how it works. And so they're using it more generally in their practice, and we're seeing that come through in our volume mix.

Yes. And then in June, the Japanese PMDA approved Signatera for patients with colorectal cancer. You expect a commercial launch later this year, pending pricing. I guess where does that stand? And then what should we be assuming for Japanese pricing going forward?

Yes. The next step -- so it's taken us something like 5 years to get from the starting point to getting to a Japanese FDA approval. It's an enormous amount of data that we had to generate. Very proud of the team for reaching that milestone. The next step now that we have the FDA approval is to be priced by the Japanese Health Ministry. So that's an ongoing process right now. I expect to have the results of that for colorectal cancer this fall. And then that would support a launch early next year.

So we're amazing, we're right on track relative to the schedule, I think we laid out several years ago for our plan in Japan. Very excited about that launch. It's surprising to me but continues to be confirmed that the number of new colorectal cancer diagnoses in Japan is very similar to the number of diagnoses in the United States, even though they have about 1/3 of our population. So obviously, colorectal cancer is a very serious problem in Japan. You can see the urgency with which the problem is being tackled in part by how quickly Japan has embraced Signatera in its clinical trials.

So a lot of our best outcomes data in colorectal cancer is actually Japanese data because the KOLs in Japan were very keen to adopt Signatera and incorporate Signatera into the CIRCULATE trials in Japan very early on, 2018, 2019, 2020. And so that's given us time to get some big prospective readouts. There's already -- even though we're not yet on the market, there's already a very strong clinical practice guideline in favor of Signatera in Japan. And we've got a lot of experience running the CIRCULATE trial there with a bunch of different centers.

So all that augurs very well for being able to have a big impact on colorectal cancer in Japan. One note of caution is that I would just remind you that this is a new territory for us. There's a lot of different variables in Japan that we're going to have to learn about. I'm sure we don't even know what the challenges -- what some of the challenges are going to be. We're going to have to tackle those. So if you're looking at this over the next couple of years, I think Japan can be an outstanding opportunity. And '27, I view this as there's a lot of upside opportunity, but it's also a year where we've got to learn and figure out a new market.

And you have a strong partner in Japan. You're also adding direct sales. How do those economics work across those 2 channels? And does Japan carry a different gross margin than the U.S.?

Well, we'll have to figure out the pricing first before I understand what the gross margin is. I mean, historically, Japan has priced these molecular diagnostic tests roughly in line with the way that they're priced in the United States. And so that's our hoped-for outcome, but we're going to have to see where we go on that. I think in terms of the commercial effort, you should consider it a direct effort from us in Japan. We'll have our own direct sales reps. We're very happy to be partnered with SRL in Japan also, which will help us with a bunch of logistics as well. So happy about that. We feel like we're well set up to get a good launch going there.

And then what's your timeline and path forward for bladder in Japan?

Yes, great question. I mean now that we've gotten the Japanese approval for Signatera, we hope that our cycle time for incremental tumor type coverages can be faster. So hopefully, next on deck can be the bladder cancer approval. I'd love to have that next year, and I'd love to stack on additional tumor types in the relative near term.

On Latitude, the tissue-free version, you've said it's a small number of cases inside that 283,000-test figure. Can you size it for us and talk about positioning that relative to Signatera?

Yes, it's a couple of thousand units a quarter right now, which is fantastic. The tumor-naive MRD has excellent performance, not as strong as the tumor-informed MRD as expected. You really get a lot of information. You get a big advantage when you start with knowing everything that you learn about the patient and you're tracking a patient's individualized most common variants in their tumor. I mean that's a wonderful starting point for sensitivity and specificity.

But nonetheless, we are thrilled with the performance that we were able to put up with the tumor-naive MRD. It plays an important role, I think, probably punches above its weight in terms of its commercial contribution. You will run into the occasional physician for whom they're concerned about tissue logistics, or they have some other exogen reason why some minority of their patients may need to avail themselves of a tumor-naive MRD test.

And so it's great to have it available in the menu. Oftentimes, what happens is it gets -- Signatera gets ordered and the doctor is comforted in the knowledge that if there is some kind of delay or some kind of concern that we can reflex the tumor-naive MRD and then work that problem in the background so that we can get the patient back on to the gold standard Signatera test.

So is Latitude Liquid mostly used when tissue isn't available? Or is it becoming its own stand-alone product?

Well, I think you can see in the numbers that it's mainly Signatera is what's getting used, and it's available there kind of as a backup plan. Over time, it's going to have its own role. I mean as MRD gets more and more generalized, there are going to be sets of patients for whom the tissue access is sufficiently problematic that it's just better to use a tumor-naive MRD test. There's definitely a niche for that within the market, and we want to serve that.

And then what kind of Medicare rate are you targeting for Latitude?

I mean I think it will be similar to the -- the incumbent has a rate. So I would expect to be kind of in the similar boat there.

Yes. maybe moving to early cancer detection. Your FIND-CRC study is approaching full enrollment; 24,000 patients and completion is on track for Q3. It seems like a 2027 readout will give you more color just on the FDA submission. Can you maybe clarify the timeline for enrollment to submission?

Yes. I mean we'll complete enrollment very soon. So we're very close on enrollment completion. Then we should have a readout roughly this time next year. error bars around that, but we should have -- be able to accession all the units and complete the development work and then get the readout. I think that will be a very exciting readout for us. And then we're going to submit to FDA and then once approved and get going on the launch.

Would that point to then a potential 2028 commercial launch?

It's possible. Yes, possible '28, possible '29 commercial launch.

Just with all the positivity around CRC screening now, is this now going to be more of an investment for you going forward? Just thinking about the early cancer detection.

What's interesting about colorectal cancer, early cancer detection is that it's such a difficult market just to get to the starting line in. I mean we put up a slide on the Q2 earnings call that just segmented the R&D spend by broad category, and we had something like $100 million ascribed to early cancer detection just this year. That's -- I think that's very challenging for the shares in the immediate term.

One more example of something where we're doing something that's probably a penalty for us in the short term but can be a benefit for us in the long term if we can get it to work because obviously, there's no revenue to support that right now. Every single dollar we spend on R&D for early cancer detection is just 100% negative down to EPS. And that's going to reverse itself. This is a very large market. There's something like 40 million people in the United States that need one of these tests. They're not going to get a colonoscopy. They're not going to get a stool test. And if a blood test is available, maybe they'll do that or they'll do nothing, okay?

So if you need a test once every 3 years, roughly, that's something like 13 million people a year that need one of these tests, okay? That's a massive, massive opportunity. And we're seeing now that the commercial payers agree with that understanding that they would much prefer a patient to get a blood test over getting nothing. That's good for the system and good for patients. So we're very excited to be launching in that market.

Very helpful. And women's health, -- that had a strong quarter this quarter, up high single-digit growth, normally your softest period. Can you maybe unpack the drivers from this quarter and then help us think about the back half cadence there?

Yes. Well, we had an outstanding quarter post our Fetal Focus launch, which we launched near the beginning of the year. We've continually added new feature sets to the Panorama test and to our Horizon carrier screening test. I was very excited to launch just in June an update to the test that highlights our data. It's like an algorithm update that improves our sensitivity in low fetal fraction cases. which is very exciting.

So we'll have data later this year summarizing what our updated performance is in low fetal fraction cases. And I think that's an incredibly valuable data set and potentially differentiating for a broad swath of docs. So just continued progress there. Maybe just taking a step back on the women's health space. I mean, this has been a space where there are very low barriers to entry. And yet 10, 15 years on, we are still the #1 player in the space.

And what that comes down to is thorough commitment to always producing best-in-class clinical trial data, relentless pursuit of excellent customer service and generally excellent commercial execution, okay? And so these are hard won lessons that we've taken from women's health, and we've been very successful there. And now we're applying this -- those same lessons and the same people, the same leadership team in oncology, and that's been a wonderful benefit for us.

And you've launched something meaningful in prenatal 3 years in a row, fetal RhD in 2024, Fetal Focus 2025, enhanced Panorama this year. I guess, what should we expect for future launches 2027 and beyond?

We've got a full slate. I mean we're going to remain very ambitious in our women's health portfolio. So I'm very excited about future launches and so is the team.

That's great. Yes, moving to organ health. You previously described the draft policy as roughly immaterial there. What do you think now the final determination was published?

Yes. I mean I think it's modestly positive for us. I think prior to the update of the policy, we were not submitting any claims where Prospera was used purely in a surveillance setting, only billing when it was used in lieu of a biopsy. And now the policy explicitly calls for some reimbursement for surveillance testing. And so that's incrementally positive to us.

And I think it also kind of recognizes a bit of the trend that I mentioned at the top of our chat, which is I think over time, clinicians and decision-makers are understanding how powerful the cell-free DNA test is and how easy it is to use and how much it can benefit when you're using the Prospera to monitor these transplant patients, particularly in this year after transplant.

Maybe just a financial question. You raised revenue guidance twice this year, most recently, $100 million at the midpoint this past quarter, implies 31% ex true-ups. Can you maybe walk us through what second half assumes and then any conservatism potentially baked in there?

Yes. Well, I mean, I think that there is potential room for upside. And we said on the Q2 call that we felt great about that guide, even though it was a massive raise. The guide does not presume any improvement in ASPs, just kind of steady ASP. So it's purely a volume-driven raise to guidance. It just reflects the demand that we've seen for our products in the first half of the year.

And then in terms of the accrual approach, you took a more aggressive accrual approach. Does that mechanically shrink future true-ups by narrowing that gap between accrual and collection?

Yes. I mean, look, the true-ups, I think, have continued to come down as a percent of revenue. Now what's happening at the same time is that the volumes are blowing up. The volumes are absolutely ramping, right? So if you have 2% over collection on a huge base, I mean, that's the same as a 20% over collection on a smaller base. So it's hard for me to forecast the absolute dollar size of true-ups, and that's why we just completely leave it out of the guide when we're giving future guidance.

And then on margins, you put that 70% plus long-term gross margin out there versus 61.8% today ex true-ups. Can you maybe walk through that bridge, like what the realistic time frame looks like over time to get there?

Yes. I mean I think that the -- I feel great about that gross margin guide over time. One, I mean, I think that the -- over time, the true-ups just kind of turn into ASP because what that represents is like, hey, we're collecting above where we had accrued historically. And so I think that there's generalized kind of ASP improvement that you can see in the women's health space still.

And the same is true for Prospera in the organ transplant space. But really where you're going to see that improvement is the ASPs in Signatera. We've talked about $2,000 realized price, we think is very realistic. That's compared to a $1,275 realized price today. So if you just run our current volume forecast through the wringer with a $2,000 ASP, you get to a very different answer. I think that can largely support well in excess of 70% corporate gross margins.

You've talked about deploying AI across the business, particularly in the lab. I guess where is that landing. Is it the revenue cycle, lab operations, sales productivity?

Yes. Well, step one is it's made us massively more efficient, and it's allowed our employees to handle a much bigger load of volumes, whereas previously, we would have had to be constantly kind of adding more and more people to just kind of in a linear way to deal -- to process to serve more patients and deal with more volume.

And now we're able -- with a relatively constant base of employees, we're able to really scale, okay? So that's important, I think, on the cost side. I think the revenue side is really as exciting an opportunity as we've seen. We're seeing a real unlock in terms of the utilization of data by pharma partners and frontier labs that I think has us very well positioned to play in the future.

Awesome. That's about all the time we have. So please join me in thanking Mike from Natera for coming to the conference.

Okay. I know we're a couple of minutes away, but I think we can get started given there's a lot to cover. I'm Kallum Titchmarsh, the life sciences analyst here at Morgan Stanley. Really pleased today to be joined by the team at Natera. We have Steve Chapman, CEO; and Mike Brophy, CFO. Thanks, guys, for being here.

Yes, cheers. Thanks for having us.

Thank you. Just before we get started, for all disclosures relating to this presentation, please see morganstanley.com/researchdisclosures. Now the fun stuff's out of the way, maybe we can start on that Q2. Obviously, we're expecting strong numbers, but I think even the Q2 came comfortably above our expectations, just under 40% year-over-year sales growth, record sequential Signatera tests and then a healthy raise on the back of that. Maybe just stepping back, how has your confidence in the business evolved year-to-date? And where do you perhaps think investors may still be underestimating that durability of growth?

Yes. So I'd say, obviously, very strong quarter and year-to-date. We've had multiple revenue raises. We've seen acceleration in Signatera volume and really just strength across the business overall. I think in Q2, we had 34,000 quarter-over-quarter growth, which was just an all-time record for Signatera, super exciting.

I would say the area that I think is maybe most underappreciated is just how big the MRD market opportunity is. And when we start to look drilling into the numbers, looking at territory by territory each sales rep and just understanding how much additional opportunity there is, it's really remarkable. And I think we're going to be in this period of very strong growth for a very long time.

And you've made some comments pointing to that tipping point underway in MRD adoption. What are you seeing from oncology practices that gives you conviction in that transition?

Yes. So a couple of years ago, we'd go speak to doctors and they'd really be focused on, "Well, not sure how the test should be used," or, "I'm not really sure what I should do if I get a positive result. Maybe we may consider using it. We're just sort of waiting for the evidence." And I would say now we really don't hear that anymore. We just had so much peer-reviewed evidence and prospective data, overall survival data, disease-free survival data that's read out.

But doctors, I think, now have come to the appreciation that MRD testing and Signatera particularly has been thoroughly validated, thoroughly proven in the peer-reviewed evidence. And now it's really about, well, who do I use it on, not should I use it, but who do I use it on and how often. And the discussions now center around putting protocols in place, EMR connectivity, expansion within the practice from, say, CRC and breast to other indications, which is exciting. And I think that, that really means that we've crossed this threshold and are gearing up for a period of very deep growth.

I think the last metric we saw was just over 70 prospective studies in the pipeline and expectations for kind of an accelerated pace of readouts now. What evidence do you think being generated today has the chance to most meaningfully impact practice in the near to medium term as we think about that next unlock?

Yes. So we published several hundred peer-reviewed papers at this point. As I just mentioned, there's a sense that we've sort of crossed the evidence threshold, especially now with the FDA approval and so forth. But we're not done there. We're continuing to invest in peer-reviewed evidence really across histologies. And so that's going to continue.

We have some great readouts coming in the second half of this year and into 2027. Just to give you kind of a flavor. I think there's continued exciting data in CRC, continued exciting data in breast. We've got a big readout in head and neck, gastroesophageal, in lung, several pan-cancer readouts. So we've got a lot to keep the team busy, and we're excited about these new readouts coming.

I want to touch on just the FDA approval of CDx and MIBC back in May. It was a little like a step change in the kind of clinical decisions MRD can inform. Maybe just unpack a little how significant that is for the business and how much that could expand the traditional MRD market that we think of.

Yes. So achieving FDA approval and then getting NCCN guidelines has really, I think, changed the way doctors think about the test. And now they really are required to have an MRD strategy in their practice. And I think that, that has sort of put us on a new trajectory, again, kind of thinking about, okay, how do I use the test, for which patients should I use it on versus whether I should use it.

There's also some exciting things in the protocol. If you look at the IMvigor protocol, just how the testing is used every 6 weeks versus maybe traditionally once a quarter or, say, twice a year, we're now looking at sort of a 6-week protocol in the IMvigor study and under the approval. And I think that's an exciting opportunity as well.

So overall, on the right path. We now have multiple NCCN guidelines for MRD, not just muscle-invasive bladder, but also lymphoma, Merkel cell. And I think that kind of starts this sort of flywheel effect of where we're on this path to, in the future, sort of be deeply penetrated in the guidelines, and that will continue to help accelerate volume growth.

And when we're seeing Signatera being used more to identify patients for clinical trials and inform those treatment decisions, I think we're getting a little questions now on those biopharma relationships. So maybe just talk us through anything you're seeing in the pipeline there and how big of an opportunity that could be.

Yes. So we're doing exceptionally well in biopharma. That's an area that we've seen very significant increases in interest, really driven by a couple of factors. I think one is this shift towards an MRD-guided strategy for new Phase III clinical trials, particularly this concept of TOMR or treatment on molecular recurrence, where big pharma companies are now saying, "We want to be able to move our drugs up in the care paradigm. And so rather than waiting for somebody to have a clinical relapse on a scan before we can administer the drug, we want to be able to administer the treatment directly on the molecular relapse itself. Prior to the cancer expanding within the body, becoming stronger, we want to treat on MRD." And that's what TOMR stands for, treatment on molecular recurrence or treatment on MRD.

So I think just the last year, we've seen 3 or 4 Phase III trials signed and initiated. We think in the future, if you look 5 years out, there's going to be several hundred of these. This is going to be one of the biggest trends by far in pharma and diagnostics, and we're right at the center of it. So that's kind of one.

On the other side of things, I think there's very strong interest in the Signatera genome with phase variants. We've actually just gotten some of the analytical validation data, some of the initial clinical validation data, and it looks incredible. I think pharma, who's seen some of the kind of early data there, is responding very, very well, and there's, I would say, extreme levels of interest in that product. So we expect biopharma to be a major growth driver for the business in the future.

Great. And Mike, maybe just to loop you in, I know you said the Q2 Signatera growth benefited from that lower baseline in Q1, that 34,000 sequential. Just considering the momentum we're hearing of and perhaps your more prudent approach to forecasting numbers out, do you think that 34,000 is totally off the cards for Q3? Maybe just help to ensure that our expectations are well aligned here.

Yes. I mean, I think the broader point is that we're clearly into this kind of S-curve dynamic with Signatera volumes. I mean Steve was just talking about how physicians really feel like they need to have an MRD strategy. That couldn't be more different than what it was a couple of years ago when we were trying to really kind of create this category and generate a little bit of basic data to introduce the topic to physicians.

As it relates to forecasting Signatera volumes, we feel like the best way to do that is just to take the rolling 4 quarters' average. The last 4 quarters, take an average, and I think that's a decent benchmark for the next quarter. That does a couple of things for you. One, it just smooths out any randomness that you might have with weather or receiving days or any kind of seasonality. You smooth that out by taking the last 4 quarters' average. The second is that, that is a moving target. I mean that is a treadmill that keeps getting faster, so it does give effect for the fact that Signatera does continue to ramp because you have this effective installed base of current Signatera patients that are getting repeat testing over a long kind of tail of quarters after they initiate with us on top of very significant new interest from new patients. Okay?

So that rolling 4 quarters' average, if you just do that math, that growth curve looks incredibly smooth. And I think it will save you some time and consternation as you try and forecast this going forward.

Okay. That's helpful. And then just on the ASP, Mike, I think $1,275 from Q2, $2,000 mature target you've discussed as well. Could you just unpack a little the drivers to get to that $2,000 and which ones you have like the most near-term conviction and which are perhaps a bit further out?

Yes. I mean there's a couple of broad categories. So I'd say continued coverage expansion within Medicare and the MolDX program that would enable coverage for additional tumor types for Medicare and Medicare Advantage patients. There's extending that same coverage to commercial patients that live in a state where there's a state law that requires insurers to offer the same level of care to their commercial patients as they offer to Medicare patients.

Beyond that, I think that the next big driver would be just starting to get more and more into guidelines in these larger indications, as Steve's alluded to. So I think there's a path from $1,275 to $1,400, $1,450, in that zone just from grinding, generating additional data and getting broader Medicare coverage. And I think the path from maybe $1,500 to $2,000, I think, is going to be driven by increasingly getting into guidelines in, for example, colorectal cancer and then in breast cancer.

And I know Japan is perhaps a part of that as well. And it's a market where the demographics, I think, screen well for diagnostic companies, but we haven't perhaps seen broad-based success from companies that push into that market beginning in the U.S. So what's underpinning your confidence for that launch? And how rapidly could we see physician uptake?

Yes. Just one comment, too, on the ASP upside. I think right now we have 11 MolDX submissions that are in and pending, which is exciting because some of those have been in now for kind of getting close to the threshold of where you would normally kind of expect to hear back. So I think we've said before, like that bucket of submissions is like a big part of getting up to up to that $2,000 ASP target.

But on Japan, we've gotten the approval. We're now kind of waiting for the pricing to come in and for the final kind of structure of how they want the test to be offered. But we feel very positive about the opportunity, particularly because many of the leading academic centers in Japan have participated in the CIRCULATE study. So for a period, I think, of about 5 years, we had about 150 of the leading academic centers enrolling patients into the CIRCULATE trial where they were getting results back. They were making decisions based off MRD, and there's a very strong desire by those centers to have the test available.

So we certainly expect there to be some excitement around the approval and I think a very rapid uptake. I mean we're kind of gearing up from a capacity standpoint to have what would be a very sharp ramp, which would make a nice impact.

And maybe just talk about the serial testing opportunity there as well and when that could perhaps be uptaken. The serial testing?

Serial testing?

Yes, yes.

Yes. So as we've kind of said before, we expect the initial approval to be kind of on that adjuvant window, adjuvant decision-making with the idea that serial testing is kind of allowed under this concept of almost like a coverage with evidence development, if you guys remember that from a couple of years ago from Medicare here, where they say, "Hey, you can do it. It's approved and there's a path to get to coverage."

And we think that's exciting. That's kind of, I think, more than what we were hoping for, but we still have to see how that pans out. We don't have the kind of final guideline in place yet, but we should have that soon. And I think that's going to be exciting. But we've got a lot of work to do. I think we built up -- building the team right now over there, and that's kind of baked into the budget that you've seen. We've got some great people that have come onboard with extensive experience and are excited for the ramp there.

Amazing. Competition still comes up a lot our way despite the numbers you guys are putting up. So maybe just unpack a little bit where you see your biggest competitive moat sitting. And any areas where you think there's urgency to invest from your end to just keep that competitive gap as it is?

Yes. So there's always going to be a lot of competitors in diagnostics, and that's something that we've -- I think we've done well in a very competitive environment. If you look at women's health or organ health or even the last 5 years in oncology, there's been, at any time, multiple competitors that have been in this space, but we've done well.

I think we have a very strong position right now when you look at clinical data, when you look at the breadth of our team, when you look at EMR connectivity, when you look at the base of patients, when you look at our coverage we've achieved for MolDX. And these aren't things that you can just change overnight as a competitor. You can't just publish an analytical validation and then sort of be on par with all of the prospective multiple years of data that Natera has delivered. So I think we're in a very good position.

But in addition to that, we've taken some very smart steps over the last several years that have put us in a -- what I think is a very strong position. So if you look at, one, this idea of ultra sensitivity, and while we do believe our exome product performs exceptionally well and it's -- when you look at a lot of the evidence that's out there, we've actually done better than a lot of the genome providers.

Several years ago, we made the decision to move and launch a genome-based MRD, and we now have that on the market and a certain percentage of our customers want that genome MRD. And we acquired Foresight, which we think has the best technology in the field. We're now in the process of putting this phase variant technology onto the genome product. And like I said, we've just seen the analytical clinical validation that's come off, and it is really, really strong. So I'm not concerned at all about any of the genome-based or ultrasensitive competitors just based on what I've seen. I think we're in the driver's seat, which is very, very good.

And then on the other side of things, we have this kind of tumor-naive MRD concept of where there are certain patients where you can't get tissue. It might make sense to have a tumor-naive MRD. And so we've also launched a tumor-naive MRD, the Latitude product that's available in CRC, and then we'll be expanding into other tumor types.

And so now if a physician wants any flavor of MRD, they can get it all from us. You want the exome that has the most data, tried and true. We have that. You want ultrasensitive on the genome. We have that. You want tumor naive. We have that.

So we're in a good position based on the decisions and the investments that we've made. And there's not a sense that right now we have to like rush and kind of do the next investment. But of course, we're always very, very smart about investing in the future of the technology, and we'll continue to do that.

Amazing. I think we covered the bulk of oncology. So maybe shifting over to women's health. A pretty strong Q2 in terms of like the typical seasonality we see. What's your level of visibility to continued performance at or around this level? And how do you think momentum has kind of trended during the third quarter?

Yes. So women's health, we're having a very strong year. I would say if you just -- you look over the history of time, we've continued to do well. While the competitive environment has changed sort of different names, we've continued to do well. And that's because we follow the standard playbook of generating good peer-reviewed evidence, continue to invest in the product, have a good sales team and have a good user experience.

This year, we've launched Fetal Focus, which is a single-gene NIPT. So if a prospective family gets carrier screening and the father is not available, we can now directly assess the cell-free fetal DNA for some of these autosomal recessive disorders like cystic fibrosis, for example. That's done incredibly well. We've seen very strong uptick there.

But we've also closed one of the other gaps. We've -- for a long time, we took the approach in NIPT, where we said we're going to give you a result back, but we're only going to give you a result if the -- if we're very confident in the performance of the test at a particular fetal fraction. And so we kind of had a no-call rate that was maybe 3%, 4% because if the fetal fraction was low, we just said, look, we're not going to be able to generate a result that we feel confident in at this level.

Now some doctors didn't like that. Most of them did, as you can see by the volume, but some didn't like that. So we launched a new product probably about 3 months ago that really closes that last kind of competitive gap. And now we can generate results down to, I think, like maybe less than 0.5% no-call rate, which is on par with anybody else. And so we're seeing a lot of interest in that. Physicians that maybe at one point wouldn't consider Natera are now switching over. Volume is strong. Competitive field is strong. Sales team is motivated. Feeling excited about the opportunity in women's health.

And Mike, just any color on the ASPs across women's health?

We've done a remarkable job of maintaining and even improving ASPs over the last 3 or 4 years. Maybe a quick case study. The ASPs now -- the realized pricing is actually better now for the women's health business than it was when we went public more than 10 years ago. Even as the list prices have come down and we've made a lot of important price concessions along the way, the fraction of time that we're actually paid for services that are covered has gone through the roof, has gone -- is now extremely high.

Two components to that. One is, thankfully, NIPT and carrier screening are now much more boring. I'm saying that in a good way, kind of boring parts of the standard of care when. We launched, this was kind of a new category that we had to convince the world on. But now these tests are universally kind of covered and in guidelines. So that helps. And then second, we've engaged an enormous execution effort just to make sure that when we have a covered service that we're actually reimbursed for those services. So both of those together has allowed us to maintain a very sustainable business for -- continue to innovate for patients and doctors.

Right. And maybe just over to the financials. I think a lot of people were pleased to see revenue grow considerably but also the OpEx growth as well and how that sat in Q2. Maybe, Mike, just help us to better understand what we can expect over the midterm as it relates to kind of banking those wins on the top line versus perhaps reinvesting into the business.

Yes. We're very much in reinvestment mode right now, and that's for the immediate term and I think, hopefully, over the next couple of years. We're in the very early stages of this change in cancer care that's being driven by Signatera.

This is -- Steve alluded to the size of the market opportunity. It's something like a $15 billion to $20 billion market opportunity. We're going to do something like $1 billion in revenue in Signatera this year. So there's just an enormous amount of things to do, particularly with pharma and new product innovation. And so that's really going to be our focus rather than rushing to deliver a nominal amount of EBITDA in the immediate term and then leaving a flank exposed or failing to innovate for patients like we know that we can.

Maybe just zooming in a little more on that. '27 and '28, when I kind of eyeball street, have low double-digit OpEx growth in '27 and then high single in '28. Obviously, it's still some way away, but any initial thoughts on that cadence?

I mean rather than give kind of multiyear OpEx guidance, I would just err on the side of just understanding what our strategy is, and that is to be in investment mode over that time horizon. When we see projects that come along that have a high ROIC, we're going to be very focused on funding those projects because our goal is to win over that time horizon that you're talking about. So I just want to make sure that investors kind of understand that mindset.

And one of those pipeline assets, the screening asset, I think some initial data there that looked pretty strong. So just lay the framework out for us on how that ramp could look, what you're doing behind the scenes now and maybe a little sense of the data that you're seeing behind the scenes as well.

Yes. So we're really excited about the opportunity in colorectal cancer, early cancer screening. We've had a program there, I would say, for at least 5 years now, going back to when we first started work on there. And 1.5 years ago, we kicked off an FDA-enabling prospective trial that's called the FIND study.

And the goal there was to enroll somewhere between like 25,000 to, say, 40,000 patients, all prospectively collected colonoscopy matched and then to run that study and submit to the FDA. We're on track to do that. And actually, the study has achieved the number of patients that we feel we needed to enroll in order to get significance. So we're going to continue to enroll a few more. But basically, we're done enrolling in many ways. We've achieved what we set out to achieve.

And now we're just completing some of the development work on the assay that is required for the FDA. And then in 2027, we're going to be running the clinical validation, and we're going to be submitting to the FDA. So we're in a very strong position here, and I think we're going to be one of the major players in colorectal cancer screening.

Mike, how does the OpEx look for that program across kind of the R&D and the SG&A side? Is it a new sales force you'd be looking at? And then it seems as though the trial work is in its final stages, so perhaps the R&D aspect of that phases down, too.

Yes. And not to give everyone homework, but if you go back to the Q2 earnings call deck, we included a slide in that deck that was a stacked column chart that just showed the breakdown of our R&D spend by category. So you can get a sense of where those dollars are going.

To me, the main takeaway from that slide is what fraction of that R&D spend is required for us to be successful in '26 and '27. Maybe -- I don't know, Steve, what you think, but I think maybe 10% of it, I mean, something like that. All of that R&D spend is heavily focused on '28 to 2032 and beyond to make sure that we're at the cutting edge for our physicians and patients. To wit the ECD program is going to be something like $100 million in R&D spend this year. And I think if you just screen the business without having that context, it looks like we've got a lot of R&D spend for the revenue that we're generating. But of course, the ECD is a complete 0 on the revenue line just for the moment.

We now know that this is an enormous market opportunity. There's something like 40 million people in the United States that are going to get no screening, or if we make a high-quality blood test available, they will get a screen. Okay? And they need 1 probably once every 3 years, so that becomes something like 13 million people a year in the United States that need 1 of these blood screens. There's a couple of good companies out there also innovating, also delivering good data. We feel very excited about the data that we can read out next year, and we feel like we can be a meaningful participant in that space.

So you think about something that right now is just a $100 million anchor on the P&L that then transforms into a product that goes from 0 to millions of tests reimbursed at a reasonable level at a supportable gross margin between '28, '29 and 2032. It's an amazing growth vector that we will be just adding on top of the existing business. So that's an example of why we're in investment mode right now, is that we see in the near term an ability to really get to scale really quite quickly in the context of these growing markets.

As it relates to the sales team, and I'll get Steve to teach you in on this, the best molecular diagnostics sales rep that's ever existed is on stage. But what we've done historically is we've legged into these commercial teams. We didn't start with 300-plus Signatera reps. We started with a modest team. We built on success. We learned, and then we grew the team from there. And I think that's roughly what our strategy would be in ECD. But take it away.

Yes. We'll take a very targeted approach. I think kind of like Mike said, maybe start off small but also just be smart about where we're adding things and go from there. But I do think it's a great opportunity. And there's going to be a time in 2027 where there's a press release on the data. And we feel like it's going to look good, and we're going to be off to the races.

Great. And then international broadly is still a very small portion of the business. We hit on Japan already. But anything outside of Japan that excites you across the businesses that you play in the 3 kind of core segments?

Yes. I think traditionally, international has been really led by women's health. I think we have 70 or 80 labs around the world that are kind of shipping some volume back to the United States to be performed here. But more and more, I think we're seeing a shift towards oncology and interest in Signatera being driven by -- largely by pharma but also by some academic centers and guideline committees in certain countries in Europe and Asia and so forth. So we think that's going to be an opportunity and I think something that represents a lot of upside from here.

I want to talk on the cash flow generation. And we've had quite a few questions over the past few weeks on M&A ambitions. Maybe just talk us through whether that would be something of interest to you, whether it would be kind of offensive, defensive M&A. Like how would you think about the broader appetite there over the next few years?

Yes. I'd just say, if you look traditionally, our approach mostly has been to just invest in our own research and development capabilities. And we've got a very strong team. We've done a small number of very targeted acquisitions over time, and we're sort of very thoughtful about that. But of course, we always are open to kind of seeing what opportunities exist or if we think that there's any kind of gaps and so forth where we can improve the portfolio.

But largely, our approach has been to really focus on empowering our own team for success, and we're in a very good position right now. I don't know, Mike, do you have any comment?

I don't.

That's great. We also get quite a few questions on the AI winners and losers in our sector. It feels like you guys are in the better camp here given the amount of data you guys generate each quarter on the test. So how are you leveraging that data today? And I guess, what could you be doing in the future to make the most of all that volume?

Yes. So with AI, we're really thinking about it in kind of 3 different areas across the company. The first is improving efficiency within the business, unlike most companies are looking at, okay, how can we kind of make the teams more efficient, improve on some of the processes and so forth. And so we have this goal to save like $200 million to $300 million in OpEx through implementation of AI. And really, what that does is to help us kind of stabilize the OpEx and reduce the OpEx growth over time rather than necessarily like pulling out $200 million to $300 million. But that's on track, and we've seen a lot of performance there that we're excited about.

I think the second is this idea of improving the user experience for patients and physicians, our customers. And there, we've got a lot of activity underway to deliver value back to physicians and patients where they can generate more insight and get deeper clinical information about their report, interact with the content in a unique and different way.

And then the third area is how do we use AI and data to improve the products that we offer but also to partner more deeply with pharma. And there, we have a lot of activity ongoing, whether it's developing neoantigen prediction assays and personal vaccines, which we've talked about. We have a program, whether it's generating new risk scores that can help enhance the product, AI-enabled MRD in some way or whether it's just looking at partnering with pharma to create new large language models that can help deliver insights for clinical development or within clinical trials or patient matching and kind of some of the more traditional things. So we have a lot of programs going there, and I think there's going to be some cool things to talk about in the very near future there. So stay tuned.

Great. Final one for me. Of everything we've discussed today and in that evolving pipeline, what's the one thing you're the most excited about today that you think investors perhaps don't fully appreciate?

Well, I guess that's kind of how I opened the talk today. I think just how big the opportunity is in Signatera and MRD and how kind of very early stage we are. Again, like when I'm out meeting with doctors, meeting with the individual sales reps, looking at the volume, I just see so much opportunity for expansion of MRD. And I think doctors are excited about that opportunity. So we're going to see growth for extended period of time as we go forward. And then I do think ECD and the data opportunity are going to be big drivers for us in the future.

Amazing. Steve, Mike, thank you so much.

Thank you.

Thanks so much. Thanks, guys.

Welcome to the Canaccord Genuity Growth Conference. I'm Kyle Mikson. I cover life science tools and diagnostics with Canaccord. Pleased to have Natera here with us for a fireside chat. With the company, we have Mike Brophy, CFO. And just for background, Natera is a leading provider of cell-free DNA-based testing for women's health, oncology, and organ health.

So thanks all for joining us. Appreciate it.

Thanks for having me.

Let's start with the second quarter results you guys announced last week. It was -- I think you beat by like $100 million or so, raised the guidance. Just walk through the puts and takes of the quarter, and then we'll get into some specifics.

Yes, had a fantastic Q2, just read it out last week. Outstanding volume quarter across the board, very strong momentum in organ health and had an outstanding Q2 in women's health, which is sequentially seasonally down for us usually. And then sequentially, we were really strong. And that was, kind of, high single-digit growth year-on-year, which is quite difficult to achieve in such a penetrated market. But nonetheless, we got there.

Probably the headline for the quarter, I think, from investors' perspective was the growth that we posted in Signatera, which just sequential to a very strong Q1 of this year, we grew an additional 34,000 units to now north of 280,000 units in the quarter. That's a record for us. The prior quarter was also a record at 25,000. So that's quite a move up, and we can, kind of, dig into some of the puts and takes on that.

But I think overall, the business is really firing on all cylinders, to use that cliche. This is year 11 for me at the company. We've just never been in a stronger position across all areas of the business. Revenues and ASPs are very strong. Gross margins were quite good. We continue to narrow losses even as we stay very aggressive on the investment front. And I think we're very well positioned for a great run over the next few years here.

Okay. Maybe just like quickly on women's health first. So the single-digit improvement, the growth, how much of that is driven by focus and some of the newer improvements to the platform?

Yes. I mean I think -- I certainly think that, that was an important component of our progress. As you'll recall, we launched the Fetal Focus offering some quarters ago, and we're seeing very good uptake for that. So Q1, we had a very strong, kind of, launch quarter. We saw that continue into Q2. Beyond that, I was very pleased to see us announce the launch of a new Panorama version that is even more sensitive than the prior version of Panorama in NIPT, particularly highlighting the data we've now generated in low fetal fraction cases, which historically has been, kind of, a difficult area for performance for noninvasive prenatal testing.

And I think our performance there is quite differentiated, looking forward to having some publications and some presentations this fall. Because we announced that in, kind of, the early June time frame, I don't think that was really part of the Q2 performance, but I think that augurs well for the rest of the year for women's health.

The outlook is there's a long runway to grow in this, kind of, range basically for this business.

Well, I wouldn't -- it's not -- I didn't include it in the guide to keep ramping like this. I mean this was truly an outstanding quarter. I typically -- when investors ask us how to think about forecasting growth, in women's health, just given the level of penetration that you see there, I typically think about this as a, kind of, a mid-single-digit volume grower and then you'd love to aspire to grow a little faster than that on revenue if you can continue to just do a good job executing and increase the fraction of time that a covered service in women's health is actually reimbursed. So there's still work to do there. This is obviously a step function higher than that. So we'll see how we do, but we're really excited about the momentum.

Yes. Awesome. All right. Now on MRD on Signatera in oncology. So you had like 283,000 clinical units, and that is the growth of 34,000 quarter-over-quarter -- or I guess, yes, 34,000. I mean that's huge to 25,000 or so that you were -- the trailing 12 months must have been in that 20s or so, but it's -- but you had some, kind of, one-offs, or kind of potential inflationary kind of factors there. There were some claims that were pulled from, I think, the first quarter to the...

Let me summarize. Yes, I'll just summarize that. So in Q1, I think, in retrospect was a little bit understated just because of the weather impacts that the entire world saw in Q1. So looking back on it, we think something like 2,000 to 3,000, maybe 4,000 units that would have normally come in the door in Q1. We just didn't get them in Q1. And that just means as we're focused on the change quarter-over-quarter, that just means that relative to Q2, that sets you up if Q2 is as clean a quarter as it was, that sets you up for, kind of, an outsized growth unit number in Q2, and we did that.

So even stripping that out, it's still an absolute blowout of a quarter. And that's really fundamentally driven by a couple of factors. One is just the continued evolution of the outcomes data that we continue to produce. So we were in the New England Journal late last year in muscle invasive bladder cancer, got an FDA approval for Signatera here in the spring. In June, we were actually included in the muscle invasive bladder cancer NCCN guidelines. So not really a driver for Q2 per se, but I think augurs very well for the rest of the year. Along with -- we completed a large commercial expansion in roughly April of this year that took us about a year, 1.5 years to execute.

So Q2 was -- although those new reps that we added were contributing volumes in Q4 and Q1, I think Q2, you see, kind of, the full effect of those reps kind of fully in place and being operational. So a couple of factors and several of those are obviously quite sustainable as you go forward through the rest of the year.

And then in terms of the -- maybe the mix in the quarter or the growth units, any of that is like, genome, maybe Latitude is not reimbursed, but I feel that's not a huge impact, but...

Yes. Neither the Genome nor the Latitude represent a huge piece of that. I mean it's de minimis relative to the overall -- I mean you're talking like a couple of thousand units out of like 283,000 units. So that's actually quite small. However, I do think that having Latitude and the genome available as part of the menu does help to further burnish the Signatera offering as the premier offering in the space. For example, if you have the occasional physician that may want to avail themselves of either a Latitude test or a genome test, they can do so on a one-off basis for certain patients for whom they think that might be more appropriate and still be continuing to order Signatera for the vast majority of their patients where you have all the excellent validation data. So I do think that those 2 product launches, kind of, punch above their weight as measured by their own volume in the contribution to the overall effort.

And I guess when you roll out the phased variant detection version of Signatera, that's higher sensitivity, I guess, like does that move the needle as well?

I think it does along the lines of the way that I just described. I mean I think that just harkening back to women's health for a moment, and I think we're on version 10 of the Panorama test. And if you ask our most loyal customers, what are the technical differences between version 10 and version 6, I don't know if they'd be able to tell you, but they trust and believe that we've just continued to improve the assay over time, and then we continue to deliver excellent clinical trial data to support that supposition. And that's part of why we've been able to maintain a leading position in the women's health space is that we just -- we're never satisfied. We're continually improving what we offer to patients and physicians.

And so next versions of Signatera are also inevitable and will be meaningful improvements over the current version. But I think in the experience of the physician and the patient, they're going to be ordering Signatera. And the data that we read out over time, it will have phase variances, it will have different technical components that make the assay even better than it is today.

Yes. I think on the top of different versions and things like that. So I think that you guys first announced like an FDA goal, let's say, in like 2022 or something like that. And obviously, now you have CDx for MIBC. Is the goal to get FDA approval for, like, multiple cancer types? Or how does that -- why MIBC basically?

Well, why in MIBC is we happen to be running an FDA-enabling trial for a drug. So we ran this Phase III clinical trial for atezolizumab. And just as a bit of background, atezo had been run in muscle invasive bladder cancer in an all-comer setting in an initial Phase III in IMvigor010. And unfortunately, the drug did not meet its primary endpoint on all-comers. But when you double-click in on the Signatera-positive patients in that cohort, those patients had an amazing response, 40% treatment response.

And so the second Phase III trial in IMvigor011 was the study that was ultimately published in the New England Journal last fall, where entrance criteria for the study was Signatera-positive patients and then they are randomized plus or minus atezo. And so that's what led -- what drove -- that's what drives the FDA approval for the drug. And then because we're then in the label for the drug, it's necessary for us to have an FDA-approved lane in the lab and FDA-approved assay. So I think it is inevitable that over time, you have additional FDA approvals just because we'll be running similar trials like that in the future.

Got it. And then on this topic of MIBC, you've got the NCCN guideline inclusion recently with Category 1. That's the third. You also have -- or I guess not you, but, like, MRD also has Merkel cell and B-cell lymphoma. Maybe talk about how volume changed or could be changed through guideline inclusion, if you've noticed anything with those other tumor types in the past?

Well, I think you can even see it a bit already in the bladder cancer setting. I mean when that data was published, there were a lot of centers that could easily see through that, that was going to yield an FDA-approved drug and that Signatera was likely going to be in the label for the drug. And so we had a number of centers call up and want to implement that exact protocol that was run in the study in their own setting. I think getting into the guidelines unlocks a further set of centers that were perhaps waiting for the guideline and the approval to execute the same strategy.

So I do think it's an important growth vector for the business to get into guidelines. And we're honestly just at the beginning in terms of guideline inclusion. We've got a huge swath of outcomes data coming across a range of tumor types that will enable further guideline inclusion across the spectrum of cancer types.

Yes. I guess on that note, a big focus on the earnings call last week was how much more data you have than others as well as like how much is in the pipeline basically. So maybe just give us a flavor for just how differentiating that is and how long would take to really generate that for some competitors now.

Well, it takes years. I mean you can just look at our own experience. There's a chart in the earnings call deck that has the one curve. I think it's a blue line that started really ramping 3, 4, 5 years ago and is now kind of just going up at a 45-degree angle. And that line is cumulative number of prospective studies that were launched, okay? And then you have a phase shift out to the right because these things take years to read out. And now you're seeing a sharply upward sloping line, a red line, which is prospective studies that have been read out.

So if you just reflect back on how impactful these prospective studies have been to validating not just Signatera, but the concept of minimal residual disease and recurrence monitoring, they've been incredibly impactful. The reality is we're really at the early stage of that flywheel. A lot of the studies that were initiated in '23, '24, '25 are slated to read out in '26, '27, '28, '29. So we're -- as much progress as we've made up to this point, we're poised to see that progress really accelerate because of all the investment we've been making over the last couple of years in clinical trials.

Okay. A hypothetical question for you. If there was an MRD test that was said -- was shown to be -- to perform as well as Signatera, let's say, didn't have nearly as much data, but it was at a price point that was like a quarter or like 10% of the price point. Was that possibly be successful? And what would that be like?

Well, I think we would have to ask the question, like how does one show that type of equivalence. I mean I would want that to be shown in a prospective setting. I mean I think it's easy -- and we've seen this in a bunch of different settings over time. It's much easier to make a PowerPoint slide that says that you meet certain technical performance requirements. It's a very different thing to then translate that PowerPoint slide into outcomes data. And there's a lot of failures between point A and point B. It's simply not enough to say we work -- we did some spike samples in our lab, and we think we work as well or better or we're more sensitive or whatever the metric might be at Signatera.

Unfortunately, when a lot of these companies, and this is over the last 5 years, have run clinical trials, their data has not matched up to the Signatera data. Why? Well, it's complicated. This is hard. Is it patient selection? Is there some -- are there too many false positives? Are they picking up some signal that doesn't correlate to an actual relapse? There's no shortcut to just getting to the outcomes data. And oncologists are very well accustomed to this dynamic because they have got to be on the cutting edge with new drugs that are getting approved all the time.

And you just don't switch patients to new treatment regimens without the benefit of those types of outcomes data. That's, I think, an appropriate and fairly entrenched practice in the community. And so the challenge is simple, produce excellent outcomes data. And I think any assay would have a right to help patients as they should.

Okay. Got it. Now with Medicare coverage, you haven't really received like a new indication to be covered since early '25, I think that was in lung cancer. So in time, you do have like, I think, 7 or so indications that could be reimbursed. You've already submitted MolDX. That's like a next 12 months or 18 months type thing. I think it's like $200 -- $150 maybe to ASP as a tailwind potentially. Why is it taking so long maybe? I mean does that, kind of, mean that MolDX is like maybe thinking about, say, pan-cancer coverage or something like that?

Well, I mean, I think like our base case has always been that the expectation should be that we just continue to grind additional coverage decisions tumor type by tumor type. And we are in the zone of all of the critical mass of the most common tumor types are largely covered now by Medicare. So that's a huge win. What we're doing now is we're working on the important but less common cancers with them. I think that the timing of that is just within -- well within, kind of, the natural, kind of, error bars of this process. It's good that it's a rigorous process, and then you've got to produce a lot of data and there's a lot of back and forth, and we absolutely welcome that. And the interaction with MolDX has been really nothing but positive for us. This is now kind of year 7 or 8 of our, kind of, consistent interaction with them.

Okay. ASPs for clinical Signatera, I think, $1,275. This could add, let's say, $150 to $200 the Japan approval recently on the CRC and then maybe in MIBC over time. But in CRC, what's the next steps with like pricing reimbursement over there?

Yes. So we got the Japanese FDA approval, which was a huge milestone many years in the making. Now that we have the Japanese PMDA approval for the assay itself, now the task of getting approvals for additional cancer types is more focused on generating the data for those cancer types. So we announced that we've already submitted for coverage in bladder cancer, for example. And so we have great ambitions to continue to submit rigorous outcomes data sets to Japanese PMDA and continue to stack up the number of indications for Signatera is covered in Japan.

We're right on track for the launch in Japan. We've always said that that's an early '27 event, and that seems like that's on track given that we have the Japanese PMDA approval. The next step is to interact with the agencies there to establish a number of time points that will be covered and then a price point. And I expect that to be resolved here in the second half. So we're excited about that.

Okay. And maybe talk about like your plans or your history recently of expanding the lab, sequencing CapEx, things like that. And if you -- there's a lot of different options nowadays with high-throughput sequencers. So what's going on there?

You wear your expertise very lightly. So there's like -- if you -- not every investor will go and look at the cash flow statement for us. But I mean if you go and look at it, if you just look at cash flows from operating activities, you see that is continuing to ramp. And then investing activities, we still generated cash, but it was more modest. And why is that? First half of last year, we had about $45 million in CapEx. In first half of this year, we had about $85 million in CapEx. So like what's going on there? Well, we had a press release in the spring that announced that fairly soon when we're done with the expansion that we have underway that the Natera Austin, Texas, lab will be the largest genomics lab in the entire world, and we'll take the title back from a lab in China there.

So we're very proud about that and very proud of the huge number of Texans that we employ in that lab, and that ranges from a lot of hourly folks earning a very good wage all the way to the PhD scientists and engineers. So it's a fantastic operation. So that's a continuous piece of the business. I don't think that we need to have CapEx at that level. $160 million a year in CapEx is not sustained CapEx. I mean it's probably more like $60 million a year, kind of, keeps you very comfortably supplied with Signatera very comfortably. What you have in addition there are some of these bubble costs and some of these very ambitious projects we're taking on in the immediate term.

Okay. All right. In the last few minutes, I do want to just ask you about transplant or organ health really quickly. So the LCD, the final update effective August 30, I think that's more favorable than the draft in terms of like frequency of testing. I think you guys called out like an ASP to volume tailwind potentially. I feel like that's like a $150 million, $200 million business a year. Maybe any guidance on increase for this year?

Yes. I mean the guide this year is really from here to the end of the year was really just based on a volume forecast. We held the ASP steady for the purposes of that guide. I think that's -- qualitatively, I generally think that's appropriate for a diagnostics business. This is a tough business. So you should when possible, make room in a guide for some price erosion, not because I'm seeing any particular price erosion in any of the products, but that's just because it's that tough of a business. Nonetheless, I mean, I think ASP steady is a safe place to be for the guide.

And then the volume growth, I think, gets you into that range. We said on the call that we feel great about hitting that guide, even though it's a massive step-up from the prior guide, it's a complete re-rating of the revenue guide. We feel like with all the momentum we have going into Q2 that we're really rolling even without any incremental ASP improvements, which could well come, and we're trying hard to make that happen.

Okay. And then on early cancer detection, let's talk about that. So you have FIND is reading, I guess, enrollment will be completed relatively soon, 40,000 patients at the high end. When that reads out, I think we would assume something pretty solid given proceed was -- looked pretty good, especially on AA. I guess you would go at the approval, maybe there's a guideline to ask or something. But we're looking at like maybe in the 2028 or '29 time frame, you're going to hire a lot of sales reps potentially in that business if it all goes well. And that's -- could burn hundreds of millions of dollars a year. What's your -- how do you guys, kind of, reconcile this cash, kind of, conversation we just had with that burn?

Well, I think it's worth understanding just how difficult it is to launch a blood-based early cancer detection test in the United States. You've got to have the technical expertise to design an assay that actually works in this population, which is extremely difficult to do. You got to design and execute an enormous clinical trial. And all of that, just doing that piece of it, along with interacting with FDA and all the relevant agencies, you probably got to spend something like $500 million before you can even sell a single test. And so that creates a dynamic where there's just not that many labs that can get to the starting line here, okay? And so then once you're at the starting line, I think the incremental spend there, obviously, as you alluded to, is you've got to build a commercial operation in a primary care setting.

I think that the way that we're going to pursue that is very similar to the way that we've pursued the build of all of the very successful sales teams that we've built. And that is we've legged into it. We don't have immediate plans to just hire 1,000 sales reps and hope that it works out and burn hundreds of millions of dollars while we're trying to -- we're going to hire a contained number of reps, drop them into the ZIP codes that we think based on our decade plus in primary care already, we think are most productive. And we're going to show some good initial results, okay?

And when we show those good initial results, 2 things happen. One, we get that information and we're able to have confidence that incremental sales force expansions have a high ROIC, just like what we just did with Signatera. And then it should also give investors' confidence that they've got some metrics that they can rely on. So the fact that you kind of do this in stages makes that sales force expansion more self-funding than it would be that if you just started with a field of Dreams-type approach and add 1,000 reps at the start.

I would just point out, and we tried to kind of make this point on the earnings call, we're very happy to be planning to launch in early cancer detection. We think that's a fantastic growth vector for the business and meets a critical unmet need for patients and for doctors. If we weren't doing it, the shares -- I think the share price would be a lot higher today, right? Because right now, we're right in the zone of spending $100 million plus on the operating expenses to run the clinical trial and do all the development work, and it contributes absolutely nothing to revenue or gross profit today.

So when you look at kind of corporate margins or you look at our overall business, it's just a boat anchor on the core business. That's going to resolve itself as we launch and we start to generate revenues from the asset. So I think it's just worth understanding that as you evaluate the P&L. Ex that investment, I think even with that investment, you see losses narrowing and you see lots of good evidence of us kind of getting scale on all of our ambitious growth plans. But if you take that investment out, I mean, it really looks like an interesting picture for the core business.

And on that note, this year, definitely elevated kind of ECD-related spending. How should investors think about next year's spending on that area in particular, especially if you think about expanding to lung or multi-cancer?

Yes. I think -- well, I think to your point, I think one should presume that Natera is going to continue to be ambitious, particularly on the R&D spend. I mean, SG&A, interestingly, I mean, given that we did a big sales force expansion last year, you see the dividends that that's paying already. I mean, obviously, I think it's clear that those are very high return on invested capital dollars. And SG&A this year compared to last year is much, much more stable. I mean it's relatively flat as per the guide, okay? So that shows you that we can get leverage on commercial operations. And I think given the scale of the markets that we're pursuing, we feel like we can remain ambitious in R&D investments and also deliver the necessary scale for investors.

In addition to more Signatera studies going?

Yes. I mean, look, the Signatera studies is a very important component of the business. I think in the context of $2 billion in operating expenses, I think that there ought to be plenty of room to be very, very ambitious on Signatera clinical trials. I'll give you one example, and that is the series of trials that we will be running known as the SIGNAL trials. where we are going to design and execute first-class prospective interventional in many cases, studies that are designed to answer key clinical questions that would change guidelines in favor of patients, okay? So the first example of the series of SIGNAL trials is in HR-positive breast cancer, where there's a set of patients that are -- in addition to their hormone therapy, they are getting a CDK4/6 inhibitor.

And so we're going to take a set of Signatera-negative patients in that category, and we're going to see if you deescalate them from the CDK4/6, we're going to see how they do. And you can see what a huge benefit that would be for patients and how much cost that can potentially take out of the system. That's the type of study that requires either an academic consortium to run or requires us to run. And we feel like we're best positioned to drive those types of cost-saving studies as quickly as they should be run.

Okay. And final question. You received like IVDR approval for Signatera in Europe in addition to the Japan, I mean if you're expanding globally, what's the plans -- what's the timing, I guess, to expand in Europe? And how do you size the global -- total global international as well as U.S. market or TAM for MRD?

Yes. I mean there's a huge amount of demand in Europe for Signatera, just that use case that I just described, I think, kind of gives you an example. I mean, for national health systems in Europe that would like to deliver the latest and frankly, most expensive therapeutics to the patients that really need them. There's a huge unmet need for a tool like Signatera to target the right patients for the latest and greatest treatments to have the most bang for your investment dollar for a national health system that has a lot of priorities to handle. So we're running a bunch of very interesting clinical trials in Europe, CIRCULATE France is one that I would bring up that I think is incredibly interesting. So big ambitions in Europe over time.

I think in terms of sizing the market in Europe, I think it's not really all that constructive to try and size like global market. I think you just got to go almost country by country and use case by use case and build up like what are the use cases that are reimbursable that are really important to that system and to that population. So Japan is kind of the first example where colorectal cancer is just a huge unmet need. And you see you have the attendant urgency from the relevant stakeholders in Japan to support it.

Got it. Okay. All right. Thanks Mike. This was great. Appreciate it.

Yes. Thanks for the time. Good to see you guys.

Hello, everyone. Thank you for joining us, and welcome to Natera's Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

I will now hand the conference over to Michael Brophy, Chief Financial Officer. Michael, please go ahead.

Thanks, operator. Good afternoon. Thank you for joining our conference call to discuss the results of our second quarter of 2026. On the line, I'm joined by Steve Chapman, our CEO; Solomon Moshkevich, President, Clinical Diagnostics; and Alex Aleshin, General Manager of Oncology and our Chief Medical Officer. Today's conference call is being broadcast live via webcast. We will be referring to a slide presentation that has been posted to investor.natera.com. A replay of the call will also be posted to our IR site as soon as it's available.

Starting on Slide 2. During the course of this conference call, we will make forward-looking statements regarding future events and our anticipated future performance such as our operational and financial outlook and projections, our assumptions for that outlook, market size, partnerships, clinical studies, and expected results, opportunities and strategies and expectations for various current and future products, including product capabilities, expected release dates, reimbursement coverage and related effects on our financial and operating results. We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. Please refer to the documents we file from time to time with the SEC, including our most recent Form 10-K or 10-Q and the Form 8-K filed with today's press release. Those documents identify important risks and other factors that may cause our actual results to differ materially from those contained in or suggested by the forward-looking statements.

Forward-looking statements made during the call are being made as of today, August 5, 2025. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. Natera disclaims any obligation to update or revise any forward-looking statements.

We will provide guidance on today's call, but will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum. We will quote a number of numeric or growth changes as we discuss our financial performance. And unless otherwise noted, each such reference represents a year-on-year comparison.

And now I'd like to turn the call over to Steve. Steve?

Great. Thanks, Mike. Let's get to the highlights on the next slide. We had an exceptional quarter. We processed approximately 1,044,000 tests in the second quarter, once again exceeding 1 million units and setting a new company record with strong volume performance across the business. In oncology, we processed 283,000 clinical MRD units, representing year-over-year growth of approximately 56% compared to Q2 of 2025. Clinical MRD volumes grew 34,000 units over Q1, which is the largest sequential increase to date.

Beyond volume growth, we met several crucial milestones in oncology. Signatera became the first MRD test to get U.S. FDA approval as a companion diagnostic and the first MRD test to get Japanese PMDA approval. In addition, the NCCN Guideline Committee issued a Category 1 recommendation for Signatera guided adjuvant treatment in muscle-invasive bladder cancer. We'll get into all of these topics later on the call.

We generated approximately $753 million in revenue in the quarter, which represents approximately 38% growth over Q2 of last year. Ex revenue true-ups, our revenues grew approximately 40% year-on-year. Gross margins were strong again at approximately 65%, driven by another quarter of sequential improvement in ASPs. We were also pleased to generate positive cash inflow again this quarter and trim operating losses while continuing to invest in growth initiatives in R&D.

On the guide, we are in a position to completely reset the revenue range, raising it by $100 million at the midpoint. Our new range is $2.85 billion to $2.91 billion in revenues, and we are holding OpEx steady. The guide implies 31% revenue growth this year ex true-ups, and we feel very good about hitting this range. We are clearly on a roll, and I'm excited to review the progress since our call in May.

Okay. Let's get into some of the business trends on the next slide. I think the growth of total tests over time is remarkable when you look at the longer-term picture here in the chart. In the quarter, women's health results were particularly strong on a seasonally adjusted basis, with high single-digit growth versus Q2 of last year. Q2 is typically our softest quarter for women's health due to seasonality, but we counteracted that effect this year with particularly strong new account wins driven by Fetal Focus adoption and early returns on the launch of our newly enhanced Panorama test. We think this puts us in a strong position to continue executing in women's health for the rest of the year.

We also had another strong organ health quarter as volume continued to ramp. And then, of course, we had our best quarter yet for Signatera. The next slide shows our clinical oncology units over time. As a reminder, that's primarily Signatera clinical units, but also includes a small number of LATITUDE cases. Our sequential growth of 34,000 units was well above our internal expectations, with performance fueled by a few drivers.

Let's first look at the changing units between Q1 and Q2. You'll recall that on the Q1 call in May, we described weather-related events that suppressed Q1 MRD volumes by several thousand units. We don't think we necessarily recovered those units in Q2, but the change quarter-over-quarter is exaggerated by that artificially lower Q1 number. Mike will expand on this as it relates to the guide later in the call.

In addition, last year, we made a significant investment in the size and the breadth of our commercial team. Most of these folks were hired in the first half of 2025, so we are pleased now to see them hitting their stride. We also achieved some critical milestones for Signatera, including FDA approval, and we've seen an uptick in general Signatera adoption as a result. We are seeing this in new accounts and new patient starts, which were both very strong again this quarter. This broad-based acceleration is happening across tumor types, with colorectal and breast remaining our largest indications. I'm also really encouraged by the contribution from the long tail of indications, both because it demonstrates broad adoption of Signatera in clinical practice and also because it increases the revenue opportunity as we expand coverage to additional tumor types.

At the end of the quarter, we got the NCCN guideline in muscle-invasive bladder cancer and the PMDA approval in colorectal cancer, both of which we think bodes well in terms of future adoption. So we feel really good about where we are and the ongoing momentum.

Moving to revenue on the next slide. Total revenues grew approximately 38% year-over-year as continued ASP execution accelerated growth on top of the volume performance. Maintaining this level of top line growth, given the size of our revenue base, is pretty remarkable. We had about $52 million of revenue true-ups this quarter, which is trending down in both absolute terms and as a percent of revenue. Ex true-ups, our revenues grew about 40% year-on-year.

We had another good quarter in women's health and organ health ASPs, and we are pleased to see Signatera ASPs increase again. Signatera ASPs were up to roughly [ $1,275 ] as we continue to drive more consistent reimbursement from Medicare Advantage and commercial plans in biomarker states. We made a significant investment in revenue cycle management a few years ago to get more consistent reimbursement for covered services. While we've completed most of the major initiatives for women's health and organ health, we still think Signatera ASPs have the potential to grow substantially over time, both from operational initiatives as well as potential additional MolDX coverage decisions and broader guideline inclusion. We talked in the past that we think a mature Signatera ASP to reach around $2,000, and we still feel good about that as our long-term target.

The next slide shows our gross margin progress across 2 time periods. The left chart shows reported gross margin versus Q2 of 2025, with solid progress mainly driven by ASP improvements over the past year. On the right-hand side, we are zooming in on sequential growth ex true-ups, where we had a roughly 50 basis point improvement over Q1. This was due to several factors, including both ASP wins and returning to a more normalized ratio of reported to accession units compared to Q1.

COGS increased slightly in Q2 as we saw an uptick in volumes from some of our recently launched products, particularly for Fetal Focus, LATITUDE and Signatera Genome. When we launch these products, we leave a lot of room to achieve COGS improvements over time as volumes scale, and we're already executing on that road map. LATITUDE and Fetal Focus also present ASP upside over time. For example, we have a LATITUDE submission in currently to MolDX. We think we can keep improving margins slightly in the near term despite this new product COGS impact, as we did this quarter.

Longer term, we feel very comfortable about reaching our target of 70% plus gross margin. The margin improvement going forward is driven mostly by major events like MolDX coverages or the completion of key internal COGS projects. If you look at our progress on gross margin from the mid-40s to the mid-60s, it wasn't strictly linear. We had periods of incremental progress and also step-up function changes. And I think we'll have a similar trajectory in the future.

Okay. With that, let me turn it over to Solomon to discuss some of the exciting clinical and product developments this quarter. Solomon?

Thanks, Steve. I will talk through some of the catalysts that hit in the second quarter, and I want to start in women's health with our launch of the enhanced Panorama test because it addresses something that has been a gap in prenatal screening for a long time, achieving reliable test performance at [indiscernible]. During pregnancy, fetal fraction is the proportion of placental DNA circulating in the mother's blood. And when that fraction is low, detecting chromosomal abnormalities become significantly more difficult, with 1 prior study indicating sensitivity as low as 62% for TRISOMY 21 using a different technology. Despite this limitation, most other labs who use accounting-based approach will routinely provide results at low fetal fraction without sufficient clinical performance data to back it up. Historically, Natera would return a no call in such cases, about 2% of the time.

Our new enhanced Panorama test closes that gap. Powered by our novel SNP informed deep sequencing technology, Panorama is now the only NIPT with clinical validation data for common TRISOMIES, specifically in low fetal fraction patients. It combines the best of both worlds, the power of SNPs for fetal fraction measurement, [ triploidy ] detection and [ Twinzygosity ] and more, along with excellent performance at low fetal fractions, bringing the overall no-call rate down to 0.5%, an improvement of roughly 80% compared to our prior version of the test.

The prospective blinded study supporting this launch included over 3,300 patients with more than 240 low fetal fraction cases. And we detected 100% of the TRISOMY 21 cases in that cohort. We launched this in May, and the reception among OB/GYNs has been very enthusiastic, resulting in many new account wins. This reflects a set of customers who always wanted to order SNP-based testing with Natera, but had held back due to the no call rates, which is now resolved. We think this sets up nicely for volume growth in the back half of the year. This new Panorama also rounds out a multiyear run of innovative launches in prenatal health.

Last year, we launched Fetal Focus, our next-gen single gene NIPT to detect inherited conditions like cystic fibrosis, which continued to exceed our expectations, driven by the strength of the EXPAND trial. And the year before in 2024, we launched our fetal RhD test, addressing a significant unmet need given the nationwide [ Rogan ] shortage that year. Amazingly, the demand for RhD testing has continued to steadily increase despite the alleviation of that original shortage. Taken together, these 3 launches reflect the breadth and consistency of our innovation and growth trajectory in women's health.

Moving now to organ health. The final Medicare LCD for organ transplant surveillance was published in July, and it represents a meaningful expansion over the initial CMS proposal. Now in year 1 after surgery, Medicare will cover 6 tests for patients with kidney transplant and 12 tests for patients with heart and lung transplants. Then in years 2 and 3, Medicare will cover 4 tests per year across all 3 categories, which is significantly higher than the original proposal.

This improvement reflects strong advocacy from the clinical community. After the draft was originally published by Medicare in July of 2025, major transplant medical societies submitted letters to MolDX in support of expanded frequency. This included supportive comments from the American Society of Transplant Surgeons, the American Society of Transplantation and the International Society of Heart and Lung Transplantation. We believe their unified voices has helped move the needle on this final policy.

We have spent years building the clinical evidence base that made this outcome possible, and the August 30 effective date on the policy means we will start to see the benefit of Medicare reimbursement in the second half of the year. We expect this to drive improvements in Prospera ASP and in Prospera volumes as physicians update the surveillance protocols to reflect the new policy.

Turning now to oncology, where we had a great quarter, both in terms of commercial adoption and major milestones. In May, the FDA approved Signatera as a companion diagnostic for patients with muscle-invasive bladder cancer. This is not just a Natera milestone, it's an industry first for the field of MRD testing. Backed by the global Phase III IMvigor011 trial, it validates the whole [ home ] concept treat on MRD at the highest level.

Then in June, the Japanese PMDA approved Signatera for patients with colorectal cancer, supported by the GALAXY study. We expect the commercial launch later this year, pending final pricing and reimbursement determination, which is on track. That commercial launch will be supported by society guidelines from JSCO and JSMO. They are already strongly supportive of MRD assessment in the adjuvant setting.

And then in July, Signatera received IVDR certification in the EU, making it the first MRD test for solid tumors to achieve this designation in Europe. Under this certification, Signatera is indicated across more than 20 tumor types. This streamlines future clinical trial launches across the EU, creating a competitive advantage for us with biopharma, while also ensuring continuity of access for patients after the expected IVDD transition deadline in 2028. This also sets Natera up nicely to achieve future reimbursement in Europe, a key part of our long-term global vision.

These regulatory wins are the culmination of a long road for Natera in developing our regulatory and quality capabilities. And it's remarkable that these approvals have come in multiple different disease indications at the same time. These are also major proof points for our biopharma partners. We are building on this momentum with our newest submission to the Japanese PMDA for Signatera as a companion diagnostic in bladder cancer. With this submission, we are advancing in lockstep with [ Chugai ] who markets atezolizumab in Japan.

Japan reports approximately 34,000 new cases of bladder cancer per year, of which around 20% to 25% will be muscle invasive. Our submission is supported by data from the IMvigor011 trial. And notably, that trial had more than 20 participating clinical sites in Japan. So the leading urologic oncologists in Japan already have experience with the protocol, similar to what we saw with the GALAXY trial in CRC. We think bladder represents a compelling second indication for Signatera in Japan, with strong evidence for serial testing every 6 weeks, and we expect regulatory approval later this year or early next year.

Finally, we were very pleased to see the NCCN issue its Category 1 recommendation in support of Signatera testing in bladder cancer. Category 1 is NCCN's highest designation and based on the most compelling randomized evidence. Furthermore, the NCCN specifically called for ctDNA testing using a personalized tumor-informed multiplex PCR NGS assay, which is language that uniquely describes Signatera. This is now the third NCCN guideline to positively recommend tumor-informed MRD testing, with prior recommendations coming in Merkel cell carcinoma and diffuse large B-cell lymphoma, all of which referenced Natera's data. This guideline update is expected to drive adoption across multiple vectors.

As Steve described earlier in the call, it is already resulting in new customer starts and more systematic use among existing customers, those who like to wait for NCCN recommendations prior to adoption into standard clinical use. It's really creating an inflection point in the field, for which Natera is exceptionally well positioned based on our gold standard clinical evidence, our operational excellence and our industry-leading analytical performance, especially with the phased variant technology acquired late last year from Foresight Diagnostics.

The NCCN guideline is also driving new positive coverage policies among commercial payers, far beyond what we could achieve with just the biomarker legislation alone. Some commercial plans already had blanket coverage policies in place for FDA-approved companion diagnostics or NCCN recommended tests, but most commercial plans are publishing new coverage policies to cover Signatera. We expect this to drive meaningful ASP improvement. Finally, as more clinical evidence is published in support of MRD guided precision medicine, we expect further progress with Medicare coverage, NCCN guidelines and commercial payers.

With that, I'll hand it over to Alex to discuss our clinical road map. Alex?

Thanks, Solomon. I want to spend a couple of minutes on the depth of the clinical evidence engine we've built behind Signatera and why we think it's such a durable advantage. If you look at Slide 13, you can see the shape of that engine. For years, much of the MRD field, ourselves included, [ failed ] its early evidence on the retrospective biobank studies. These studies are valuable. They're efficient. And they let you establish prognostic performance across many tumor types quickly.

But retrospective data on its own only takes you so far. What actually moves guidelines and unlocks broad reimbursement is prospective evidence, studies designed upfront, run in real time and, in many cases, randomizing patients or tying Signatera directly to a treatment decision. That evidence is a different order of magnitude and carries far more weight with guideline committees and with payers. It also takes real effort and takes years to generate.

We made the decision to invest in that harder path early. We've been signing and initiating prospective studies since 2019, and we've been building this flywheel quietly in the background for more than 7 years. Today, as the chart shows, we've opened more than 70 prospective studies of various forms, spanning our own sponsored trials, pharma partnerships and academic and cooperative group collaborations.

The key point on this slide is what happens next. For most of that period, we were putting studies in, investing ahead of the return. Now the flywheel is starting to really turn. These studies are beginning to read out. You can see this inflection on the right side of the chart, and we expect the pace of readouts to accelerate meaningfully over the next few years.

Each readout is a potential catalyst for guidelines, for reimbursement, and ultimately, for volume. This is the part of the story that compounds, and it's very hard for anyone starting today to replicate. We are just now entering the harvest phase of an investment we began 7 years ago.

I want to discuss in more detail, the Natera sponsored portion of our clinical trial portfolio. I'm excited to introduce SIGNAL-ER 101, the first interventional prospective study that Natera is sponsoring and operationally running ourselves, end to end. The study is now open, and early reception from investigators has been excellent.

Let me frame the clinical question because it's a big one. In early-stage HR-positive HER2-negative breast cancer, the most common form of breast cancer, the vast majority of patients today may be overtreated. When a patient is considered high risk, the standard is to add a CDK4/6 inhibitor on top of endocrine therapy. But these are difficult drugs to take. More than 60% of patients experienced serious adverse events, and a full course of therapy can carry a U.S. retail cost north of $400,000. And the reality is that many of these patients were likely already cured by standard perioperative therapy alone.

SIGNAL-ER 101 asks a simple but powerful question: What if we use Signatera to identify patients who actually need that escalation? In the study, patients are surveilled with Signatera after surgery, and treatment is escalated to a CDK4/6 inhibitor only when we detect molecular residual disease. MRD-negative patients are spared a toxic and expensive therapy they may never have needed. This is exactly the kind of high-value clinical question MRD is uniquely positioned to answer.

And the addressable population is large, representing a meaningful share of the more than 200,000 women diagnosed each year in the U.S. with HR-positive cancer, the majority of them early stage. I want to be clear about why this matters strategically. SIGNAL-ER 101 is the first of a broader interventional portfolio, the SIGNAL program, and we have multiple additional interventional studies launching over the next few months covering a significant portion of the largest tumor histologies. These studies are designed to a pharma standard. They can be viewed as equivalent to Phase II or Phase III trials with the same implications if they succeed, namely, the potential to change practice and help define a new standard of care.

And critically, we've built the infrastructure to run these ourselves efficiently and cost effectively. Owning operational execution means we control the quality, the time lines and the economics. It lets us bring rigorous, potentially practice-changing studies to questions that matter most to physicians and their patients on our own terms.

Finally, let me update you on the progress in early cancer detection. We continue to be enthusiastic about the data we previously presented. PROCEED-CRC demonstrated excellent performance, including a 22.5% sensitivity and a 91.5% specificity for advanced [ adnomas ], a notoriously difficult target and a strong signal for the underlying technology. Additionally, case-control CRC performance showed a sensitivity of 95% and a specificity of 91%, with Stage 1 adjusted sensitivity of 91% in screen detected individuals.

Our pivotal FIND study is now approaching full enrollment. We're on track to complete enrollment in the third quarter of this year, with roughly 24,000 average-risk adults enrolled to date. Our conversations with the FDA have been productive and are ongoing. We plan to read out the FIND cohort in 2027, and we'll provide additional color on the path from there at that time.

Stepping back, we remain very excited about this opportunity. We believe we're developing a genuinely differentiated product, one that from the very beginning was designed around high sensitivity for advanced [ adenomas ], the precursors we most want to catch early.

With that, let me hand it back to Mike to walk through the financials. Mike?

The next page is just a summary of the financials compared to last year. I won't belabor all the points that Steve already covered, but there are a few items I want to highlight. The revenue growth over Q2 of last year is particularly notable because you'll recall that Q2 2025 itself was a strong quarter, where we put up 20,000 sequential Signatera growth units for the first time. Obviously, the 34,000 unit growth number this quarter shows you we've moved yet again into new territory.

You can see positive gross margin trends here year-on-year and organically ex true-ups sequentially versus Q1 despite our rapid cadence of launching new products this year that are not yet optimized for COGS, as Steve described. I was pleased to see loss per share continue to narrow even as we aggressively double down on the future of the business. After ticking upwards last quarter, I was also pleased to see DSOs come down again roughly 4 days to an average of 57 days this quarter as we continue to do a nice job converting our volumes to cash.

On the next slide, I'd like to give more granular detail on our OpEx, particularly in R&D. Given the successful commercial team expansion last year, SG&A is relatively stable in 2026. And obviously, that investment is paying off really well this year. We did have some expenses in the first half on SG&A that are not budgeted to recur in the second half. To the extent we exceed the SG&A guide range this year, I expect the majority of the overage would come from noncash expenses like stock-based compensation charges related to the business hitting long-term incentive targets and litigation expenses.

In R&D, we are remaining very ambitious in our core areas of MRD, organ health and women's health. You can easily measure our productivity over time just by reviewing the speed and breadth of the new products we've launched and the clinical trials we've read out over the last few years. Given the speed of our revenue and gross margin growth, however, we can afford to make these investments to remain in pole position while getting scale on the enterprise.

As you can see on the chart, while R&D in our core areas is clearly growing, the gross profit dollars are accelerating over and above this growth. What's unique about our current R&D spend is the scale of the investment we are making in early cancer detection this year, which at the moment doesn't yield any top line or margin benefits at all. You can see that visually as the large change on the chart, which represents the roughly $100 million we are spending this year on development work and the FIND ECD trial. We think that ECD has enormous future potential once launched, and we expect a growth wave from 0 currently to millions of tests per year. So we expect the scaling benefits to arrive for that fourth area of the business relatively soon.

Okay. Great. Let's wrap up with the guide for the rest of the year on the next slide. We're going to significantly bump the revenue guide now at $2.85 billion to $2.91 billion, which comprise roughly 31% annual growth ex true-ups and meaningful growth in the second half over the first half of this year. We feel good about hitting this guide range given the volume and ASP trends of the business, obviously, with Signatera, but also given the better-than-expected seasonal dip we experienced in women's health.

For Signatera volume growth assumptions, keep in mind, Q2 sequential volume was exaggerated by several thousand units due to weather negatively impacting us in Q1, as Steve described. So while we had another very strong month in July, we don't expect to set a new volume record again in Q3. We continue to think the right framework for forecasting Signatera growth units is this linear growth model we've described in the past. If you take the average growth in units over the prior 4 quarters, that solves for randomness around weather and any seasonality or receiving day variances over the past year. Overall, the guide is just driven by volume growth and stable ASPs through the balance of the year.

On Signatera, we've made a bunch of progress with biomarker state and Medicare Advantage coverage. So I think really to drive ASPs meaningfully higher, I think we are going to need to expand MolDX indication coverage, get some benefit from the bladder NCCN guideline and eventually get guidelines in initial indications. Our approach this entire year has been that those drivers are going to help us in '27. And so we will continue to keep them out of the guide for 2026.

The rest of the guide, we're going to hold steady. Gross margins, we bumped 100 basis points last quarter. And what you've seen this quarter is the benefit from ASP improvement and in normalizing test reported [ business session ] ratio that was balanced out by a step-up in volumes in the new products, which, as Steve mentioned, we think is a healthy development and sets us up to generate returns on COGS reduction projects next year.

We are holding steady on OpEx. We'll keep the same mindset we have and keep our foot on the gas to invest in future growth. If additional high-return projects come our way, we are going to make the investments and update you on the quarterly calls. Finally, we are in good shape to generate cash for the year again, which is a priority for us even as we are in growth mode.

Okay. With that, let's turn it over to the operator for questions. Operator?

[Operator Instructions] Your first question comes from the line of Puneet Souda with Leerink Partners.

Thanks for the questions here, and a really impressive quarter for Signatera. So first one, if I could. Steve, you talked about a bit of the drivers. But if you could double-click on that, clearly, you're building very strong evidence that's playing out. Could you elaborate a little bit on how should we think about how are these increases sort of sustainable? Any color you can provide into '27?

And maybe just if you could double-click on the -- what's powering this growth? Is it the sales rep, the commercial execution? Clearly, the data is strong. NCCN data readouts, I mean you could say all of those things, but maybe just the principal component that is -- that you think is driving this and keeps this sustainable in terms of quarter-over-quarter remarkable growth that we're seeing here.

Yes. Thanks for the question. Yes. So I think there's some things that happened this quarter that we think were very beneficial. You look at that FDA approval. Certainly, there's some halo effect coming off of that, that was received very positively after the IMvigor readout.

But if you take a step back and you look at the preparations that we've made over the last couple of years, we made big investments in the commercial team, we made big investments in medical affairs. We've been investing in large-scale clinical trials and data readouts. So all of those things have put us in a position to now be executing and outperforming. So we're super excited to see the planning that we put in now coming to fruition.

But ultimately, we really focus on sort of the 4, 5 core things across all of our businesses. One is like an extreme focus on technology and sort of being on that cutting edge of technology. The second is backing everything with a very significant amount of peer-reviewed evidence. And you can see we've continued to invest in that and continue to extend our lead.

And then the third is focus extensively on user experience. We've done a lot of things to implement new ways to reduce [ TMP ] issues on tissue to be able to accept more samples, mobile phlebotomy expansion and so forth. And then the fourth is the team, and we have an excellent team of both on the commercial side and the medical affairs side. All of those things have put us in a position to be successful.

And as we look forward, obviously, this 34,000 quarter-over-quarter is just a blowout record, I think, compared to anything that we've done previously. But I wouldn't say necessarily, we're going to repeat that immediately. But if you look at it, I think our previous record was maybe 25,000 quarter-over-quarter or something like that. And I think we can outperform that as we move forward. And Q3 is off to a very good start. So I would expect us to be kind of somewhere right in the middle there.

Got it. And then a follow-up for you. Maybe this is just going a bit deeper into Slide 13. Thanks for providing that. I think it's a very good perspective given the competition questions that we normally receive.

Could you maybe dive a little bit deeper into it? Maybe Alex, if you can talk about it? How should -- this clearly lays out 2027-2028, readouts that are steadily going to be coming out. But is there any -- are there any specific readouts that you would point to? And maybe if you could just dial a little bit into the ER 101 study. Again, sort of how should we think about that? Is that something of a practice-changing study? Is that how we should be thinking about that study?

Yes, Alex, go ahead.

Thanks for the question. So I think Slide 13, this is just kind of the prospective portion of our studies, right? So I think on top of this, we still continue to invest and readout biobank studies as well. So we do expect a large bolus of readouts in the next few years.

The way I would kind of think about -- especially the prospective readouts, I would say there are definitely a few studies that were kind of monitoring very closely. I think VEGA is, for example, a good study that we've discussed in the past. But a lot of these studies are also, I would say, important in smaller indications. And because they are prospective and many of them are now interventional, I think the readouts do have a significant impact in terms of change in care and possibly changing guidelines in reimbursement.

So we can't, given the number, provide details on every single study kind of an exact dates for when it will read out. Some of this is variable. Some of it, we don't control because some of these are getting done with collaborators. But as we kind of get closer and kind of enter 2027, we'll try to provide a little bit more guidance about kind of the studies that we think are important and a little bit more information about their timing.

Kind of going back to ER 101 and the broader SIGNAL portfolio, I think we'll be announcing additional studies as they come online. We're extremely excited about the pipeline. I think the main point is these studies are designed to a high level. I think that we said in the prepared remarks, pharma level. And many of them are actually randomized.

SIGNAL ER is not randomized, but it's not randomized because we couldn't randomize it, but because we're actually looking for performance for the CTA negative arm to do so well, that really, what we're doing is almost comparing to close to 100%. I mean, that's how high of a bar we're setting. And if the study is positive, we do believe that this study will be practice changing. And that's the mentality we've taken with every single SIGNAL study that we have designed and plan to initiate in the next few months.

Got it. Great.

And Puneet, let me just add to that a little bit, too. So basically, what we did is we sort of went across every histology that we thought could make a major impact on the business. And we said, let's design a practice-changing potentially guideline enabling study, and then we're going to fund those trials. And that's sort of what we've done. And that's why you see a lot of our investment going into these clinical trials. So SIGNAL breast is the first one that we're announcing, but there's going to be a suite across all different histologies. So stay tuned, and it's a big part of our strategy going forward.

Your next question comes from the line of Dan Brennan with TD Cowen.

Great. Congrats on a strong quarter. Maybe, could I start just on Signatera volumes again, given how strong it was this quarter. So a couple of thousand tests from the weather recapture, so you had 32,000. And I guess, Steve, you talked about that sales force expansion productivity, which is just beginning to hit. So I'm just trying to wonder how we should be thinking about the go-forward pace? Because it sounds like given the size of the sales force expansion, that possibly, you could see really another couple of quarters here, really significant volume quarter-to-quarter growth based upon -- I mean, these salespeople are probably just getting going with that productivity enhancement.

Yes, I think that's right. I mean, we've got these sales folks that have just come online. We made a big investment in medical affairs. We're seeing a lot of momentum coming off the trials that have read out coming off the halo effect of the FDA approval. There are some things like even in bladder, for example, where the IMvigor protocol is sort of moving to kind of an every 6-week protocol, as outlined in the approval. And I think things like that can kind of give us an upside opportunity as well where people may be starting to draw more frequently where they've traditionally drawn, say, quarterly or every 6 months.

So there's a lot of momentum right now. And I don't think we'll do 34,000. Obviously, I think here, we've really outperformed even our own internal expectations. But like I said, our previous record, all-time record had been, I think, 25,000. And if we can outperform that, I think that would be a good achievement. And we think we're in a position to be able to do that and kind of continue to notch up as the year goes on.

But very strong momentum. I think we're crossing the sort of tipping point in the field where doctors are really starting to believe in MRD as a core part of their practice. And I think we're the major beneficiary of that given the breadth of our presence in the field and the data that we put out, the size of our sales team. So everything is sort of starting to come together.

Terrific. And then maybe just on the price, the $25 sequential increase ahead of expectations, think you've had 25 and 22 the last 2 quarters sequentially. But what I'm hearing -- I know Mike talked about more of the benefit in '27, but I heard Solomon say several commercial payers that are kind of putting Signatera in their plans. You've got 3 NCCN guideline inclusions. And Steve, you talked about the benefits you had on rev cycle as well that you experienced in transplant and women's health and you're seeing really an opportunity now, more so in Signatera. I'm just wondering if you can unpack at all, is there a chance this price really begins to take off in the next few quarters more so is? Or is $25 sequential still the right way to think about it for a little while?

Mike, do you want to take that?

Yes. No, thanks for the question. I mean, I think that -- so as we mentioned on the prepared remarks, the guide that we put out presumes just stable ASPs, $1,275 for Signatera through the balance of the year.

I think if you're looking for like what would be an upside case beyond the guide, which we normally said is something that is difficult, but achievable, I think it would be something in that ZIP code of another $25 through the balance of the year. And I can talk a little bit about why, I mean, the things that drive immediate term ASP upside are things that we're basically getting paid on already right now, right? If you think about the timing of the accrual for Q3, we've got to be receiving reimbursement for that unit effectively right now for us to count it in the Q3 results. So that tends to be things that are kind of more tactical in nature, these are things like improving Medicare Advantages, compliance with reimbursing for coverage services, expanding coverage within the biomarker space, things like that.

The things that we're mentioning on the call are the longer-term drivers and will have a bigger impact on ASP. I feel better about the long-term visions for getting to $2,000. I feel better about that now than I really ever have since we launched Signatera 6, 7, 8 years ago. But I think just if you're looking for kind of tactical kind of moves over the next couple of quarters, I mean, I think an upside case would be something like $25 just because these recent wins that we've had take a little while to get into the revenue recognition.

Your next question comes from the line of Dave Westenberg with Piper Sandler.

Congrats on the good MRD numbers. So one of the things I think that was kind of fascinating, we see really good growth in a lot of the different MRD competitors or new entrants. Obviously, it's not having any impact on you with the 50% growth rate. So can you tell us, is there still like market education from some of these competitors? And how do you think as these competitors come in? Is there lanes for each? Or is there some crossover? Or do you think maybe they're kind of just getting their own customers? I just want to think about how it plays out as they are in the market and they do seem to be getting traction at this point.

Yes, it's a good question. I mean, there's always going to be competition, and we've seen that. I think if you look at -- probably 4 years now, maybe 3-plus years, there's been major oncology competitors that have had MRD tests that are approved by MolDX on the market.

So it's not necessarily a sort of a new dynamic. And you can see we've done really well in the face of competition. I think we're going to continue to do really well because we're doing all the right things. So we're investing in the technology when we see an opportunity to round out the portfolio or enhance the portfolio, we're taking those opportunities. We're doing all the right clinical studies. So I think we're in a really good spot going forward.

I would just say there's always going to be competition and other companies are going to do well. But because it's such a large market, it really doesn't have a significant impact on us. I mean, we're still very early in penetration in the overall market, I would sort of say mid-single digits. So we think there's a lot of upside here, and we're really in the best position to capture that upside.

Now with that said, we're very keenly watching what everybody else is doing. And if we think there's an opportunity for us to push harder in one particular area or sort of close gaps in a particular area, we're going to be really focused on that.

Great. And you mentioned in your prepared remarks some of the new patient starts, again, being extremely high in the gross margin commentary. Now I know you don't give out mix of brand new patient starts versus continued patients. But can you maybe give some of the mix in terms of tissue types? Are you gaining new -- or a lot more new patient starts in some of the covered versus uncovered indications, some of the more newer indications? Just trying to get a flavor of what might be coming down the pipeline in terms of what you're seeing in, say, tissue types and say, 2028.

Yes, it's a great question. So as you know, we have many tissue types now that are -- or many histologies that are covered by MolDX. Then we have a handful where we still don't have coverage, but we have submissions. And I think we've sort of reported before that we had 7 submissions in, which are at various stages, and we're excited about the opportunity of gaining coverage there.

As far as what we're seeing in the field, we're continuing to grow colorectal and breast, which I think are the two sort of largest as we said in the remarks, but there's a lot of opportunity beyond that. And as we turn out new publications, we generate new data, we start to see uptick in these other histologies as well. And we think we're in a really good position to continue to drive growth across the business, both in CRC and breast, but also across this longer tail of other histologies.

Your next question comes from the line of Daniel Markowitz with Evercore.

Congrats on the good results. First, I wanted to ask on Signatera ASPs. It's nice to see the continued progress there. Steve and Mike, you both had some helpful comments on the step function improvements that we could see from specific catalysts.

So what I wanted to specifically ask about is the 7 indications submitted to MolDX. Should we think about that in 2027? Is it coming online in the first half, and maybe it will take a few quarters to get fully rolled out and realized? And then once it's fully ramped, in terms of the P&L impact, could it be like 200 plus contribution to ASPs on that path to 2,000? And are there any incremental costs that come with it? Like the way I'm thinking about it, it could be a really nice step-up to the ASPs and also at a nice inflection towards positive EBITDA. Is that the right way to think about it? Any color would be super helpful.

Yes, it's a great question. I would say, with regards to the timing, it's always hard to say. But generally, we've been able to sort of work through these submissions very successfully over time. I mean usually, if you have a good peer reviewed published paper and you submit to MolDX, there's going to be some back and forth. There's going to be a couple of rounds of revision, and then ultimately, you'll end up getting coverage. And so that's why we feel like we're in a good position on these.

I don't think that time line of at some point over the kind of second half of '26 and then kind of into the first half of '27, I think that's a reasonable time line, which is basically rolling coverages over the next sort of 12 months or something in that range. And frankly, I think it's good that they're very sort of strict in the way that they are. And I think that's benefited us because we generate so much data and so much quality data. And it really, in some ways, is a competitive moat for others that are now entering the market where it really takes a long time to generate this level of evidence that you can go to MolDX with. So we think it's an opportunity.

On the path to 2,000, certainly, this would make a major impact on the path to 2,000. But Mike, do you want to comment specifically on sort of what number you think this might give us?

Yes. I mean, I think if you just kind of sum up the indications where we've got submissions in flight or we're planning on submitting some MolDX, I mean I'd estimate that's worth something like $150 for the ASP, perhaps $200. So Daniel, I think your estimate's roughly in the right range.

So obviously, that's a transformational difference when you started $1,275 and you add that. Steve mentioned the timing to -- starting to get these coverages. And I think that's right. I mean, I think over the next 12 months, I think you start to get these coverages. And I would just reiterate what Steve was just mentioning on the process. It's hard to forecast with precision, but I mean, I think rolling approvals over the next 12 to 18 months is probably the right way to think about that.

Great. And then the second thing I wanted to ask about was the progress in biomarker states. It sounds like that got a little bit better this quarter. Are we seeing an inflection of this starting to flow through? And then will you be able to be trued up on -- like retrospectively since biomarker bills went into effect? So in other words, should we expect some outsized true-ups in the quarters and years to come based on the biomarker states?

Yes, I'm not really expecting -- thanks for that question. I'm not really expecting a lump of true-ups specifically from biomarker. I mean, the way that you see this happening is you get a biomarker state law, and then you interact with payers in that state. And it's kind of a linear kind of grinding process that takes quite a bit of time as we've described in the past.

So that kind of linear process of getting payers on one by one, sometimes it feels like it's unit by unit. That contributes to the drip of continued true-ups rather than a bolus. I mean, more generally, we said this in the prepared remarks, I mean the ambition is to have the true ups kind of gradually come down, and you've seen that happen both in terms of absolute dollars, but particularly as a percent of revenue. So that's the plan.

Your next question comes from the line of Tycho Peterson with Jefferies.

This is Noah on for Tycho. I wanted to ask on women's health. I think the high single-digit growth was a little bit better than you were expecting. Curious, what are you seeing from an underlying market growth standpoint? And then when your competitors flagged some share loss there, so curious if you think you're going to benefit [ share gain ] there?

Yes, it's a good question. Yes, we definitely think we're benefiting from share gain here. We had -- over the last couple of years, we've had some big investments sort of behind the scenes and technology development. That led us to beginning of this year, launching the Fetal Focus product and then more recently launching an enhanced version of Panorama that really closed one of the major gaps that people had with the products.

So I think right now, we're in probably the best position we've been in from a competitive standpoint. And we really started to see the impact of that over Q2. Typically, it's -- Q2 can be sort of a softer quarter just because of seasonality. And we were really able to overcome that this quarter, I think, with just the interest in the product portfolio and the interest in the enhancements. And the sales team is feeling very positive right now in women's health.

That's helpful color. And then for my follow-up, I wanted to ask on the SG&A guidance. It looks like you're expecting a step down in the second half versus the dollars last year, around $80 million. Just curious, where these efficiencies coming from? I think you mentioned an AI project last year that could drive $200 million in cost savings over time. So any incremental progress there? And how you're thinking about the longer-term path to profitability?

Yes. Mike, do you want to take that?

Yes, sure. Yes, thanks for the question. Yes, I think I mentioned in the prepared remarks, there were a couple of onetime expenses in Q1 that -- I wouldn't forecast them to guide to have them repeat in the second half around noncash accruals of stock-based comp and some litigation expenses. So that's -- that makes up the majority, I think, of that delta.

I mean, more generally, I think we are getting a lot more efficient. We're deploying AI really across the business at a pretty frenetic pace. And we're seeing efficiencies all the time. We've given a bunch of examples in the past of where we can deploy that in a large operation like this. You've got a large lab, you've got a lot of employees, a lot of patients, a lot of volumes. There's lots of opportunities to automate workflows and to move the employees up the value chain, as it were. So we continue to see a lot of progress there.

Your next question comes from the line of Kallum Titchmarsh with Morgan Stanley.

Maybe first one on the Japan launch. Could you just help us understand a little more, how that ramp could look in 2027? How quickly do you think reps could get out there into accounts? And then maybe just talk through your confidence in securing recovery for perhaps more frequent testing based on some of the studies that you've run in the region?

Yes, it's a good question. So Solomon, I'll have you kind of comment on the sales penetration. I'll comment first on the coverage. So I think as we said on the last call, we're sort of initially looking for that sort of adjuvant coverage. And then I think, following on after that, at some point, the surveillance coverage.

Now we think we'll be in a position to be able to offer surveillance, but we think the coverage will probably come sort of shortly after that. There's a lot of opportunity there, just given the number of CRC patients that are diagnosed. And then now also, I think bladder as well is going to be a big opportunity. So Solomon, do you want to comment on the penetration?

Sure. Thanks for the question. Yes, with the launch in Japan for CRC expected at the end of the year, we think we're poised for penetration or market adoption, I prefer to say, that meets or exceeds the rates we saw in the United States when we introduced Signatera for colorectal cancer. And that's because of the -- we're starting further along with more significant published data, with medical societies having published guidelines and strengthening those guidelines over time, including expected updates this year from multiple different guideline bodies in Japan.

And then the reimbursement is really going to be the unlock because it's [ not the way ] the tests are ordered, it's really a requirement for the reimbursement to be in place in order for clinics to order the test. I'll just add one other thing. We have a really strong partner in Japan, but we're supplementing that distribution partner with direct sales effort, [ sales effort ] and marketing in Japan.

So we feel pretty confident we're going to be able to get awareness out very quickly, we think, given the Japanese thought leadership with the GALAXY study. But there's already a strong understanding and appreciation for the technology. And it's really going to be about user experience, making it easy to order, easy to get results. And we look forward to launching.

That's great color. And Mike, maybe just one for you. Outside of the ASP uptick, you highlighted some internal work that's being done to drive down COGS. Could you maybe just detail a little more what those actions are and when you think those can come through the P&L?

Yes. Thanks for the question. No, this is really kind of our standard playbook. We launch new products very frequently. You've seen that pace of the new launches been quite intense over the last year. As those products launch, obviously, they're not yet optimized for COGS as they kind of get to a volume scale. So as they scale, you get some natural efficiencies with workflows in the lab.

And then also, once you see, you kind of confirm that you do have the demand for the new product and the investment is worth it, then it's relatively straightforward to then deploy resources then to optimize the workflow itself for COGS. Those are some of my favorite R&D projects because you can see what the demand is, you can see what the savings per unit is. And so it was quite easy to calculate returns on invested capital for those projects.

And we've generated very high returns on these cost reduction projects over the last decade. So just given the pace of the new product launches we've had over the past year, we're well set up to have another wave of COGS reduction projects that hit over the next 12 to 18 months.

Your next question comes from the line of Subbu Nambi with Guggenheim.

There are two topics I want to address. And one of it was partially addressed, but I'll touch on it anyway. First, on R&D, it looks like you increased the budget for early cancer detection program. Are you accelerating time lines here? What is driving the investment?

And second, on margins. In a huge revenue quarter, gross margins didn't increase by that much sequentially. There are some good reasons that could happen, things like a jump in new Signatera starts or more LATITUDE growth. Is that right, one? And then do these mix dynamics start to flip later this year?

Yes, thanks for the question. So I'll take the first one on ECD. So we're actually really tracking along at where we thought we would on the FDA enabling study to [ find a study ]. We think we're going to be done recruiting this quarter, which is sort of what we outlined in the prepared remarks. So that's really on schedule. We're excited about that.

We've kind of back to that with this readout of PROCEED that we had early -- I think, at the JPM conference previously, which we're excited about. So now we're doing the development work, we're getting the assay ready to be in a position to run the FIND study after all the samples are collected and then be in a position to submit to the FDA.

So these are all expenses that over time, will go away. But I think for now, this is sort of what needs to be done to be in a position to submit to the FDA. We think this is a huge market opportunity, and we're in a position to be potentially one of the key players in this space. So Mike, do you want to comment on the margin?

Yes. No. It's very similar to the topic we're covering with Kallum, which is -- yes, we did have a huge number of new Signatera starts commensurate with the blowout in volumes that we had for Signatera. And then we had some very promising growth in a bunch of these new products where the COGS aren't yet optimized. But as I just mentioned, we've got ample opportunity now, now that we see the volume coming in to go and tighten down those COGS and optimize those workflows, which we're excited to do, again, over the next kind of 12 to 18 months.

And I'll just reiterate this point on new patients. I mean, new patients coming in for Signatera was way up. So we're seeing this very significant excitement. And the good thing about that is that sort of usually kind of foreshadows significant growth in recurrence monitoring and surveillance in the future.

We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.

All right. Thank you. Well, good morning, everyone. I'm Evie Koslosky, the Life Science Tools and Diagnostics Analyst here at Goldman Sachs. And I'm joined here today by Mike Brophy, CFO of Natera.

Good morning. Thanks for having me.

Of course. So I guess just to start things off, you came off a really strong Q1. You cleared the 1 million unit milestone for the first time in a single quarter, raised full year revenue guide. Maybe walk us through a high level what you saw in the quarter and then how things have changed since then?

Yes. Well, we had a great quarter. I mean, we had another record Signatera volume growth quarter. We had an absolutely massive women's health quarter as a record on a number of different levels just in terms of volumes. Realized pricing was outstanding across the board, COGS per unit was actually outstanding across the board, if you look at the specific unit economics and the COGS per test that we delivered, had a very strong set of data that we just released at ASCO, I guess, last weekend, circa last weekend, that was very encouraging. So we're on a fantastic trajectory here.

Looking into the rest of the year, we significantly bumped the revenue guide. We bumped the gross margin guide. We even bumped the R&D guide this year, which I viewed as a positive because what that meant was that we were actually enrolling our early cancer detection study much more quickly than what we had anticipated. So more of the spend from ECD is coming in '26 versus 27, which means we'll just get out on the market quicker. So really kind of firing on all cylinders across the business.

Great. And then we just had ASCO last weekend and mentioned some of the data. I think you guys have really leaned into this kind of TOMR treatment on MRD approach. Maybe talk through some of the data and feedback from oncologists, and then how Signatera is being used now to guide treatment decisions.

Yes. I mean we had a bunch of data at ASCO, which is extremely practical data. I mean, we had data from the GALAXY study that showed that just further reinforce this concept that Signatera negative patients have extremely good outcomes, it looks like. And Signatera positive patients really materially benefit from receiving their chemotherapy. So just further reinforcing this concept that Signatera is critical to triaging this patient population because you lose patients in both directions. You've got people that turned down their chemotherapy for all kinds of very understandable reasons that really do need it, that really would benefit and it costs the system when they avoid their chemotherapy and the reverse is also likely true.

Another important dynamic there, we saw this in the IMvigor trial last year. We had patients that started off negative on Signatera and then turn positive and then went on to get adjuvant treatment, adjuvant chemotherapy. And those people benefited, right? I mean, those people actually had a very good outcome as well. I think that's an important kind of nuance to the data that's very important in kind of the daily life of an oncologist of like how to manage these patients as they turn positive later on in their journey.

Beyond that, we have an outstanding kind of meta-analysis across a broad range of tumor types across several thousand patients and a bunch of published papers. I think that's quite relevant for physicians as well because we're seeing a real evolution in terms of how do oncologists adopt Signatera. I think if you rewind 3, 4 years ago, I think physicians were primarily adopting Signatera for specific use cases and then primarily in colorectal cancer because that's where the initial data was. And now we're seeing many more oncologists kind of adopt Signatera and MRD monitoring just more generally as a concept in their practice because of the breadth of the data that we've been able to deliver over time across a broad sweep of tumor types. So to be able to crystallize that in a meta-analysis as kind of a pan-tumor analysis, I think that it provides more balance to that decision.

And then finally, I was quite encouraged with the data that we showed on the ultrasensitive genome backbone with phased variants. We had some very interesting data in non-small cell lung cancer that was presented there, which I think is quite exciting as well. So very successful conference.

One thing about our progress with Signatera that we take very seriously is that really every single conference that you go to now, I mean, there's just a drumbeat of data that if we'd had this set of data sets 3, 4 years ago at an ASCO, it would have been like, oh my gosh, this is unbelievable. I would be celebrating, high five. And now this is kind of the standard -- every conference, we're putting up a huge amount of data. And I think that's both required, but it also speaks to the flywheel effect that you get when you're constantly evolving -- constantly investing in clinical trials over a period of time.

Great. Yes. And you mentioned the phased variants. I know there's a plan to launch an updated version of Signatera later this year. Maybe talk through more detail on that and then what feedback has been in the research setting for that test?

Yes. I think it's been great. And I think it's commensurate with our own experience in the business over a long period of time. I think we're on version 9 of the Panorama NIPT test. And I think if you even went to a bunch of our best customers and said, hey, what version of Panorama are you on? Or what's different about Panorama now versus 3 -- I don't know if many people would be able to really articulate that for you. There's just a belief and an expectation that we've just continued to improve the performance of the assay. And I think that's of a piece with the plan with Signatera as well. Over time, we'll just continue to evolve and continue to improve the performance of the test.

As we're enrolling clinical trials that starts now that read out in the 2030s, and we had a couple of very interesting ones that we've announced recently. Those will likely be on kind of the next version of Signatera. I think for now, the primary preference for most physicians is to order the Signatera test and know that it's gold standard and it's backed up by all the data that we've published so far.

Great. And then I guess, you've seen new entrants in the MRD space. You have the market-leading position in tumor-informed MRD. I guess, what stickiness factor for Natera. Is it the clinical evidence, TCMR integration, commercial team? Like how would you characterize that?

Yes. I mean I think it's all those things. I mean, I think you just got to be able to -- you got to solve important problems for patients and physicians, and you have to do that with excellent customer service. And that sounds -- that's simple but not easy. It's been very, very hard to get to that level where we can do that consistently at scale. It's taken us a better part of a decade now. And we've got about that size of a head start in terms of delivering that.

If you just -- if you double-click down to the individual patient level, a patient has initiated on Signatera when they're in the middle of a critical health care emergency that they're going through. They found that they've had cancer. They've often had surgery to remove the tumor. And now they're having a personalized -- individual tumor -- serial basis. And there's information that flows from one test to another. You can track your tumor burden as measured by mutated fragments per mL of plasma longitudinally, right? And they're used to the test report and they're accustomed to Signatera, helping them kind of guide their cancer journey.

So you can imagine the level of stickiness that you have with that patient is unlike anything that's ever existed before in molecular diagnostics. And once you have that level of stickiness at the patient level, it's much more straightforward to attach that at the clinic level. Once you have a critical mass of patients on Signatera, there's an incredibly high incentive to have your next patient also be on Signatera.

Great. And then you recently launched the Latitude test for tissue-free MRD within CRC. I guess, how are you positioning this alongside Signatera? Is it mostly a reflex option? And then what is the early feedback been on that test?

Sorry, for the Latitude test?

Yes.

Yes. No. I think Latitude, very proud of the -- like the rapid kind of evolution of the product launches that we've had with Signatera, and we've talked about the -- we talked about the ultrasensitive offering.

Latitude, I guess, is kind of on the other end in the spectrum. I mean, I think there are specific use cases where a tumor-naive MRD test will be an option that physicians will want to avail themselves of. And from our perspective, we just want to -- back to my kind of original comment is, we just want to be able to solve all the problems for the patients and the physician. This is a particular use case. A lot of times, a physician may just prefer Signatera, but perhaps they're -- they have some concern. They haven't done this before. They've never done a personalized MRD test before, and they have some concern about like exactly how the logistics will work.

And so this is a nice way to allay those concerns. You say, look, doc, go ahead and order Signatera if for whatever reason, there's some delay or there is some access to tissue or what have you, we can reflex to the Latitude test and then work the problem in the background and get the patient back on the gold standard Signatera test for subsequent time points. So I feel like that's a very compelling offering. And you can see how like just that positioning generates a lot of benefits for Signatera, even if it's not a ton of Latitude volume. I think the Latitude volume will also grow on its own over time because there will be specific use cases where Latitude is particularly relevant.

Great. And then the recent FDA approval for this -- for Signatera as a CDx in bladder cancer, I guess, how should we think about implications related to this approval in terms of volume or ASP uplift? And I guess, how do you expect this to kind of help with commercial payer conversations?

Yes. It's a massive milestone for us to actually kind of go through the process and get to an FDA approval for the Signatera test. I think there is -- the customer base, the physicians are not monolithic. I mean there are sets of physicians, there are segments of that group that care about having an FDA-approved option. I think it's a marker of the quality that we have in the lab that we were able to pretty seamlessly meet the standard required by FDA in supporting the submission of atezolizumab.

I think more broadly, it's hard to separate the FDA approval just from the quality of the data that was generated in the IMvigor study. I won't bore you to rehash it right now, since we're short on time. But look, there's a reason why that data was in The New England Journal of Medicine. I mean, it was a watershed moment for the company for Signatera and for MRD in general.

Great. And Japan is kind of the other major opportunity for you moving forward. I guess, talk us through kind of the commercialization model there, direct sales force, sublicensing model and then kind of what the margin profile is of that international revenue and then pricing considerations?

Yes. Very excited about this. As many of you know, colorectal cancer is an acute problem in Japan, similar number -- absolute number of people have -- or get colorectal cancer in Japan as compared to the United States, despite the fact that circa 1/3 of the population is just much more prevalent there. A lot of our best prospective outcomes data is Japanese data for this reason. So the Japanese have been very, very proactive in helping us to generate that data. I expect to get a Japanese FDA approval this year get pricing this year with the launch next year. There's already a guideline in place. We have excellent data in country. And so I'm quite excited about what that portends for us in the future.

Awesome. And then I guess, switching to women's health. I mean you had a really great quarter in 1Q. Are there any particular areas of the portfolio you would call out? And then what your expectations are in terms of growth cadence within women's health rest of the year?

Yes. I mean I think that the -- it's obviously we're the strong market leader in women's health. It's gratifying to see now the penetration. I think, we were talking about this at the Brexit EV, but now it's very, very common for women to get in NIPT, whereas even 10 years ago, this is a rare kind of experimental thing. It's made a huge difference to patients over that time horizon.

We're going to continue to innovate. I mean, you saw we had a massive Q1. That's -- in part that's good commercial execution, in part that's evidence of our continued product launch pipeline. Just recently, we -- I think last week, we had a press release highlighting our data in patients with low fetal fraction. So these are patients where the amount of sulfur DNA that you detected from the fetus as compared to the mother, the amount of DNA from the fetus is very low relative to what you would normally expect to get. And our evidence looks outstanding in that cohort.

We've actually launched that new capability in the lab now. So patients can avail themselves of NIPT as early as 8 weeks as opposed to the standard 10 weeks. That data was going to be -- will be submitted and presented at a major conference later this year, and we're very excited about that.

Great. The other kind of exciting part of women's health, you recently launched, Fetal Focus. It seems like it had a really successful launch and good growth in 1Q. I guess what's the early feedback been? And then how are you positioning that in relation to your Horizon test?

Yes, it's been fantastic. I mean, we're very excited about that launch off to a quick start. A lot of patients have availed themselves of the option of Fetal Focus to have that available as mom gets the carrier screening test. Still early days, so I'm excited to see kind of where it goes. But I think one can -- it's always interesting to try and parse -- you have a very strong volume quarter. Well, why was that? Well, there's a bunch of different things and Fetal Focus was clearly a key driver.

Okay. So do you think -- I guess, in terms of market share, do you think that Fetal Focus test will kind of help you in that aspect of the portfolio?

Yes. I mean, I definitely think it's an important piece. One way to think about that is just given how much competition there has been in NIPT over the last decade, how is it that we've been able to play the role that we played in that market? And I think one of the key reasons why we've been so successful there is that we are constantly being very ambitious in terms of the data that we generate and the cadence of our product launches.

So rewind a year, we launched an Rh factor test largely in response to a shortage of RhoGAM in the United States, and that was a critical unmet need, kind of came up quickly, and we were able to launch the test. And that was very important, right? So every year, we like to be on the cadence of launching something new and important for patients and Fetal Focus certainly fits within that paradigm.

Great. And then maybe talk through some of the pricing considerations in women's health, I guess, what levers do you have to kind of keep that inching higher? And what sort of revenue contribution should we expect volume versus pricing?

Well, the good news is women's health is that we're a decade in, I mean, the tests are much more incorporated in the standard of care. I mean NIPT is now kind of a boring test, and I mean that in the highest possible complement. There's no better way to be boring than to just be in the standard of care to be something that everybody gets.

And what that means is that the fraction of time that you get paid should be quite high. I mean -- that does not cover noninvasive prenatal testing for their patients -- you've got to navigate the specific administrative requirements of each individual payer. We've had a decade to understand those requirements and to get quite good at just hitting our marks with the payers so that we can just get paid a high percentage of the time. What that ends up yielding is ASPs, kind of realized that ASPs are actually higher now than they were when we went public 10-plus years ago, which I find to be -- I'm very proud of that stat as I say every time I'm on a stage like this.

What maintains your realized pricing is when the clinical utility is clearly there. I mean, you're generating net benefits to the health care system by delivering these tests. You continue to innovate, and that allows you to continue to have meaningful market share. And so long as you have meaningful market share in a product that is a standard of care, that gives you the ability to sit at the table with the payer and work with them as a partner versus being a supplicant like you were just one of a dozen small players or something like that.

Great. And then you recently expanded your portfolio into a rare disease with the Zenith launch. I guess talk to early feedback, what the market -- why that market makes sense, I guess, with your existing offering?

Yes. I mean, I think there's a lot of overlap both in terms of technology and call point with rare disease to the other things that we offer. I mean, we offer a bunch of germline screening. Obviously, carrier screening is the largest example for us. We also offer a BRCA test. We offer a bunch of innovative products in the in vitro fertilization space.

And all of those different products, there's a lot of technology, a lot of hard work that we have evolved on in terms of kind of their curation and delivery of the product itself in terms of the technology as well as the call point. So a lot of these people -- the precision medicine group within a hospital system will be extremely relevant to all those products I just mentioned.

Renasight is -- in the kidney space -- screening products and rare diseases fits right within that paradigm. So it's -- you're often calling on the hospital system. We've seen a lot of engagement with these bigger groups. It does -- it enables further adoption in terms of kind of getting into these EMR systems. So I think there is sort of a -- there is a synergy there, a benefit to the rest of the products when you offer something innovative like we are in rare disease.

Great. And then you mentioned Renasight , so I guess, we'll touch a bit on organ health. I guess, what are you seeing in terms of volumes that you see there, both in the quarter and then kind of any catalysts that we should look out for in that portfolio?

Yes. It's been a fantastic evolution for us. This is another one where prior to the advent of these molecular diagnostic tests, the standard of care was quite onerous. I mean, these kind of physical biopsies that you would take a person's heart every month or very frequently when you've just given them a transplant is quite onerous. And so being able to supplement that with the cell-free DNA readouts, I think, has made a huge benefit to patient care.

I think that we're on a kind of a secular growth wave in transplant diagnostics, where cell-free DNA is going to have an increasingly more and more important role to play in terms of monitoring these patients' post transplant. I don't think that's a static metric. I think that's -- there's a lot of room to grow there.

Renasight, we're very excited about. Chronic kidney disease is obviously a huge area of spend for Medicare. It's an enormous problem just for the health care system. We've run studies that show a meaningful proportion of these patients have chronic kidney disease, not because of lifestyle factors or other reasons, but because they have a pathogenic variant that's causing their chronic kidney disease. And it's very important to know that. It's important to know which patients are in that category because it affects how you care for them. I think if you look out further into the future, there's a healthy pipeline of therapeutics on the way that sensibly would be available to potentially cure some of these people to have these pathogenic variants. So that's very exciting to be part of that journey. And we're just kind of -- I think we're just scratching the surface, honestly, in organ health.

Awesome. And then the other thing I wanted to touch on, you recently raised your R&D guide. A lot of that had to do with the reinvestment kind of back into the CRC early detection pipeline. Maybe talk through how you're thinking about that market developing over time and why you're kind of excited to get into the early detection.

Well, it's a huge unmet need. I mean it really is -- there's 40 million people in the United States that need to get screened for colorectal cancer, and they're just not going to get colonoscopy. They're not going to avail themselves of a stool test, unfortunately. But if you could have a high-performing blood test that they can get at their annual checkup, they would avail themselves of that. And so there's a huge amount of misery in the world that can be avoided just by getting an early screen in colorectal cancer.

We had some outstanding preliminary data where we took the lessons, I think, from the space as these data sets have evolved over the last 3, 4 years. And we tried our very best to have the preliminary data to be a very rigorous readout. The reason why you have to run a big FDA enabling study is that you've got to enroll 25,000 to 40,000 patients and actually get the result. So we're running at that as quickly as we can.

We mentioned on the call that we expect enrollment to actually complete now here in the second half, which is meaningfully ahead of our original expectations. So then that would imply that we get a readout in '27 and a commercial launch in 2028. That's an enormous opportunity for us that right now it's just -- it's only a penalty, right? It's only on the R&D spend, and so it kind of obscures the leverage that you're getting in the commercial business, and it generates no revenue. But that will reverse, right? Like that will go from 0 to being all growth as we launch in that space. So I think that's an outstanding long-term catalyst for shareholders.

Awesome. Awesome. Very exciting. Well, I think that's probably a good place to end. Thank you so much.

Yes, cheers. Thanks for the time.

Ladies and gentlemen, welcome to Natera's First Quarter 2026 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded today, May 7, 2026.

I would now like to turn the conference over to Michael Brophy, Chief Financial Officer. Please go ahead.

Thanks, operator. Good afternoon. Thank you for joining our conference call to discuss the results of our first quarter of 2026. On the line, I am joined by Steve Chapman, our CEO; Solomon Moshkevich, President, Clinical Diagnostics; Alexey Aleshin, General Manager of Oncology and our Chief Medical Officer.

Today's conference call is being broadcast live via webcast. We will be referring to a slide presentation that has been posted to investor.natera.com. A replay of the call will also be posted to our IR website as soon as it's available.

Starting on Slide 2. During the course of this conference call, we will make forward-looking statements regarding future events and our anticipated future performance such as our operational and financial outlook and projections, our assumptions for that outlook, market size, partnerships, clinical studies and expected results, opportunities and strategies and expectations for current and future products, including product capabilities, expected release dates, reimbursement coverage and related effects on our financial and operating results. We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. Please refer to the documents we filed from time to time with the SEC, including our most recent Form 10-K or 10-Q and the Form 8-K filed with today's press release. Those documents identify important risks and other factors that may cause our actual results to differ materially from those contained in or suggested by the forward-looking statements.

Forward-looking statements made during the call are being made as of today, May 7, 2026. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. Natera disclaims any obligation to update or revise any forward-looking statements. We will provide guidance on today's call, but will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum. We will quote a number of numeric or growth changes as we discuss our financial performance. And unless otherwise noted, each such reference represents a year-on-year comparison.

And now I'd like to turn the call over to Steve. Steve?

Thanks, Mike. Let's stick to the highlights. We had another excellent quarter, as you can see here. We posted revenues of $697 million in Q1, 39% growth over last year. Even at our scale, Q1 shows we are still in rapid growth mode. It was just a short while ago that we celebrated a milestone by delivering 1 million units in a year. Q1 was our first to deliver 1 million units in a single quarter headlined by excellent volume performance in women's health and another record growth quarter for oncology. We feel like we're just getting started.

On women's health, the core business grew exceptionally well. and we had a very successful launch of our fetal focused product. The Fetal focus launch is exceeding expectations based on the strength of our technology and data from the prospective blinded multisite EXPAND trial. We are winning new customers and experiencing high client retention rates. We're approaching a run rate of nearly 200,000 focus orders, which is impressive given our recent launch date.

In oncology, we processed 249,000 clinical oncology units in the quarter, which is 55% growth over last year and yet another record with roughly 24,000 units over the Q4 results. This is the biggest increase we've ever achieved. In February, we guided to full year gross margins of 64% at the midpoint, and we're pleased to have exceeded that level in Q1 with gross margins coming in at just under 65%. The rapid increase in volumes in Q1 actually harmed margins by roughly 2 percentage points because we had more samples in process in the lab at the close of the quarter than normal, impacting our received versus reported ratio. This will resolve itself as we move forward. So we believe we are in a very good position relative to the guide. Given the fantastic start to the year, we are pleased to fully reset the revenue guide range by more than $120 million and increase our gross margin guidance to 65% at the midpoint.

Enrollment in oncology clinical trials, including new interventional MRD trials in the FIND ECD study are well ahead of schedule. So we're going to bump R&D expectations by $50 million, primarily to pull forward these trials. Of note, on the FIND ECD study, we are pleased to announce that we should be fully done enrolling in Q3 of this year, which is super exciting, given the huge opportunity that provides as we look to a 2027 launch. Alex will cover this later on the call.

Okay. Let's unpack some of the trends on the next few slides. On volume, I want to thank our team for getting us over 1 million units in the quarter. Natera employees are very passionate about our mission of proved health and it shows in our performance. Thank you for what you do every day. We fired on all cylinders in Q1 with another strong organ health quarter to go alongside record units in oncology and a very strong women's health quarter. While we do expect Q1 to be strong due to seasonality, this was really an incredible quarter and nearly the most unit growth we've seen since I took over as CEO. We've seen a lot of new account momentum with the launch of Fetal Focus as we'll describe on the next slide.

As a reminder, Fetal Focus is our next-generation single gene NIPT. It's powered by our ultrasensitive Link SNP technology and enables direct assessment of fetal cell free DNA across 21 genes associated with serious early onset conditions. We continue to see strong interest from clinicians, particularly given the test's ability to address a common gap in prenatal care, specifically when paternal screening is not available. That demand is now transitioning into meaningful scale. As shown on the slide, we are approaching an annualized run rate of approximately 200,000 test orders, reflecting strong adoption across OB/GYNs and MFMs -- for clarity, we don't count these fetal focused orders in our test process numbers when Horizon is negative for one of the 21 conditions tested. So when we say we saw an incredible growth quarter, we're really referring to the core horizon of Panorama testing and not including the majority of these fetal focus orders, which would boost our numbers even higher.

Importantly, this growth is supported by strong clinical foundation. The EXPAND trial has been a major success and was selected for an oral plenary presentation at the Society of Maternal Fetal Medicine Meeting, a rare distinction that underscores both the quality of the data and its clinical relevance. As a reminder, the EXPAND trial is a prospective blinded multicenter study that has definitive genetic outcomes on all participants, both positives and negatives. The goal is to enroll about 2,000 patients into the study, and this has been ongoing now for several years. The EXPAND results were recently submitted for peer-reviewed publication, and we believe we will continue to see fetal focus emerge as a meaningful contributor to growth in the women's health business. The next slide shows our clinical MRD volume progression over time. First, let's look at the total number of MRD test.

In nearly 250,000 tests is an incredible number, and we are now on a run rate of over 1 million MRD tests annually. We were able to grow by approximately 24,000 units in Q1, which was another record for our team. It's amazing to think we are still in the early stages of what MRD can become. In the volume, we are continuing to see strong growth in the core indications of colorectal and breast cancer, while seeing increasing contributions from other cancer types, and I'd like to cover some of those growth drivers here on the next slide.

The Q1 growth was a result of some major milestones in the second half of 2025, where we had a steady cadence of important data readouts and publications across uterine, particular breast, colorectal and lymphoma. A major highlight was our bladder cancer data being presented at ESMO and then being published in the New England Journal of Medicine. We are still seeing the impact of this data in our volumes in bladder cancer and beyond as it always takes time to see new clinical data translate into real behavioral changes in the doctor's office.

In addition to the new data, we launched an integration with Onco EMR across their network of 4,500 physicians, creating a much more seamless ordering experience. And you'll recall that we also expanded our commercial footprint last year, and I think we're seeing those reps start to contribute in a real way. We also differentiate our platform with the acquisition of Foresight diagnostics. The Foresight integration is going well, and their deep research and clinical relationships have also been a tailwind for Signatera adoption in the clinical setting.

Many hematologists are starting to order Signatera MRD for their lymphoma patients and the biopharma interest has really been picking up in both heme and solid tumors based on the value of the phased variant technology. We are pleased to see this working well thus far.

We've also listed some of the wins from the first few months of the year on this slide, and we believe that will drive future MRD growth across tumor types. Solomon will discuss a few of these later in the call, including a recent data set showing how Signatera may enable surgery avoidance as well as the exciting new data from the ALPHA 3 trial.

Okay. More detail of revenue progression is here on the next slide. In addition to the strong volume growth, revenue growth is being amplified by realized average selling prices continuing to climb. We spent a lot of time detailing all this hard work and investment we've put into obtaining reimbursement for covered services, and those efforts continue to bear fruit. Unit ASPs were up across the board in women's health in Oregon Health and Signatera ASPs reached another high now at roughly $1,250. Mike will spend more time on this in his section. The second driver to realized pricing growth is worth watching as well. even as women's health continues to grow, the rapid expansion of organ health and oncology units being they contribute an increasingly large share of total revenues -- this trend is a further amplifier of revenue and gross margin growth in the future.

As a reminder, in Signatera, we have many histologies in submission of Medicare and are currently engaged in the standard cycle of coverage review, which represents additional ASP runway in the second half of this year. As we talked about in the past, we previously set out a long-term Signatera ASP target of $2,000 per test. We think we're still on track to hit that goal as more private payers start to pay and a broader set of indications gets covered.

Just at our current annualized volumes a $2,000 ASP would generate an additional $750 million in revenue and gross profit per year. The next slide is our standard gross margin progression quarter-by-quarter going back 2 years. In addition to the ASP growth this quarter, COGS per unit in the lab were clean, largely holding steady with a very strong Q4 performance.

Learn on top of these unit COGS were a couple of factors that we think are transient that impacted margin in the quarter. And without these, we would have been about 2% higher. First, we took a larger-than-usual stock-based's comp charge to COGS as part of the close of the Foresight acquisition in Q4. Second, a larger impact was just the amount of work in progress we held in the lab at the end of March. We only build out recognized revenue on about 92% of our cases received in the quarter while that ratio is normally 95% to 96%. As we take COGS charges as we use materials and labor to process cases in the lab, we've got a larger-than-usual bolus of cases hitting COGS but not revenue in the quarter. This happened because the volume coming into the lab was so high, particularly at the end of the quarter, which is, of course, a good sign for us. I expect this factor to normalize in the subsequent quarters. Mike will spend more time on these dynamics in his section, but we are sufficiently encouraged our gross margins to meaningfully raise the full year guide.

Okay. With that, let me turn it over to Solomon to discuss more details from the quarter. solomon?

Thanks, Steve. In my section, I want to highlight several new sources of clinical and economic utility that we are observing with Signatera. There's a big new story emerging about the ability to use Signatera in certain patients to determine who might avoid surgery. On this slide, we have three examples where data was presented or published in the first quarter of the year, showing that certain patients if they test Signatera MRD-negative in forgo surgery. In bladder cancer, data presented at ASCO GU conference showed that Signatera MRD-negative patients who avoided cystectomy have similar outcomes as those who have the surgery.

The investigators concluded that ctDNA-negative patients may avoid immediate cystectomy. This is a huge deal as bladder sparing approaches are in extremely high demand due to the heavy impact on quality of life. In rectal cancer, a paper was published in the journal cancers showing that after neoadjuvant therapy, Signatera MRD-negative patients who chose to avoid surgery had excellent outcomes. Again, sparing the rectum could have a huge impact on quality of life. So it looks like Signatera can really change the risk-benefit equation and potentially drive massive clinical and economic benefit.

Finally, in breast cancer, a paper was published in clinical cancer research showing that women over 70 with early-stage ER-positive disease who tested Signatera MRD-negative at diagnosis we're able to forgo surgery and remain progression-free. The authors wrote that this can facilitate surgical deescalation. The broader implication here is important MRD testing is not only about finding recurrence earlier. It can also help avoid overtreatment, including major surgeries as well as systemic therapy. Physicians are very enthusiastic about this new data and the opportunity to de-escalate surgery. And as a reminder, Signatera is already covered by Medicare in all these indications. We look forward to proving this out in other cancer types and continuing to build out the value proposition.

Moving on now, I want to highlight the recently announced interim analysis from the ALPHA3 trial. Sponsored by Allogene Therapeutics, ALPHA3 is the first randomized study in large B-cell lymphoma to identify patients with positive MRD following frontline therapy, and to intervene with an experimental second-line treatment while the disease burden remains low. As shown on the slide, the data demonstrated a clear separation between the trial arms. MRD clearance was 58% in the treatment arm versus 17% in the observation arm, representing a 41-point absolute delta. We also observed the quantitative molecular responses with median ctDNA levels decreasing 98% from baseline in the treatment arm, while increasing 27% in the observation arm. I will note that this interim futility analysis leveraged MRD clearance as an endpoint in addition to MRD status for patient enrollment.

As a reminder, this trial was already underway when we acquired Foresight Diagnostics in December. On the basis of this positive readout, we congratulate our colleagues from Foresight and from Allogene and we look forward to completing the trial and hopefully enabling a valuable new therapy in the arsenal for patients with B-cell lymphoma.

With this data, plus the 15 abstracts presented at the ASH conference, we are seeing a growing wave of interest from biopharma in hematology and beyond. An exciting time. While this trial drives treatment on MRD or tumor based on a single time point after the completion of first-line therapy. We are seeing the tumor concept really take off across the board. IMvigor011 was a TMRtrial as well, in that case, with up to 7 time points in the first year post surgery. So it's worth spending a minute on the magnitude of this home opportunity.

Treatment on MRD creates a new paradigm, enabling both earlier, more aggressive interventions for patients destined to recur as well as deferred interventions for patients with low likelihood of recurrence. In this surveillance setting today, patients are usually monitored but not treated until recurrence is visible on a scan. TOMR changes that by using MRD to trigger earlier treatment and intervention, when disease is first detected in the blood, which is usually before it becomes detectable on a scan. We are seeing this idea play out in multiple pharma-sponsored trials, including alpha 3 in lymphoma, STELLAR-316 in colorectal cancer, treat ctDNA, DAR in breast cancer and IMvigor011 in bladder cancer. We look forward to launching more of these.

In the adjuvant setting, instead of treating all comers with systemic chemo or immunotherapy, TOMR allows MRD-negative patients to avoid potentially unnecessary therapy and continue surveillance. If they later become MRD-positive, treatment can be escalated later at that time. To that point, perhaps the most important finding from our perspective, from the IMvigor011 trial was that patients who delayed the initiation of immunotherapy until they turned MRD-positive, enjoyed the same high level of therapeutic benefit as those who started immunotherapy right after surgery. That unlocks a major sea change in how patients are treated.

So in the IMVIGOR trial, 47% of patients were persistently MRD negative over the course of the first year and avoided adjuvant systemic therapy completely, achieving excellent long-term outcomes, including 2-year overall survival of 97%. We estimate that a course of adjuvant immunotherapy can cost around $196,000 per year. not to mention the cost of managing adverse events. So avoiding this cost in approximately half of ladder cancer patients can be extremely valuable to the patient and to the system. We think the value proposition in bladder cancer holds up even with the advent of new perioperative treatment approaches like with EV pembro where many doctors are telling us that they will consider withholding the EV in patients who test MRD-negative after surgery. The EV component itself is estimated to cost over $100,000 per patient and to be more toxic than the pembrolizumab.

We see a similar story playing out across disease types, with TOMR translating into meaningful clinical and economic utility. In colorectal cancer, for example, at least 2 different health economic studies have been presented in the past, one by our Blue Shield plan and one by a large private payer in the U.K. called Bupa, showing that MRD guided treatment in Stage II and III colorectal can result in meaningful cost savings to the system, ranging between 21% to 43%.

With that, I'll turn it over to Alex to provide an outlook on upcoming data readouts and our launch in Japan. Alex?

Thanks, Solomon. Turning to ASCO this year, we have a powerful opportunity to reinforce Natera's leadership in MRD and the headline is clear, breadth, scale and momentum. -- we will have 35 abstracts spanning Tom or pan-cancer MRD, phase Varian technology, real-world evidence and trials in progress. That level of output matters because it shows Signatera is not a single tumor, single use case or a single study story. We are building the evidence base for MRD across the full oncology landscape and doing it at a scale that we believe is unmatched.

The presentation I would highlight is the pan-cancer MRD meta analysis. This is an important step forward because it moves the discussion beyond individual tumor type wins to a broader platform level statement. Across 18 published studies, more than 3,000 patients and 15 solid tumor types, positivity was strongly associated with recurrence risk in both the MRD window and surveillance settings. These data reinforce the clinical relevance of tumor-informed ctDNA across cancers, and support the idea that MRD is becoming a foundational tool in oncology. That message is also reflected across the broader ASCO program. We will be presenting data in colorectal cancer, bladder, breast, lung, lymphoma, melanoma, ovarian, uterine sarcoma, and other tumor types, showing the expanding role of Signatera across settings from adjuvant decision-making to surveillance, treatment response monitoring and treatment on molecular recurrence. The TOMR data are particularly exciting because they point to where oncology is heading, moving from reactive treatment after radiological relapse to earlier, more precision interventions at the molecular recurrence stage. And our pace variant technology presentations in lung cancer and lymphoma further highlight how our technology platform continues to advance pushing sensitivity in settings where detection is especially challenging.

Together, these data reinforce three core messages. Signatera is broadly clinically actionable today. Our technology platform continues to advance and our evidence generation engine is operating at a net scale.

Looking at the next slide. It's remarkable to see how we've continued to launch important trials that we believe will deliver compelling data to advance MRD testing in breast cancer. What you're seeing here is the scale and depth of the clinical work we've built spending every stage of disease from early to metastatic. We've continued to expand our evidence base with 22 peer-reviewed publications in 84 presentations at leading medical meetings, reflecting both the momentum and growing interest from the clinical community. At the same time, we continue to advance our prospective trial pipeline with high-impact studies across multiple settings including interventional randomized studies like SAFE, DAR and heroes, each answering an important question, including the escalation, TOMR and treatment optimization and exceptional responders, respectively.

And underpinning all of this is a substantial investment, now exceeding over $250 million in breast cancer trials alone. -- reflecting both the opportunity we see and the barrier to entry creates for others trying to build a comparable data set. So when you zoom out, the breast cancer program is really strong, and we look forward to announcing additional game-changing trials in the near future. We're expanding the evidence base, deepening clinical utility and investing ahead of what we believe will be significant long-term adoption.

Now I want to talk about two major areas of upside for Natera. Early cancer detection and the Japan Signatera launch. First, turning to early cancer detection. FIND CRC is one of the most exciting milestones ahead for Natera. This is our FDA enabling colorectal cancer screening study targeting approximately 25,000 to 40,000 average risk adults, including about 70 CRC cases and roughly 1,400 advanced adenomas. Enrollment is progressing above plan, and we're now on pace to complete enrollment for the PMA submission in Q3 2026, supporting the path forward for an FDA PMA readout in 2027. We -- what makes this especially compelling is that we are not starting from a blank slate and proceed CRC, a prospectively enrolled study of average risk asymptomatic participants, we previously demonstrated a 22.5% sensitivity for advanced adenomas at a 91.5% specificity. That is important because these were not easy to detect lesions. Nearly all were under 30 millimeters and more than 90% were under 20 millimeters. In other words, we're seeing encouraging performance in exactly the kind of challenging precancerous lesions where a blood-based screening has historically struggled. That matters because the biggest opportunity in colorectal cancer screening is not just finding cancer earlier. It is helping prevent cancer by detecting advanced adenomas before they progress. This is where we believe Natera can be differentiated.

And strategically, CRC screening is only the first step. As we advance FIND CRC, we're also building the foundation for a broader early detection platform, including development of a multi-cancer early detection assay. So again, we are ahead of plan here with trial enrollment.

Finally, a note about the outlook for our launch in Japan. Japan is one of the most exciting near-term growth opportunities for Signatera and importantly, has the potential to become a meaningful volume accelerator. PMDA approval remains on track for Q2 2026 and commercial launch preparations are advancing for a broad commercial launch shortly after. The CRC opportunity alone is significant. Japan has a similar absolute number of colorectal cancer diagnoses as the United States, and we estimate that a launch could effectively double Signatera's annual Crius C volume TAM.

Over time, expansion into additional histologies could make Japan a broader platform market with MIBC submission being the next prioritized use case given the IMvigor011 data. What gives us confidence is that the market is already being ceded. Through circulate Japan and Galaxy, Signatera has been used across more than 150 institutions, giving hundreds of oncologists firsthand experience before commercialization. In addition, both Jazz Mo and Jazz co have issued supportive clinical practice guidelines for MRD testing, creating favorable clinical backdrop for adoption. That familiarity to help volumes ramp faster than our base case assumptions.

Japan structure also supports rapid adoption with a single national payer 1 positive reimbursement decision can open broad access across the country. For the message is clear, Japan can be a spec change opportunity, expanding our global MRD market, accelerating commercial volumes and reinforcing Natera's leadership worldwide.

With that, let me turn it over to Mike to review the financials. Mike?

Great. Thanks, Alex. The next page is just a summary of the financials compared to last year. On revenues, we had another good quarter of sequential ASP progress across the board. We had about $50 million in revenue trips this quarter, in line with Q4 and, of course, smaller as a percentage of revenue compared to Q4 given the longer history we now have with improved realized pricing, we took a modestly more aggressive approach with accruing higher prices for selected payers and products that have strong payment track records. This is just an incremental shift from our historical approach, and we'll continue to turn the dial on ASPs if the cash receipts continue to exceed our expectations.

Signatera ASPs are now roughly at $12.50, as Steve described. That's another roughly $25 increase over Q4. We achieved that just by continuing to execute our playbook of driving better alignment with the smaller Medicare Advantage plans and grinding out more consistent reimbursement for covered services in the biomarker space. In addition to those factors, we got a bump from the improved bundled pricing CMS announced at the beginning of the year, which has more than offset the modest decline in ADLT rates we spoke about on the November call. While the new bundled pricing is fully reflected in the revenue results, that change in the bundled pricing actually caused a temporary delay in cash collections for Signatera as we had to take some time to update our list pricing for each covered tumor type, reload each bundled price back into the system with all of our payers and revalidate the engineering. So that caused a modest step-up in DSOs this quarter.

We've now gotten the new prices largely loaded in and have seen the delayed cash arrived in April. So collections for Signatera are back on track. SP-2 Okay. Good. Let's get to the guide on the next slide. We're really pleased with the start to the year and happy to be completely resetting the revenue guide up $120 million at the midpoint. While the guide is a lot higher, the underlying drivers look achievable to us at this point in the year.

On volumes, we continue to expect quarterly growth in Signatera along the lines of the trailing 12-month average as we have described in the past, and we expect to see Oregon Health continue to grow in its current trend line. The rev guide also bakes in the seasonality in volumes we typically see in women's health, where Q1 is our strongest quarter, Q2, the slowest, and then we see a recovery in the second half of the year.

As Steve mentioned, we've got a pathway to continue driving ASPs higher. For example, the original guide contemplated getting $50 in ASC gains on Signatera this year. The new revenue guide implies we anticipate exiting 2026 by roughly $1,275. And of course, we are pushing to be higher than that as there's significant opportunity among the private payers and from expanding Medicare coverage to new indications.

I think we can get to the 12 to 75 ASP without additional coverage decisions. So these would be upside to our guide. -- covered gross margins in some detail in his section, but I would just reiterate that we are feeling good given the per unit COGS we saw in Q1, it should have some tailwind in the center receive ratio in the next few quarters. Given those factors, current ASP trends and the Q1 actuals baked into the annual number, we think resetting the midpoint at 65% still leaves room for upside as we progress through the year. As a reminder, when guiding to future periods, we do not include the impact of revenue true-ups, so those would represent further upside to the guide.

On OpEx, we are holding SG&A steady as planned in March. We are pleased with the progress so far with all the growth initiatives we have in place in sales and marketing and continue to get scale on our operations that are not needing to grow anywhere near as fast as revenue. We've deployed a significant amount of AI capability around the business in the last year, and I think we are well positioned to drive more efficiency over the near term. On R&D, I'm pleased to see the FIND study progressing faster than expected, and we've been very glad to invest in more clinical trials for Signatera that have become available to us just this spring. We have a long track record of generating high ROICs in our R&D efforts and our plan is to stay ambitious to maintain our leadership position across the portfolio.

Okay. And with that, let me open it up to questions. Operator?

[Operator Instructions] And our first question comes from the line of Doug Schenkel with Wolfe Research.

I'll keep them to two and they're both financial. So first, on gross margin. You had a really nice quarter, even normalized for catch-ups. You bumped up full year guidance by about one point. That said, it does seem like you could have gone further than that. Is it just -- is -- are you holding back largely just because of things like MRD mix and basically just trying to get a better handle on how that is going to play out, given it's only May? So that's the first question.

Second question is on spending. Specific to the SG&A line, it jumped up a bit as a percentage of sales relative to what we saw in the fourth quarter. I'm just wondering if there were any timing dynamics or things that you would consider onetime or is that we should be contemplating as we evaluate spending discipline in the quarter and update our models.

Yes. Thanks for the question, Doug. So yes, on gross margins, I think this is just kind of a philosophical point with respect to our guide. We do feel like -- I'm biased towards the upside as it relates to our gross margin trajectory through the course of the year, but we are always kind of -- we're looking out for those potential risk factors to gross margin always -- as we talked about in the prepared remarks, I mean if you just dial down to the unit economics, the strip out the kind of the foresight equity and things like that, that we've had as part of the deal. If you just look at kind of just COGS per unit and ASPs, those are looking really clean. And I think I laid out in my section just a couple of the drivers for ASPs going forward, particularly related to Signatera, which we're excited about. We did not include kind of all of the potential drivers in the guide. So I agree there could be upside there.

And yes, thanks for the question on SG&A. I mean Q1 is often elevated as it relates to kind of sales and marketing expenses, had a number of those in the quarter that don't repeat. Had a couple of true one-timers related to kind of balance sheet adjustments that related to noncash charges in the quarter. Those -- I'm roughly estimating those were worth about $25 million just in the quarter. So that's -- when you back that out and kind of normalize that, that's what gives me confidence around the SG&A guide for the rest of the year.

Just a general comment on optics generally. Our posture is to marry up the spending discipline that we've talked about, while still remaining opportunistic still recognizing that we've got a huge growth runway ahead of us. And if these higher ROIC opportunities come in the door, we're not going to hesitate. We're going to keep our foot on the gas and we're going to be aggressive to ensure we maintain leadership position across all these businesses. Thanks for those questions.

Our next question comes from the line of Dan Brennan with TD Cowen.

Maybe first one is just on volumes. Steve, I think you called out this idea that 92% of tests got recognized in the quarter was atypical versus 95% to 96%. I'm just wondering how unusual is that? I mean if you just apply 95% to 96% this quarter, that would be like another 10,000 test real signatory blow out. So are those -- is it factored into Q2? Should we see a big bump there? I guess that's the first question.

And then the second question is just related to MolDX I know you kind of called out again the opportunity there. Kind of what's the latest thinking there on pan cancer potential? I know Steve, you called out in the past a couple of hundred million dollars potential. Is that something we could potentially see at some point either this year or next year? Or do you think it's going to be single cancer by single cancer. Just wondering your latest thinking there.

So why don't I think the MolDX comment, and then Mike, you can talk about the received to reported ratio, which should be probably more favorable in Q2. But yes, MolDX, we're feeling really good. We said previously, we have, I think, something like 7 additional histologies or digital submissions that are in and those went in, I think, right, maybe in Q4, and we had already kind of one rounded back and forth with MolDX on those. And so these are all kind of following the standard process that we've seen. And so we're feeling positive about it. I think these ones that are in submission right now would make up the vast majority of the sort of remaining non-covered business for us. And as we said, that would have a value kind of in a similar range to what you've outlined. So it could be very meaningful for us, both from getting the Medicare payment but also now with commercial payers starting to slowly comply with the biomarker state initiatives or state laws, we think there's some upside there as well.

Ultimately, we do think we're on a trajectory to get to around $2,000 ASP. And if you just multiply that by our volume today, that would be worth something like $750 million in volume and margin. So obviously, lots of upside there, and we think there's path to unlock. We're working on us. So Mike, do you want to comment on the margin and receive a report ratio?

Yes. The is usually about 95%, 96%. It's not at all unusual to have a very high ratio in Q4 and a low ratio in Q1. That's actually kind of our typical experience sometimes that's masked by just other factors in the business that are just rapidly changing like we've had maybe 24. If you go back to prior years, it's quite evident. The factor there is just similar to what Steve described in the prepared remarks. When the women's health business is rocking like it did in Q1, that's just a very high-volume enterprise at this point. So if you bring in a ton of units in the second last week -- 2 weeks of the quarter, you're just going to end the quarter with a lot of units in process that haven't been reported out yet. We've got to take the COGS as they come in the lab. So we're taking COGS on most of those units, but we can't recognize revenue cannot recognize revenue until they're reported out. So it's just a work in process, kind of a transient issue and I expect it to normalize over subsequent quarters. I think that was about -- give some grace in terms of the exact estimates of a judgment call, but I think that was about a 1.5% plus gross margin headwind in the quarter, which I think you'd spread that out over the balance of the year, and that's just another factor that gives us confidence in bumping the gross margin guide at this point.

And our next question comes from the line of Tycho Peterson with Jefferies.

This is Lauren on for Tycho. One just on fetal focus. Did you notice any specific like share trends relative to the broader market for this quarter? And kind of what are you seeing in terms of pricing pressure or competitive intensity in core women's health overall? And then the second question just around Latitude. Following the CRC data in January, you kind of talked about additional tumor types? Have you kind of worked out what that looks like later this year? And then in terms of the reflex testing strategy, how frequently now is labbing used as a reflex when tissue is insufficient -- and how do you kind of see the Latitude volumes in the long term working out this year? .

Yes. So on Fetal Focus, we're feeling very good, very positive, both on the quality of the data and the volume that we're seeing. We had a very strong Q1 in women's health. I think we said it was the second highest number of units that we've added sequentially between Q4 and Q1. I think since I took over as CEO. So I mean we added 63,000 units in women's health just between Q4 of 2025 and Q1 2026. So we think that's incredibly strong when we look at others in the women's health field. We think this compares very, very favorably.

Now on Latitude, of course, we're doing very well with the CRC rollout. We're seeing a lot of interest from physicians. I think the majority of physicians prefer the tumor-informed products. But in the kind of limited cases where they're not able to get tissue, it's great that we have latitude available. We've had a lot of great data come out there. Physicians are happy with the product. We are in a position now to reflex pretty quickly in a setting where the tissue becomes not available. And we've built this technology platform that allows us to expand beyond CRC to other hithologies, and we will be doing that in the future, and we'll give you updates on that as that progresses.

And our next question comes from the line of Patrick Donnelly with Citi.

Maybe one just on the Signatera side. It's obviously nice to see the sequential build there. I know you guys have talked about kind of looking at the trailing 4 quarters on the build. Can you just talk about, I guess, the momentum you saw throughout the quarter? And again, the right way to think about just that build going forward as that number continues to kind of nicely step up every quarter.

So what we've seen in Signatera is really consistent growth in new patients. And that was really continuing very strongly throughout the end of the quarter. which is a positive sign. We also look at patients that are on surveillance and repeat rates, and that also continues to be strong. there's kind of a couple of dynamics now that are driving growth in the business. I think the first is doctors that have used the product become more comfortable with it, start to expand their usage. And that can be either deeper within a histology, for example, like within colorectal or that can be expanding laterally to other histologies within their practice. And so that's a good vector growth for us.

The second is just new customers that have never tried Signatera before. I think we said I think the latest update, we've said something like 45% or maybe 50% of oncologists had tried Signature in the quarter. I don't think we can give an updated number this quarter, but that means there's half that haven't. And obviously, we're targeting that half. And every quarter, we're seeing more and more doctors use the test.

And then as more data comes out, I think we had several slides here on the strength of the data on Signatera in Q4 and the beginning of Q1. I think that drives kind of both new customers and expansion within accounts. So 250,000 tests roughly is a lot of tough, and we're feeling really good about that. and the impact that we're making on care, patient care, but it's also just the beginning, we've invested it fun into clinical trials, into product enhancements -- we've got some exciting things that are coming out at ASCO. We've got some exciting technology advancements that are launching later this year, and we're feeling like we're in a very good position.

And our next question comes from the line of Subbu Nambi with Guggenheim.

I have just one. One of the leading players in the rare disease market has had some challenges with reimbursement and mix. Is this dynamic relevant for you? And then bigger picture, how is Venus ramping? And how are you differentiating there?

Yes, thanks a lot. So we launched our rare disease product called Xenith. It's going really well so far. Obviously, volume is relatively low, just at this stage in the launch, but -- we feel really good about the product offering and the feedback that we've gotten from physicians so far. We're not really impacted by any of the dynamics that I think others have highlighted just because we're pretty early on. So it's sort of all upside to us at this point. But I think there's a lot of opportunity there, and it's a new growth vector for us.

We've got a lot of new areas of growth. Rare disease is one. I think another one that is really near term and very, very large as early cancer detection for CRC. Alex talked about that a little bit in the prepared remarks, but we're going to be done with the trial in a couple of months. And I think that's going to put us in a great position to commercialize in the near future and be submitting to FDA in 2027.

Should we expect data readout end of this year? Or would that be early next year?

ACD data will be read out from the definitive trial in 2027.

And our next question comes from the line of Daniel Markowitz with Evercore ISI.

This is Makenzy on for Daniel. I was just wondering if you could talk a little bit more about the CRC launch in Japan. It sounds like that could come in the back half of this year. Can you talk about visibility to adoption and what that ramp might look like? And then my follow-up is, can you give us an update on any momentum or other developments in the biomarker states?

Yes, it sounds good. And I just want to clarify 1 thing I mentioned earlier, too. So on women's health, we grew 63,000 units quarter-over-quarter in Q4 2025 to Q1 of 2026. And that really doesn't count at all the fetal focus orders that we've received. Only a couple of thousand of fetal focuses are counted in that number. So the vast majority of that 63,000 are just Panorama and Horizon orders because if Horizon is negative and fetal focus is ordered, we don't actually count that in our numbers. So we could be counting to growth is a number that's much higher, but that 63,000 is really just the core women's health business, Panorama Horizon, growing between Q4 and 2025 and 2026, which we think is very significant, especially when you look at the competitive readouts that have come over the last couple of days in the women's health space. So that gives you a sense of of sort of how we're doing.

On Japan, I'll make a couple of comments, and I'll hand it over to Solomon and Alex, but Japan, we know has the same number of CRC diagnoses per year as what we see in the United States. And we've kind of been waiting to be in this position now where we're going to have regulatory approval we're going to have reimbursement and we're going to have our commercial launch. And now all that's happening. I think we're less than 6 months away from all that happening and being off to the races in Japan. We've had a lot of really good conversations and things are on track. So we're feeling very positive. I think initially, the goal is to kind of have that initial time point covered and then move on and down the road, get surveillance covered. And I think, be off to the races. So Solomon or Alex, do you guys want to comment on opportunities in Japan?

Yes. This is Solomon. So two elements here. I think the questions are about what to expect in Japan. Given some of Alex's comments, what we know about it already being in the guidelines, MRD being recommended in on several major guidelines of medical societies. We do expect pretty significant adoption post approval and post reimbursement. It's hard to say exactly right now what the units might look like. I think that's something we'll provide in the future because we tighten up the models. I think on the pricing side as well, -- as we discussed on the call today, there's strong health economic rationale in addition to clinical rationale. So we think we're in a good position from -- to negotiate solid pricing with the Japanese ministry. That's something that would happen post regulatory approval, so we have to operate sequentially, and we'll provide updates on that once we have clarity towards the end of the year, ahead of our launch. So we're really looking forward to making a big impact and helping CRC patients in Japan.

And our next question comes from the line of Kallum Titchmarsh with Morgan Stanley.

Mike, could you maybe just help us understand how the cost ramp could look for the screening asset? I guess between R&D and the commercial costs down the line, too. It's obviously a pretty different cost profile to the core business, but just help us to split the 2 from one another as possible and how we could expect that to shape from through '26 and beyond? And then -- just a follow-up on Signatera, can you maybe just talk through what momentum you're seeing in terms of kind of same-store sales, I guess, versus new additions just as we think about kind of market penetration, I guess it's a depth breadth question.

Yes. Got you. So look, to your point, there's two components to the cost for the ECD launch. One, you've got the R&D costs associated with the FIND trial. And then secondly, you've got kind of commercialization and launch costs, which would be SG&A. For the fine trial itself, we're weight on the path now. I mean the guys gave you the update about how close we are now to completing enrollment and then we've got to make the spend to run the samples That, we think, is largely reflected now in the guide. We bumped the guide in R&D this quarter, specifically because of just the ramp of that enrollment was much quicker we anticipated, which is, to my mind, is a great sign. Beyond that, I think on R&D, I mean, I think the only variable would be if there's additional things we can do to further accelerate, then we'll be opportunistic and we'll try and do that. But I think that's largely put in now to the R&D spend. A lot of that will be incurred this year and perhaps early next year in terms of running the samples, but that would be within the context of our kind of normal R&D budgeting process.

Then secondly, on the commercialization front. We've talked about this before, but we've got -- we feel like we've got some good channels to leverage in the commercialization of the assay. And then in terms of kind of building out larger commercial channel specific to ECD, we're not going to do the thing where we hire 1,000 sales reps and hope that, that works out. We will leg into this. We'll build that call point incrementally as we deliver volume. And I think our experience in the primary care call point via the OBG wine channel gives us a ton of experience in terms of understanding where to build first, right? So we'll kind of -- we'll build into that, and we'll build on top of that sales team on the back of success, just the same exact way that we did in women's health and then subsequently in oncology.

And our next question comes from the line of Casey Woodring with JPMorgan.

Steve, you mentioned in your prepared remarks that you're seeing the reps that you added last year start to contribute to MRD growth in a real way. I guess where are you with getting that cohort of new MRD reps up to speed and fully productive -- and I guess, like how much more runway is there for Signatera growth from those reps ramping? Or would you say that they're fully ramped at this point?

Yes. So I would say we're probably like between 50% and 75% ramped. I think they're really starting to become productive here kind of mid and through Q1 and turn in the quarter into Q2. So there's still a little bit more juice to squeeze there. And that's contributing, I think, both targeting new customers, but also helping with cross-selling with just some of the specialization that we have on some of those reps. So we're feeling positive about that. We've also been investing in medical education and I think that's going well. So I do think we'll continue to see the momentum coming out of these initiatives.

We had record numbers, and we continue to see very, very strong growth, leaving the quarter, we were seeing that same kind of very strong trajectory that we've seen. So we're feeling very positive about it. Also a lot of growth starting to come from some of these new areas that once they get going, things like lymphoma, for example, and these are big markets that by themselves would be their own company, and we've got 15 of those. So as those things start to get going, the flywheel starts turning, there's going to be some big opportunities.

The other thing I'll mention on that, too, just since no one's asked about it yet, I think it's just initiatives within pharma. And so some of the reps that we added were actually reps that are focusing on Natera's data business where we have a really unique capability reps that are focusing on our AI tools where we have a really unique capability that nobody else can touch or reps that are focusing on our pharma sales in oncology. And we're seeing like an incredible amount of momentum there in that overall business. And -- there's been definitely some hiring there, and they're starting to hit their stride. And I think that's something we can -- you can expect to be hearing a lot more about as that continues. -- tons of interest there -- we had a lot of interest, but I think that was really expanded by the acquisition of Foresight and this extreme ultrasensitive levels that we're getting with the phase variant technology. So tons of interest there, a lot from pharma, and there's another area of excitement.

And our next question comes from the line of Catherine Schulte with Baird.

Maybe first, we've heard some others in the space calling out weather as an impact in the quarter. Clearly, volumes were very strong for you guys, but did you see any kind of winter storm impact?

Yes, that's a good question. We did, and I don't think we called that out in prepared remarks. But certainly, I think those storms that kind of hit maybe the end of January or somewhere in that time frame. We saw that there was just a step down in units, and we tried hard to recover a lot of those, but we definitely were not able to get the full recovery there. So I mean, despite having a record quarter really across the board and record growth in oncology. Certainly, it would have been much faster had we not had those storms, but we didn't really call it out just because we did so well despite those happening.

Okay. Great. And then maybe for Signatera. What portion of patients would you say are adhering to kind of the surveillance schedule that you guys have laid out? Just curious if you think there's some untapped utilization there in the surveillance setting.

Yes. So we've -- that's obviously something we sort of pay attention to. And we've seen pretty consistent usage in surveillance over time. It depends how many years out the patient is -- but I think like in colorectal, we've seen a protocol sort of 4 times a year for the first year and then 2 times a year thereafter. I think that's kind of met mirroring closely to what you see with CEA. But not everybody stays on that and sometimes the patients recur. Sometimes, unfortunately, they pass away. Sometimes they just feel like they're they've moved on and they don't want to keep getting monitored. But we do see good adherence. But of course, that's something that we always are trying to increase and there are certain doctors that don't believe in it, and that's an upside opportunity for us because as more data comes out and as they start to believe more and more in surveillance, that's more tests that we'll do but there's very many that do believe in it and that really try hard to keep their patients on an assistant protocol. And I think that's a big reason why you're seeing the growth driving the way that it is.

And our next question comes from the line of Puneet Souda with Leerink Partners.

Here. First one on prior authorization. There has been some news lately in terms from or -- and also some of the larger payers on prior authorization. So just wondering how often do you see prior authorizations? And either on Signatera, other products? And to what extent do you think payers reducing the prior authorization here would be a tailwind for you this year? And then just very quickly on Foresight. Are you launching any Signatera with phased variants yet in the clinic? Any reception there? Any feedback there? I appreciate that clinical data takes time to build from the higher performance of the assay, but just wanted to get so many early reads.

Let me comment on that and then maybe Solomon, and Mike, if you want to comment, so first on -- prior of, I would say that's definitely been a tool that payers have used to not pay even for covered services. And any action that limits prior off for covered services is going to help our ASPs. So we commend the kind of strategies around that to make access to care easier for covered services. We do think that, that's an upside opportunity for us. I can't remember the second question right now.

Yes. No, Foresight performance.

Yes. Get too fired up on the -- Yes, let me -- I'll just say the Foresight is getting ready to launch. And there's a ton of excitement from physicians, but Solomon, why don't you jump in on that?

Yes. We're -- as we said, we're planning to launch an updated version of Signatera genome-based assay that will include phased variants that's coming later this year, and we're looking forward to that. It's already available in the research setting for pharma and for academic researchers. I would say that has driven a lot of excitement and a lot of additional conversations. I think we might have mentioned previously, that we already have at least one more major pharma-sponsored trial that's been contracted that we haven't yet announced. That's leveraging that capability.

But on the clinical side, I don't think this is necessarily holding anyone back. People, especially hematologist treating patients with lymphoma, we're just excited to be able to order Signatera for their patients. And we showed incredible data at ASH in December on the performance of the current Signatera assay for patients with lymphoma. And that, together with our partnership with Foresight and the reputation in that setting has already driven an inflection point that we're seeing on people's willingness and enthusiasm about ordering MRB for those patients, especially given that it's in the guidelines. So I don't see a lot of physicians holding back and saying, we're going to wait in order to get started. So we're feeling good about...

And it looks like we lost our caller. Ladies and gentlemen, that will conclude our question-and-answer session and today's call. We thank you for your participation, and you may now disconnect.

Good morning, everyone. I'm Puneet Souda. I cover life science tools and diagnostics here at Leerink. And it's my pleasure to be hosting Mike Brophy, CFO of Natera. Mike, thanks for joining us. Thanks for being here. Great. So a lot to talk about. You obviously had remarkable growth in Signatera over the past few years, 2025 again. You have 100-plus publications, lots of clinical evidence there. You acquired the technology for PhasED variance. So that's enhancing sensitivity. There's a women's health business that's also doing well. You have 40% plus market share in NIPT. Competition is increasing, but you're taking it head on, and we'll get into some of the fetal focus in other discussions.

But maybe just staying on Signatera at first. When we think about the volume -- sequential volume growth, the number was 8,000 to 10,000 earlier when Signatera was growing strongly, it still is. But now that number is 20,000 sequential over the last 3 quarters. You're suggesting we look at the last 4 quarters average sequential volume growth, the right way to look at it. So maybe tell us your thinking behind that? And how should that inform the view on forward volume?

Yes. Well, no, thanks for having me. And you're right, we've been on a massive upward trajectory with Signatera volume growth. We posted 22,500 growth units last quarter, 225,000 units overall in the quarter. And so look, the question always comes, well, how do we model the next quarter as we're kind of on this ramp. I like the construct of the trailing 4 quarters average just because that does 2 things. One, it just normalizes the quarters in terms of seasonality and days available in the quarter and all those kinds of factors that really don't -- they can impact volumes quarter-to-quarter, but they really don't have an impact on the reason why you care about the number, which is sort of a metric for demand for the test.

And secondly, it does give the effect of kind of the compounding that happens in the real world with Signatera because as you start more and more patients with Signatera, they're getting repeat monitoring tests. So you do have this kind of waterfall effect of volume growth. And so when you do kind of a rolling 4 quarters average, you do have this effect of the quarterly target kind of increasing every time we set a new high. And so I think that that's a decent framework to kind of to measure where we are. And it allows for quarter-to-quarter variability, which is always possible, although as we mentioned on the Q4 call, we are off to a fantastic start in Q1.

That's great. And I want to touch briefly on the ASP side as well. ASP growth has been strong. How should we think about the sort of the ceiling on that ASP for Signatera? And maybe walk us through the puts and takes for ASP. What needs to happen to get to that to the higher end?

Yes. So when reimbursed for Signatera, we're paid north of $3,000 on average. And the ASP is about $1,225 as of Q4. And so what's the difference? Well, there's a lot of commercial payers that don't cover Signatera yet. And we can get into what is the path to change that. We are covered fairly broadly by Medicare. Medicare is a little bit unique as a payer in that they certainly have a different set of incentives from the typical payer where typical payers, if you get sick, there's a decent chance you're going to change jobs and you're not going to be on that particular payer's roles in the next year. So there's a bit of a disincentive to focus on the kind of things that can improve the care upfront, the kind of preventive care, earlier care in the cancer patient journey, whereas Medicare has just the opposite incentive. I mean they know that when patients don't get the chemotherapy that they should, for example, they're very likely to come back with Stage 3 or 4 disease. And of course, that's a human tragedy, but it's also very expensive for the system. So Medicare is now kind of broadly reimbursing Signatera across a range of tumor types. And so that explains the difference between when paid and the average selling price.

Reasonable people can differ on what is kind of the ultimate realized pricing for Signatera. I tend to think without trying to set too high a bar or make all kinds of aggressive arguments, I just sort of center on meeting in the middle, around $2,000 as an ASP. And so what that would mean is over time, you have contracted rates coming down as volumes expand into the millions. And the fraction of time you get reimbursed goes up. It goes to -- you get to 80%, 85% allowed. One case study that supports that would be the noninvasive prenatal test. I mean when we launched Panorama, we were getting -- the contracted rates were in that kind of $850, $900 range and the ASP was around $350. So kind of similar proportions. This is kind of when we went public in 2015. And more recently, I mean, the ASPs are above $400. So 10 years later, as the NIPTs are now kind of solidly within the standard of care, you have a higher ASP even though the contracted rates have come down. Why is that? Well, just the NIPT is just in the coverage policy for all of these payers. And so the fraction of time we get paid is in that kind of 80%, 90% range. So I expect as Signatera becomes the standard of care over the next couple of years, I think you'll kind of go on a similar trajectory. And that's why I think about that $2,000 ASP.

Another case study that perhaps would be a more bullish scenario would be in the experience of Oncotype DX. I recall when the test launched in the mid-odds dating ourselves a little bit here because we remember that. There's a lot of people that we work with that. I have no recollections. But their reimbursement was around $3,000 at the time, and it's more than that now. Why is that? Well, they're just -- there's obvious clinical utility for the test. They have wonderful long-term outcomes data, and it's broadly covered. So that's certainly a potential outcome for Signatera as well.

Got it. That's great. And then in terms of just hopping back to sort of volume, but it is tied to the clinical evidence that you've built out for MRD. How should we be thinking about the clinical trial readouts this year? I mean, obviously, you have a number of studies in works on Signatera. Some even longer term. But maybe tell us for this year, what's -- what do you think are sort of key sort of catalysts or studies that investors ought to be paying attention?

Yes. I mean the interesting thing about Signatera is that it's not a biotech in the sense of we don't have PDUFA dates. We don't have clinical trial readouts that I would view are truly binary events. Instead, what we have is every academic conference quarter in and quarter out, we have a continued drumbeat of a broad base of compelling data across a range of tumor types. So just one case study from this year already is the ASCO GU conference. We had incredibly compelling data in head and neck cancer, okay? I don't know -- I wouldn't present that as a catalyst or some binary event to investors because it's pretty consistent, honestly, with the data that we've put up in head and neck cancer previously and data we've put up in other tumor types. But it does meaningfully expand the use case for physicians that are dealing with a very difficult disease. And we're going to continue to do that every academic conference, you're going to see us on podiums, plenary presentations, publications in major academic journals. The key focus of our very significant R&D investment is in data generation and particularly within Signatera, but really across the business.

And maybe tied to that is the Foresight acquisition, the PhasED-Seq technology, how you've incorporated. Maybe tell us, first of all, is it incorporated across -- which assays it is incorporated across as of right now? And in terms of that enhancing the analytical performance, but then more importantly, the clinical performance or the clinical evidence overall, when do we start to sort of see some of that come through and because that could be really powerful if it's in a prospective trial.

Yes. I mean the Foresight acquisition fits in perfectly with our pre-existing strategy to just be constantly improving the Signatera test. Another example from women's health is our Panorama NIPT assay. I mean, we're on version 10 something on that order. We've just continuously improved the test -- the technology and the algorithm that we use for NIPT now is just light years better than it was a decade ago. And yet physicians are ordering the Panorama test. I don't know if a lot of our customers would be able to give you kind of a detailed bridge of all the technology developments we've had over the last 10 years. I expect kind of a similar trajectory with Signatera, where the current version of Signatera has a huge base of outcomes data now to your point, there's a lot of clinical evidence that shows that if you just follow the protocols with your patients that we've established in these clinical trials, your patients are going to do better, okay? That's going to continue to be true even as in the background, we're continually improving the test, all right?

So what are some potential routes to improvement? Well, one example is dropping in the phase and structured variants analysis into the algorithm, okay? We feel like one of the most promising routes to massively improved sensitivity in the assay over time without having to pay a big penalty in terms of false positives is this technology of PhasED and structured variants. We had a program in flight to add that to the Signatera technology stack. And we were impressed and heartened to see a scrappy company in Foresight that I felt like had a lot of the same kind of values and intensity that we like to think that we have as a management team. And they had a lot of interesting technology in the same area as well and made a ton of progress in specific tumor types of particular interest to us was lymphoma. So this was a great match in terms of like just the people fit, which sometimes it's easy from the outside to kind of discount that. But I'll just tell you, it's super important to kind of have that kind of cultural fit when having a business join us. And it's a seamless fit, I think, into the technology stack for Signatera.

So in terms of when will you see more data? Well, you have analytical validity already, right? I mean we've got very impressive down below 1 part per 10 million, limited detection, 95% at 3 parts per 10 million. That is -- as far as I understand, that's just -- that's light years ahead of some of the analytic validity we've seen from others. But that's not really -- those types of studies are not really what matters to physicians, right? I mean physicians want the studies that show them how the test performs in the real world and how it can actually help them care for their patients. And that's coming. I mean, just gradually over time, as we fold in the technology, this drumbeat of clinical trial data that I've been referencing will increasingly incorporate outcomes data sets that have the phase variant technology folded into it.

Got it. Just staying just very brief a bit more on Signatera. You're expecting FDA-approved version of Signatera this year with the CDx or atezo. How significant is that both as companion diagnostics for muscle invasive bladder cancer and more generally from having an FDA-approved assay? And how should we -- if I go back to the CGP days, an assay was initially in lung, then it got in breast and then it became pan-cancer -- got a pan-cancer approval. How are you thinking about that?

Yes. So very excited about the IMvigor011 data in the New England -- published in the New England Journal of Medicine. Just as a quick background, this is the second Phase III study that we run with Roche with atezolizumab, where the first study, IMvigor010 Roche had run as an all-comers trial in muscle invasive bladder cancer 8-year, several hundred million dollar effort to get that initial readout. Signatera didn't exist when that study began. But before they read out the results for the first IMvigor trial, they prespecified an endpoint to evaluate how did patients do among the subset of patients that were actually Signatera positive, okay, meaning we thought that we could see that they still had residual disease and were in need of further care. Unfortunately, the drug did not work on all-comers. It's very difficult to get these drugs to work on all-comers, as we all know. But they had a massive treatment effect among the Signatera-positive population. And that was a significant proportion of the clinical trial population, it was something like 40% of the patient population was Signatera positive, okay? So that was 2021, something in that time frame. Roche and Natera rushed around, we immediately set up a second Phase III clinical trial IMvigor011, where enrollment criteria was benchmarked on whether or not a patient was actually Signatera-positive, okay? So all the patients IMvigor011 are Signatera-positive, then they're randomized plus and minus atezo. And we saw very happily in the prospective outcome study, we saw the very same effect, massive, massive improvement for outcomes in patients that got the drug versus did not get the drug, okay?

So now that that's read out, there's a couple of things to do. One, there's obviously a path to getting FDA approval for atezolizumab. Usually, when a drug performs this well in a clinical trial, the drug can be eligible for priority review with the FDA. So hopeful that the drug can achieve that. If that's the case, then there's usually about a 6-month time horizon to getting FDA approval. We would be in the label for the drug. So we've been going through the process with Roche for years to have a version of Signatera that is FDA-approved Signatera. It's just a separate lane in our lab that will run when patients want to order -- if they care to order the FDA-approved version of Signatera in conjunction with ordering the drug for their patients.

So how does that affect us? Well, one, I mean, I do think that there's something to the idea that there are some physicians that are heartened by the FDA-approved stamp and the quality process required there. So I think that you could have some demand just from that process. I think more importantly, we've already seen hospital systems, physicians come to us and say, "Hey, we're going to implement the IMvigor011 protocol for our muscle invasive bladder cancer patients in our practice or in our system," which is lovely. I mean that becomes incredibly important for their patients and obviously drives incremental demand for Signatera. The other thing that it does is if you're -- one of the things that I've been quite heartened by over the last, call it, year or so is the evolution of MRD and recurrence monitoring in the mindset of the academic and community physicians as something that we really ought to do. I think a lot more physicians now really believe that Signatera is pretty inevitable as being part of the standard of care. This is a new category of cancer care that everyone should get. Over time, I would love it to be, hey, it would be like getting a CT scan. If you had a loved one that had cancer and they said they've never gotten a CT scan, you'd be quite worried about what's going on. I think that's where Signatera goes. The way that we get there is by having data sets like this. As physicians and hospital systems integrate, they center on an MRD vendor. Data sets like this are compelling arguments to center on Signatera.

So shifting gears a bit, but maybe a bridging question to women's health business, maybe in terms of the overall $800 million R&D spend that you've guided to for this year, it's up 30% year-over-year, meaningful uptick there. Maybe just walk us through the spend priorities. I suppose a lot of this is still on Signatera, but just wanted to get your thinking in terms of how you're rank ordering the different priorities on the R&D side.

Yes, we're really excited about this. I mean we remain extremely ambitious in our goals in the R&D operation. There's a very significant effort in new product development across all of the women's health, organ health, Signatera. And we've got a huge investment in clinical trials for the existing franchises, okay? And I think if you just rank order the dollars, obviously, Signatera is going -- the lion's share of that clinical trial investment is going towards Signatera to push forward on all these data sets I've been talking about. I mean that's how we're going to be able to show up at every academic conference with a very fulsome set of new data points for physicians and their patients. Beyond that, I mean, we're making, as we've talked about on various earnings calls and other outlets, we're making a very meaningful investment in colorectal cancer, early cancer detection screening. So we've got the FDA-enabling FIND study now that's in full flight that's actively enrolling. And that's a very significant investment this year, and that stepped up meaningfully as compared to prior years on the back of some very strong preliminary data that we were able to generate. So those are the main kind of areas. I mean, product development across the portfolio, clinical trial efforts across the portfolio, both of which the dollars kind of center on Signatera, but there's important investments happening kind of across the business. I would also just mention alongside that very ambitious bump in R&D investment, overall operating expenses are going to grow about 9.5% at the midpoint this year, okay? And can there be plus and minus around that? Of course, there can. We're not going to shy away from making incremental investments if they have good ideas arise in the middle of the year, things like that.

But I think you're all seeing on an overall OpEx basis that we're getting a lot of leverage on the business. SG&A at the midpoint is roughly flat, slightly down, same caveats, as I just mentioned. But the point is that we've been needing to make very significant investments in the commercial and customer service channels here just to be able to offer particularly Signatera, but all the products in a first-class way to every single American that wants to test, and increasingly more and more patients globally. We've gotten to a point now where we've got a critical mass of people in the commercial channel. And we've been continuing to generate -- to deliver, I think, operating leverage in the business over the last couple of years. And I think that really goes into stark relief with the guide this year.

Great. On the women's health business, Fetal Focus, we talked about quite a bit on the quarterly call as well. That's a product that you launched into the market. There is a competitive assay, mother-only assay that is in the frontline setting there as well. But maybe just tell us your considerations on marketing Fetal Focus. And one question we also get is, can Fetal Focus potentially cannibalize Horizon volumes? Or is that sort of more complementary to the overall portfolio?

Well, I think just to take your last question first, I mean, those types of questions are not really -- you might be surprised, but when we're thinking about new product development around the table inside the company, it's not really top of mind. I mean it's really -- you kind of have to start, as we've mentioned in many of these types of settings, you really have to start with what are the questions, what are the concerns, what are the problems that patients and physicians are having and how can we solve them? And if we can solve important questions, then you got to go do that. I mean I think that's got to be your North Star in terms of product development. Having said that, I don't think that there's -- it just happens that there's not kind of massive cannibalization between the carrier screening business and the Fetal Focus offering. If anything, it's incremental. I mean mom will get a carrier screening test. And if, turns out, she's a carrier for an inherited disorder, now she just has an extra option. We can evaluate the fetus for a selected number of inherited disorders or we can incorporate dad for a second carrier screening test. And either solution is great as far as we're concerned.

Got it. Just briefly on Panorama ASPs and costs. Wondering what levers do you have to push? At this point, you talked about reimbursement already being solid for this assay. You touched on that. But just what levers do you have to push ASP higher at this point and maybe costs lower in terms of sequencers or other chemistry, any scale improvements?

I think really across the business, I mean, I'm cautiously optimistic that we can continue to drive realized pricing higher. And as I described, maybe too long of a description earlier, but the different -- the point is that, that doesn't imply that we're rising our contracted rates or anything like that. We're just getting reimbursed for covered services a higher percentage of the time. I mean that's been a major driver for us for women's health even in the past year, very significant improvement in these, what really are kind of standard of care. If I had a better word than boring, I'd use it. But I mean, products that people are quite accustomed to using, we're still making meaningful improvements in the fraction of time we get paid when the test is already covered. I think that's -- obviously, there's a lot more green space to run in Signatera just because of the journey that we're on. I mean, right now, covered by Medicare, can get paid more broadly by commercial payers over time as we get into the guidelines. A couple of areas of just immediate low-hanging fruit there include Medicare Advantage plans. So Medicare fee-for-service patients when we have a covered test, we submit the claim to Medicare, the traditional Medicare program and we get reimbursed 99% of the time, like you would expect, like we should. When we submit that same claim to Medicare Advantage payers, the reimbursement rate is more like 80%, okay? So that's pretty disappointing. It's up from what it was 30% a couple of years ago. So we've put in a ton of time and effort, but there's still more effort that unfortunately falls on us to go and execute to go and just make sure that we're reimbursed for covered services. That plus kind of turning the same crank for commercial patients that live in states where there's a biomarker law in place. Those 2 factors give us a lot of activity for us to just continue to drive realized pricing by increasing the fraction of time that we get paid when we should get paid.

All right. Continuing on the women's health actually. But maybe actually an adjacent business to that is a rare disease for newborn testing, and you obviously had a product launch there recently. Maybe just give us -- how do you think about that market overall?

Well, I think it's a very interesting space. Our history has been one of kind of gradual expansion into adjacencies from areas of strength, either technological adjacencies or commercial adjacencies. So I'll give you an example of both. I mean, our first major kind of flagship product was this noninvasive prenatal test. And then we deployed really very similar technology to then launch what we think is a best-in-class organ transplant rejection monitoring test and the Prospera test. And then that is that core technology has a lot to do with how we ended up building Signatera, right? So there's technological adjacencies across each of these kind of flagship products. In each of these flagship products, there's actually also commercial adjacencies. So we have a very large carrier screening business. There are a number of -- there's a number of labs that offer excellent carrier screening products. We're a leader in expanded panel carrier screening because one orders the carrier screen test at the same time that one orders the NIPT often, okay? And so that's kind of a commercial adjacency. There's a potential for there to be a commercial adjacency in the rare disease space, particularly within hospital systems. We've had to get quite good at making our offering available to hospital systems for Signatera. And so then when you have a flagship product and you've got that conversation with decision-makers around the continuum of care, you have these conversations about what else can we offer? And what other problems do you have? Where can our technology be useful? We got a huge amount of history and experience in this type of testing. I mentioned the carrier screening product. Renasight is another important product that has some similarities with the rare disease space. And so that's something that we're actively working on. Once the -- we're continuing to move forward with that in the field. After we've kind of gotten through kind of a formal announcement of product launch, we're going to be excited to share more with the investment community on as well.

Got it. Okay. In the last minute we have here, maybe just coming back to the CRC screening, a large market, then there's MCED beyond that. Maybe just give us your view on this FDA approval timing for this. There's some competitive products in the marketplace. And how are you positioning for MCED given what we recently saw was a trial failure in the space?

Well, I think step one is to understand that the early cancer detection opportunity within colorectal cancer screening is itself a massive opportunity, and I think quite discrete from the overall MCED market. In colorectal cancer, early cancer detection screening, you got something like 40 million people that are just not -- they're just structurally, they're not going to get a colonoscopy and they're probably not going to get the Exact Sciences test, unfortunately. I'm 46. I had a colonoscopy for the first time last year. I now understand why that is. It's like an unbelievable deal. I work in a company that serves cancer patients, and I delayed my colonoscopy 3 different times. I just -- I had something to do that I couldn't reschedule and I made it happen. But I still had the privilege of being able to arrange my schedule so that I could take 2 full days off to get this thing done and then recover. And a lot of people, like very understandably just don't have that level of privilege, right? So they're going to need something more efficient. They don't -- they would rather not do nothing, but the current modalities just don't accommodate their needs, okay? So that's a huge and pretty distinct market. You need to test something like once every 3 years. So that's something like 13 million people a year that need a test that needs something that are getting nothing, right? They're defaulting to nothing right now because the form factors just don't accommodate them. These plasma tests are very important as a result. I mean they can make a huge difference to public health as a result. It takes an enormous amount of infrastructure, technical talent, grit and know-how just to be able to launch one of these products. I mean there's an enormous technological lift that we've had to go through. You've got to pre-spend hundreds of millions of dollars just to get to the end of an FDA-enabling study to see if your product works. So it's not something that really lends itself to small start-ups and you need to be kind of bigger companies. The companies that have and will have offerings in this space, kind of meet that criteria and so do we. I'm very excited to get to that FDA-enabling readout and launch a product here. I think that's one of the ways that we've driven a lot of shareholder value is we've been able to do this internal technology development in large markets and then launch. And when you launch into a large market and you're solving an important problem like that, you go from 0 volumes and 0 revenues to every dollar, those first couple of years that you're in that business, these are growth dollars. And so this would be another kind of secular growth driver for the company that just layers on top of all the other things we have going and really comes at a time in '28 when Signatera, I think, would just be hitting its stride.

Yes. Well, on that note, Mike, that was great. fabulous. Thanks for your time here. We're out of time, but thanks for all the comments.

Good afternoon, everyone. Thanks for joining us for the final day of the Raymond James Institutional Investor Conference. For those who don't know me, I'm Andrew Cooper, cover Diagnostics and Life Science tools for Raymond James. Happy to have Natera CFO, Mike Brophy, with me this afternoon. We're going to do a little bit of fireside chat, and then we'll head downstairs for a breakout in Amarante 1 afterwards. So please join us there.

But maybe just to start, Mike, can you give folks who are maybe a little bit newer to the story, a couple of minutes on just who Natera is, where you fit in the landscape and some of the topical items of late?

Yes. No, thanks for having me. So always great to be here. We just announced our Q4 results. So that's always a good call because it's a great kind of recap of 2025 and you get to set the guide and expectations for '26. I think that was very well received. Well we did it.

I mean, just maybe just a quick summary. In the quarter, we had another fantastic kind of revenue growth quarter. Signatera volumes where you had another kind of record absolute quarter and also a record kind of just growth unit quarter as well. Gross margins were extremely strong in the quarter. All in, we were -- I think we're about 67% and then even backing up the true-ups, we were close to 64% for gross margins in the quarter. And that's about a 240 basis point climb just sequentially off of Q3. We had a couple of tailwinds and probably don't repeat every single time, but nonetheless, I mean I think that can have a big confidence that we're continuing to grind higher and higher on gross margins as the top line continues to accelerate.

We actually came -- we actually generated net income in the quarter. I didn't really -- I didn't pump that as much on the call per se, there was like a -- we did an acquisition, and so that triggered like a deferred tax benefit that was more of an accounting thing. So -- but just -- I bring that up just to point out that we continue to narrow the operating losses and it was close enough to actually generate net income for quarter, which I think maybe we did that once in 2016 or something, but it's been a minute.

And I would just flag that's gap. If they made all the adjustments you see from some others, it's a little different number.

No, as a Charlie Munger fan, I try to just give you the numbers. And then I do talk to people about cash flows, and so I think that's a proxy for a lot of those of things. I think cash flow is a relevant metric, and we hit our target for the year. We generated more than $100 million of free cash flow, which we're very happy about.

Going into '26, I mean, good kind of strong guide to start the year. Same kind of mindset that we've always had with financial guidance and that we want to set something that we think is a strong target, but it also strikes us as achievable. I think we did our best to strike that balance on the call.

What's implied in that guide is another very strong growth year really across the portfolio, women's health, organ health and especially Signatera, continued pricing improvement sequentially for Signatera through the course of the year. Really just based on the couple of items we have more within our control in terms of activity around just kind of grinding higher on Medicare Advantage compliance for covered services. And I think upside to that would be broader coverage for Signatera, which we're working on as fast as we can.

One other thing I'd point out on the guide is just on the OpEx guide, continue to keep our foot on the gas in terms of the R&D spend, very ambitious set of projects, clinical trials, new product development that we want to stay aggressive on. And the SG&A guide was actually implied at the midpoint basically stable SG&A year-on-year, which I think just at a high level, I think, gives you an indicative sense of kind of where we are in the cycle of the company, where the top line is just continuing to accelerate, you see continued progress on the gross margin line getting some leverage, getting some scale on the sales and general line while we continue to stay aggressive on R&D for the future.

So really well positioned for 2026. I'm very excited about all the opportunities and happy to be here with you, Andrew.

Perfect. We're going to touch on a lot of what we just hit on there, but I want to start with Signatera. You guys pretty quickly got to 50% of oncologists ordering. So the kind of penetration is clearly starting to show. But I wanted to ask, when we think about the next, call it, 12, 24 months, how do you think about what's the bigger driver between indication expansion, penetration into the remaining 50% or depth of ordering across more of these folks who have already used it with the rest of their patients?

Yes. The good news is that 1 core set of activities operates on all of the vectors you just mentioned, right? So I think there is a very significant opportunity. Just to expand Signatera to physicians that haven't ordered the test yet, it's kind of amazing to think about because when you walk around the academic conferences now, I just can't tell you how different the tone is now versus even maybe even 2 years ago in terms of -- I think you'd be hard pressed to find a physician or scientists at those conferences that doesn't think that MRD and recurrence monitoring is an important part of the continuum of care now. And yes, obviously, there's a lot of white space out there for us to go and grow into in terms of physician adoption.

I think that maybe even arguably a bigger opportunity is depth within a practice. And I think that's actually kind of happening kind of in real time.

What we used to see with accounts that would start adopting Signatera is you usually start with colorectal cancer, some very discrete indication and then very gradually build. We're seeing a little bit more of a trend now where you see accounts adopting Signatera and just kind of dropping much more broadly in their practice. And I think that's just a function of the time that we've had available to us to make the case for the value Signatera and all the clinical trial data that we've been able to read out across a broad set of tumor types, really encourages that broad adoption.

So like how do we move it forward from here? It's kind of -- I'm sorry to be boring, but it's kind of the standard playbook, right? It's -- have the best possible product we can have and we're going to stay very aggressive in terms of the product development cycle, particularly for Signatera, be very ambitious in the clinical trial program that you want to pursue. So not just in the biggest tumor types that we've all talked about. But beyond that, there's a large set of tumor types where there's 30,000 to 70,000 new patients every single year where Signatera has very strong data already. They are compelling use cases and we're running a lot of times what would be considered kind of the seminal or landmark trial for MRD in those tumor types.

And just continue to turn the crank on all the other things. I mean, the operational execution required to deliver a test like this at scale is truly demanding. I think we're kind of at a place where we know how to do that. And it's honestly as just someone -- as an executive -- just around the company, it's just a pleasure to see us kind of operating at that tempo, and there's more to do there to just continue to delight customers with the customer service aspect.

Perfect. And maybe on new indications, I think the comment with earnings was 30% to 35% of volume is non-covered areas today and that a couple of hundred million dollars of kind of potential if those start to get covered, and it's not 1 thing, it's not 2 things, but a good handful. So maybe just give a refresher on what you have at MolDX today, how you think about that buildup. And I think in the back of our heads, there's a hope that at some point, this becomes more of a pan cancer versus every incremental indication as they get kind of smaller and smaller down the road. So just would love the latest there in your thoughts.

Yes. No, I think that's right. I mean I think that is a big opportunity. Just the volume that we deliver to Medicare patients where we don't yet have coverage from Medicare for that cancer type has been something that as the business has grown and again, growing kind of not concentrated in 1 or 2 tumor types, but grown kind of across the continuum of indications has become an absolute units, a really important target for us to run to is just to hit the marks. We've delivered a lot of the data, but then you've got to kind of go through that process. It's quite a rigorous process to go through with the MolDX program with Medicare to make the case for coverage in these various indications and different tumor types.

Historically, that's the way we've done it. We've just grinded it out, tumor type by tumor type and now the most common cancers in the United States, we're very well covered by Medicare. And we are kind of in that next tier that I was alluding to in terms of incidence rates that we're pursuing coverage on.

I think that needs to remain kind of the base case. That's my base case for the business. Is that going to just continue to interact in a constructive way with Medicare. And over second half of this year and first half of next year, you start to see more coverage, more indications covered, more announcements, just kind of flowing in 1 by 1. I think that would hold us in good stead, and that would allow us to meet all of our goals. And I think upside to that kind of base case would be if we can go faster in a broader setting, but we'll just got to see.

Maybe just on kind of the last point in mentioning time line a little bit, just to remind folks, the '26 guide, you talked about basically $30 of ASP still to come. It feels like most of that is, can you get paid a little bit better from MA as opposed to new indications. But I guess, is that the right takeaway? And how do you think about what's in the guide? And what's out there for you to win above that?

Yes. I do -- that is -- that's a great -- thanks for characterizing it that way. I mean the guide kind of implies we do -- we continue to execute and get coverage, get actually reimbursed from these Medicare Advantage plans, where we already have a coverage policy, and there's really -- the only reason why we're not going to pay some administrative reason that we're -- we've got to just work collaboratively with that payer and understand what is the disconnect and just fix it. And that's been a linear process for us. I mean if you rewind a couple of years, we used to get paid 30% of the time for Medicare Advantage plans and 85% of the time from Medicare fee-for-service. Now it's -- when it's a covered service we get reimbursed 99% of the time for Medicare fee-for-service and there's still that gap with Medicare Advantage where we're kind of up to 80%. But that just means that there's a long tail of smaller MA plans that we just got to engage with. We've got a lot of long history of doing that. As I mentioned, in a collaborative way, and we'll do that. So the $30 would be, hey, continued execution on that front. And then upside from there is, I think more progress in biomarker states, which I think we can have some of that this year and broader reimbursement just from the Medicare indications.

Like I said in the prepared remarks on the earnings call, I'm a little bit biased to the upside on that guide if it'll had to lean 1 way or the other, but I think that's a good way to start the year.

For sure. Perfect. I want to talk about guidelines a little bit. I feel like we used to talk about it more. I still think they're important, but we haven't been kind of as front and center on them. So CRC is the 1 people are looking for. There's a lot of other cancer types. How do we think about what that progress looks like from here? I know we're waiting on the '26 update for CRC, but what should we expect in terms of the nuance and the wording? And then how impactful is it at this point, given you have the adoption you do even before that?

Yes. The guidelines are still very important. And I think the story will be different for every single cancer type for the immediate future here, where each NCCN guideline committee there's a specific 1 for each cancer. And these are folks that are obviously steeped in the care of that particular cancer type in the use case.

So we've got a number of very compelling prospective outcome studies that I've already read out that 1 could argue, should be up for consideration for guideline inclusion. You mentioned CRC and then we've got another slate of large outcomes data sets coming over the next, call it, 18 months or 2 years between the escalation data in Japan and then readouts from U.S. circulate coming as well. So I'm cautiously optimistic that, like as those read out, I think we'll be able to make an even more compelling case for guideline inclusion colorectal cancer. But it's ultimately it's not really for us to decide for the professional societies and the guideline community decided that that's appropriate, that's the way it ought to be.

Away from colorectal cancer, I mean, we did have a fantastic very large prospective Phase III readout in muscle-invasive bladder cancer that just based on the strength of that data, I think the kind of the consensus expectation among physicians, certainly among the PIs is that, that data was strong enough to merit an FDA approval for atezolizumab guided by Signatera with Signatera in the label.

What usually happens in that scenario is that when there's going to be an FDA-approved drug, there's typically a guideline update just to accommodate the fact that there's a new on-label therapy available. And since we're in the label for the drug, I would anticipate some level of inclusion within most of it is bladder cancer. But there again, that's just -- that's not -- I'm not reflecting feedback that I have from anyone around the process, I just sort of outside looking in.

Honestly, taking a step back on guidelines as a topic, they're critically important over the long-term vision for adoption of Signatera in clinical practice because you just got to have -- is this part and parcel with having the right data to have, 90% of physicians adopted the test. You just got to have the best outcomes data available that should merit guideline inclusion. I don't think that there's like a business case or an investment thesis that really hinges around specific timing, we've got to get a certain guideline inclusion by a certain time. We're content to just let the process kind of play out organically and play our role, which is to do what we can to support kind of the best available kind of outcomes data.

Yes. Perfect. Makes sense. I want to touch on the portfolio and how much it's sort of expanded within MRD in the last, call it, 12 months. So you've got Signatera genome. You've got Latitude. You're going to drop in phased variants here in pretty short order. I guess why is it important to have that breadth and to have kind of the approach that you do to have each of those? And then how do you think they all sort of shake out in the market from an adoption perspective?

Yes. One of the reasons why I like working here is that the my colleagues have -- and I have been together for a long time now. So this is year 11 for me at the business. And I'm kind of the newcomer among the management team, among our operating committee, I mean, the other guys have been here for a couple of years longer. I mean, Steve, our CEO, is the first commercial employee that was hired here back in 2010. And I think 1 of the things that Steve and both our -- Steve and our Chairman, Matt, bring to our culture is this intensity around understanding what are the problems that the patient and the physician are facing and solve those problems with a level of intensity, like really take it seriously, work backward and let the problems, let the unmet needs dictate what your product road map should look like. And when you do it that way, you don't have to be so smart about like what competitors are doing or any of the other things that are easy to get wrong. You can just ask the patients what they -- see what the physicians need and solve it.

So 1 thing that we solved is on the tumor-naive MRD front. There is a niche, there's an application for tumor-naive MRD. I think rewinding the 2020 when MRD was just kind of launching like as a topic and we really created a category, there was kind of an open question as to whether or not physicians would be able to order a tumor-informed MRD like would it actually work? And could we logistically deliver it? I think what we've shown over the last 5, 6 years is definitively, the answer is yes to both, we can deliver it very seamlessly. And the data is kind of without comparison versus any other approaches.

Having said that, you still have niche indications where getting access to the tissue to run a personalized MRD test is inconvenient. If you have an older lung cancer patient, you may not want to stick a large board needle into that person's chest and extract some tissue to then run Signatera, but you might like to offer that person an MRD test. Perfect case study for tumor naive MRD.

Similarly, you can have physicians despite kind of the track record we've had with delivering Signatera over the last 5, 6 years. You can still have physicians that are kind of -- they're new to this and they're a little worried about the logistics. They're a little worried like can you really deliver a test that's personalized for every single 1 of my patients? What if it doesn't -- what if we run into some kind of issue? Well, with the existence of the Latitude test, the response can be, look, physicians, Doc, you can order the Signatera test. And if we run into some hold up with the lab -- with the pathology lab or we get an F50 block that has no tissue in it or -- these things can happen, we can reflex to the tumor naive test. It's an excellent test. The preliminary data is amazing. We'll continue to fill out the data over time. We'll deliver that. And in the background, we'll continue to work the problem. We'll get the patient on to the gold standard Signatera offering for the second time point.

So I think like those are just 2 examples of questions or challenges that a physician and a patient might have that we're trying to proactively solve with the product launch. And so that's on the Latitude side.

It's a similar answer, I think, on the launch of the genome product. If you look out into the future in the business, it's actually quite heartening to see that there's actually a chunk of the physician community that has totally buys into the idea that personalized MRD is going to work, and they're fully -- they've seen all of our data and they're convinced, they're so convinced that they're willing to say, "Hey, look like whatever you guys have as Signatera today, I just want something that has the potential to boost sensitivity in the future."

So I think in the future, once it's fully characterized with outcomes data, I think that will be an interesting thing to see like can we actually continue to improve the performance of the test over time. That's always been our objective. And right now, the test is available if a physician just wants to kind of order the genome if they've already bought in, they have a particular patient that has a particular need where they might want to use a genome backbone test. Very soon to be able to have a genome backlog test that also has phased variants layered in that will be the most ultrasensitive tests as measured by limited detection that's available.

And so it's just kind of on the other end of the continuum, just proactively kind of addressing a physician's question or need.

I'm going to ask when you may say you need to hold off for the answer because you guys don't tend to do your product development in public. But 1 thing just talking to some other companies and kind of hearing how they think about it, there's this talk of adding apps and adding extra kind of data points to reports. Just kind of curious how you think about that. And I think genome kind of opens up a little bit more of that potentially. So just would love sort of the view there and how you think about sort of the competitive landscape from the perspective of maybe not with Signatera or Signatera genome is today, but what it can be 5, 10 years from now when we have more of that data, more ability to kind of dig in on some of what's generated from what you're doing now?

Well, a lot of that type of stuff is available right now. I mean I love that. I mean I think like 1 of the real promises of MRD is all of the information that you can generate from the MRD test that you can then put into the clinical decision-making. And we've always trusted physicians to kind of take in disparate pieces of information that are available, and this is patient history, patients -- what are their personal needs and preferences going forward. What was the result from their path lab? How is their tumor graded? What does the CT scan look like? We ask the oncologists to kind of take all these things into consideration, leverage her, in many cases, decades of experience and formulate a plan with the patient, okay? So 1 of the reasons why MRD has gotten such dramatic uptake is that the residual disease test fits in perfectly into that care continuum to just add -- just empowers the physician with more and more information.

So we give a ton of information. So it's not just -- when you get a test report on Signatera, you don't just get a positive or negative, you also get a quantitative score mutated fragment per mL of plasma. And we've actually published some very interesting data to show the outcomes can be pretty differentiated for patients based on how quickly that score is changing. So if you're a mutated fragment, your tumor load is kind of a proxy for what that score is, if that's increasing quickly, right, you're in a more difficult situation than if it's increasing more slowly. And we've kind of shown it a couple of different data sets. It becomes that patients really like to know. I mean the entire patient report becomes something that is quite user-friendly. I have this -- maybe you'll forgive me this like quick story. I'm on trip in Mexico with a high school graduate, a kid of mine just graduated from high school. We're doing a trip with some of the boys and some of the parents. I don't know all the parents super well. This is like why add some of the younger people, like, this is what you get into when you have kids like you get into -- thrown together with these people that you otherwise never hang out with anyway. And in that scale, these other adults that like I don't know that well. And I didn't know 1 of the dads and 1 of the reasons why I hadn't interacted with them is he had a terrible journey with colorectal cancer, stage III colorectal cancer over the preceding 2 years. And this guy is a pretty successful property developer in Austin and he's getting treated in the Anderson. And so I thought, well, this guy is definitely -- he's getting Signatera. But I just didn't want to bring it up. I just let it go. And I'm prompted the guy brings up his cell phone, shows me his Signatera result and gives me an amazing 5-minute elevator pitch on how important tests was and why he felt comfortable coming to Mexico is that their results were pretty good, and he's not going to have some kind of health emergency right now on this trip. So it's just like very heartening to see that and just also kind of gives you a sense of just how prevalent Signatera is becoming just among cancer patients and survivors today.

So that type of data. I know it's a super long answer to your question. But like that type of data is we're delivering that right now, and the sky is the limit. I mean, there's more and more things that we can deliver, whether it's like particular resistance mutations, there's a ton of things that we can deliver that come off of the core conversation we're having right now with our customers.

Perfect. No, that was super helpful. I am looking at the clock now and I'm thinking maybe we need to move a little bit.

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No, that was fantastic. Maybe just to touch on women's health. I feel like it's an important -- a pretty big piece of the business still. So you still are looking for volume gains there, which I think, given where that market is, continues to be an impressive thing. I think you said mid-single digits for kind of this year is where the baseline is. What are the key factors that let that keep being the case in a market that we all feel like is pretty well penetrated here in the U.S.? So just a little bit of flavor for kind of how you think about driving that?

The business has done amazingly well. I think to set the guide. I mentioned, I think this is like a mid-single-digit volume grower. It probably grows faster than that on revenues, particularly in carrier screening. I think there's a -- it remains a huge opportunity as patients continue to avail themselves more and more of broader panels for carrier screen to understand like a broader set of conditions for which they might be a carrier, that's becoming increasingly of higher and higher interest to patients and physicians.

We have a very ambitious plan in terms of product development and clinical trials as always with women's health. If you look back over our history, you'll kind of notice that once a year, once every 18 months, we have some major new feature launch, new product launch in women's health. I think the previous 1 might have been the launch for our RH test about 18 months ago, about a year ago. And now the most recent 1 is the fetal focus test.

So it's just -- it's constant with the effort that we've always had there. It's -- we all know it's a competitively challenging market, lots of different entrants, lots of labs have kind of come and gone. The reason why I think -- 1 of the reasons why we've had amazing staying power in women's health is that kind of commitment to continue to innovate, to just always be launching cool new features and products that patients and doctors care about along with continuing to deliver kind of best-in-class kind of customer service. And letting people have the comfort in knowing that this is a test that has a very ambitious 7-year 18,000 to 20,000 patient outcomes trial that will probably -- that will just never be matched again. I mean just a huge undertaking. So that kind of commitment to data is what keeps us in the pull position there.

Maybe just on fetal focus. I mean I think when we look at the landscape, there are some players that are moving more towards hey, we want it to be a combined offering versus you took the approach of, you can always add it on, but it's a stand-alone test as well. What made that the right approach for you guys? And just kind of how do you think about that competitive piece of it?

Yes. So I just want to make sure that, that's clear, like the way the fetal focus gets offered on par with the way that the single gene is offered more generally in the market. So it's available as a frontline offering. The way that this will work is mom will get a carrier screening test. And if mom is a carrier for -- potential carrier for inherited disorder. She doesn't have cystic fibrosis, but she may be a carrier of the mutation, for example, then you have a conversation, right? I mean, historically, you might screen dad and we have dad get a carrier screening test. This is now a new option. You might avail yourself of a single gene NIPT. So the way that we offer the test is effectively frontline is just the exact same way that other labs would offer.

Okay. Helpful. We've got 2 minutes left. So maybe just a couple of finance questions since we do have the CFO here. You talked about positive cash generation without the prior period collections. Can you frame where the businesses sit maybe on an individual basis, meaning how profitable is women's health? Where is oncology in terms of -- obviously, you're investing a lot as I think you should be, which I'm going to ask a question about as well. But can you frame where you are in that sort of build to positivity in each of the businesses?

You can just see it just looking kind of at the total company, right? If you just look at -- pick a metric, revenue scaling, gross margin the -- compare that to the OpEx growth, I mean the gross profit dollars are growing much more quickly than the OpEx is growing. And what that yields is your losses continue to narrow. So I think we had a very narrow kind of EBIT loss even in Q4.

So the way for us to get to kind of sustainable kind of earnings per share generation every single quarter, it's just to grow our way there. I mean I think there's like a whole range of companies that felt like they got to a certain level of spend, maybe post the pandemic, and they had to make a huge pullback, we never did that. We just said, look, we're going to grow our way to profitability because the products we have are so high value, that's really the way to make the enterprise work is just to really just grow the top line and grow the market opportunity.

And then since I said I would ask it, the R&D line is growing a lot. And I think it's the -- like you said, SG&A is going to be flattish. R&D is where you're growing. I think you still turn down a lot of opportunities for studies or at least some. So maybe just frame for us how you look at the ROI on a study-by-study basis and what makes the study that you're most excited about different from kind of the 1 that maybe you say, not so much. Because I think everybody comes to you and once they're on a study with you, right?

Well, everything we do here, every project within R&D, every -- if we look at acquisitions, everything you just kind of normalize all the different ways to deploy capital by looking at them on an ROIC basis. And really, our bias with respect to clinical trials is to be aggressive, right? If there's an ambitious clinical trial that we can run, that we can drive, we want to do it. Clinical trials that partners want to run are almost always fantastic. So I wouldn't say that there's like a some committee where we're turning down most of the clinical trials or anything like that, like usually, there's something to do with like, hey, we want to make sure that if we're going to put our time to a clinical trial that the endpoints actually inform standard of care in some way that's not already informed. I mean usually, we have some critique of like the design to make sure that it's going to be right. But honestly, rarely do we pass on a trial that we think has the right level of ambition for the company.

Perfect. We're a minute over, but I always like to end with if there's anything you want to leave the investors with or what you think is most underappreciated, the classic closing question.

No. Look, I think like -- honestly, I think the business is pretty easy to understand now. I mean you have a core technology, it drives 1 strategy that we deploy across these 3 different areas. We're going to be very aggressive in terms of having the best products, having the best data, having the best commercial channels and the resulting kind of scale in revenues and margins that we're rapidly generating allow us to get to a much, much higher revenue numbers over time on relatively stable OpEx growth. So I think we're at a pretty steady state place now.

Perfect. Thank you so much. And we'll head down to Amarante 1 for the breakout.

Welcome, Day 2 of the TD Cowen Global Healthcare Conference, 46th Annual. I'm Dan Brennan, I follow Tools and Diagnostics. Pleased to be joined here on the stage with CFO of Natera, Mike Brophy. Mike, welcome.

Thanks for having me.

Awesome to have you. So yes, I thought a good way to kick it off would just be since we just finished 4Q not that long ago, you guys had a terrific 4Q, set the guide, a bit above consensus. Maybe just give us a sense of how you thought the year finished up and just kind of key priorities for 2026, and then we'll dig in.

Yes. We had a fantastic year in 2025, finished the year with a really, really strong Q4. Obviously, the volumes and the revenues were well ahead of our own internal expectations. Of particular note, the gross margins were really outstanding in the quarter. I mean we grew gross margin something like 240 basis points, stripping out the true-ups, just sort of underlying organic gross margins were close to 64% in the quarter ex true-ups and 67% with the true-ups added in.

We had another really strong quarter really across the portfolio in terms of growth. Signatera was another standout, had another kind of record quarter for absolute units and just the change in kind of the unit growth was another quarter once again, had a bunch of amazing clinical trial data readout last year that I think holds us in good stead for '26. We also made a lot of just massive investments in the business in 2025. I mean even as we're kind of scaling the business, we're getting -- we're sustainably kind of generating free cash flows, getting closer on operating profitability going forward.

We were just continually doubling down in the business, both in the R&D operation. But we also made a large expansion of our commercial channels in '25. And I think that puts us in a really good position for '26 and beyond. So we're really excited about where we're at.

So when you think about the guide for 2026, you kind of looked at the fourth quarter trailing 20,000 sequential Signatera units, you actually beat that in the fourth quarter. Just kind of give us a flavor. Obviously, you've seen this sequential momentum continued penetration is so low. You guys are a leader. But -- anything changing in terms of maybe the mix of tumor types, academic, local. I think we shared last night at the dinner, Mass General here. I know we started to test MRD across breast and colon and a year ago, they weren't. So is there anything like incrementally changing driving the acceleration that you're seeing.

I mean these things are kind of qualitative. But I mean, just -- I know a lot of people in the audience have done this as well, but just walk around some of these academic conferences where I would walk around them 3 or 4 years ago, and I would be concerned, hey, are we going to be able to fill out the -- we've got a dinner series. Are we going to fill the seats or are people going to be interested. And now that's just -- that's not a concern. The fire department is getting called because we have too many people at the -- in a room for the speakers.

I also just think that the acceptance of minimal residual disease and recurrence monitoring as a category has just kind of undergone kind of a qualitative change over the last period of time to where you feel like when you walk around the academic conferences that this is something that's much more broadly accepted than it was just a few years ago. And you see that kind of you referenced the customer, but you're seeing that kind of in the customer adoption for Signatera, where previously, you'd have accounts that would perhaps start with colorectal cancer and then kind of gradually build their way to other tumors. And while that still happens, I mean, you're starting to see a lot more customers that adopt Signatera more broadly in their practice.

You see on the back of the IMvigor data from last year in muscle invasive bladder cancer, you see systems wanting to just implement the protocol for Signatera that we use in that study for their MIBC patients kind of in their practices and in their systems. So you kind of see the -- what we would have hoped for a couple of years ago, kind of the flowering of this market and the benefit to patients. So it's been great.

You guys still have 50% of oncologists, I think, that don't use Signatera. Kind of what's -- where was that a year ago? And do you expect that -- like are we in acceleration in terms of the new doctor usage.

Dan, glass half empty man don't use. What about the 50 that do use it. Yes, I'm kidding. No, the -- look, I mean, I think we're kind of in a place now, and we should update that stat at some point on an earnings call. We're north of 50% of physicians that ordered a Signatera test in the last quarter. And I think that adoption is just kind of confident with those kind of qualitative trends I was just describing. I mean you're going to just continually see broader and broader adoption. There's kind of 2 components to penetration very broadly that I would call out. And one is physicians starting to order Signatera, like order one Signatera test in the quarter.

But then beyond just kind of penetrating total percent of doctors that ordered a test, there's a huge opportunity in terms of just depth of penetration within a given account, and there's a lot of room to run basically in all of our accounts on that score as well.

So you doubled the size of your sales force last year. The guide reflects continued really strong growth by 2,000 -- or 20,000 tests sequential, up from, I think you started last year at like 13,000, so a meaningful increase. But arguably, I would still think doubling the sales force is going to be probably an acceleration coming beyond what you've guided to. How do you think about the productivity benefit of these salespeople and what's in the guide.

Yes. Well, I think it's important not to just count on there just being like a linear one-for-one contribution like sales rep to units. I mean these things happen kind of in a lumpier way than that, right? You'll have -- it does stand to reason though that when you have a meaningful expansion of the commercial channel that we ought to be able to reach more patients and physicians. And that ought to be an important driver to the expansion of Signatera, not just this year, but over the next kind of couple of years.

I'm pretty excited about that because I just feel like I referenced in kind of my initial remarks that we made a lot of investments in the business and operating expenses in '25. And you see even in our guide for '26, it's pretty obvious how we're -- already we're kind of getting scale. We're getting some leverage on those 2025 investments. And the commercial channel is a great example where the expansion of the commercial team is going to be a lot smaller, if at all, this year compared to last year, and yet the volumes are continuing to ramp.

So on the pan tumor application for MolDX, I think as we spoke about it, I think it was cited $100 million, whether it was on the Q4 call or maybe the Q3 call about the opportunity. I think Steve mentioned it would be kind of revenue and gross profit. I think you said maybe you got to tighten that up a little bit. I mean, doing the math, it feels like it could be a lot bigger. Maybe could you just speak to a little bit about what this opportunity is for pan tumor. And kind of when do you think we'd hear about it.

Yes. Just some background. I mean, we -- something like 1/3 of our volumes in a given quarter will be volumes that we -- that are ordered by Medicare patients, either Medicare fee-for-service patients or Medicare Advantage patients. And we are broadly covered within Medicare. We've got a bunch of different coverage decisions, but we're not -- we don't have kind of pan coverage across all tumor types.

As you see the kind of the rapid growth and adoption of Signatera really kind of within a practice, you kind of mentioned the customer's kind of using it much more broadly. We're seeing a big uptick in like a broader range of tumor types. And that just means that, hey, we've done a lot of good things there. We've generated data. We've gotten the test to the office. We've delivered it successfully to the patient. And if it's a tumor type that we don't have covered within Medicare, then we still can't get reimbursed on that. So huge opportunity just to kind of broaden out the fraction of time we get paid just within our Medicare patient population.

A couple of different pathways to do that. I mean we've referenced on previous calls that, hey, we've got something like 7 submissions for additional tumor types that we're submitting to MolDX this year. I'd expect to start getting coverage decisions second half of this year and then first half of next year. I think as a base case, I think that's the way to go -- that's kind of the way to kind of think about how that rollout happens. And if there's a way to do that more rapidly, of course, we'll do that, and that would be meaningful upside to the business.

And they, I mean, just the context of it, did you -- at some point, you guys have said pan tumor would make sense. Did you proactively reach out? Or did MolDX come back to you and say, "hey, I want you do a pan tumor?"

Well, it's been just kind of an ongoing dialogue with MolDX. And look, we'll see what happens there. I mean I think like your base expectation has got to be kind of the tried and true method that we have taken over the last 5, 6 years where you submit for a particular tumor type, you get the coverage decision back. And so we'll see what happens this year.

Which are the 1 or 2 that are biggest incidence opportunities out of those 7?

I don't know if I -- each of these -- those next 7, they're kind of in that next tier of incidents where it's -- is it 30,000 to 70,000 new patients a year. So very meaningful opportunities and just like a step down from like colorectal cancer or breast or some of the like very common cancer types.

Okay. On tumor-agnostic, you filed Latitude with MolDX. Just -- I think you've kind of quantified it as like it's still going to be niche, right, maybe in the 5% of patients where there's tumor insufficiency. Nonetheless, Guardant is seeing really rapid growth with Reveal. So just how do we think about, a, the profile of that test? And then b, is if we're standing here a year from now, what kind of contribution could you be having?

Yes. I mean, look, it's an awesome product, and I think it definitely -- it serves a need in the market. I mean one example of how Latitude, I think, is helpful to our patients and physicians is as follows. So you may have a physician that is, for whatever reason, concerned about the logistics of getting a tumor-informed MRD test. Now I think over the last like 5, 6 years, that used to be a very major concern of all participants, shareholders and doctors. And I think we've shown that actually the logistics are quite solvable and you can get a personalized MRD test quite efficiently from us.

Nonetheless, that can still be kind of an open concern. And you will have the occasional patient for whatever reason where the tissue access is just not the most convenient thing. You've got an older lung cancer patient and you're just not going to go access the tumor tissue from that patient. And in those situations, it's great to have a high-performing test like Latitude available. So one, you kind of -- you address the concern of, hey, what about my occasional patient that there's just not access to tissue.

And it also addresses the concern about kind of an in quote concern about, well, are the logistics going to be inconvenient for me in my practice. What you can then say to the physician is, look, you can order your Signatera test with a plan to reflex to the Latitude test. If for whatever reason we do run into some logistical issue, we'll deliver you this very high-performing Latitude test. And in the background, we'll continue to work the problem, and we'll get the patient on to Signatera for the next time point. So we found that to be a very compelling value proposition for the physicians.

Okay. Just on whole genome, obviously, the Foresight deal, what's the plan there? When will that be kind of included. And I think you've always been of the mindset, obviously, like Signatera 16 mutation exome dominates all the publications, so whole genome will feather in over time. But chatting with Alexey, I think you talked about in 3 years, maybe the whole -- all of your volumes could be whole genome. So how do we think about the timing? And what's the kind of impact do you think of whole genome over time?

Yes, it's impossible to know. And part of our strategy is not to try to know. We're not going to try and be smart about kind of predicting that. Our strategy has always been just be the best you can and just solve any potential desire that the patient, the physician might have, any need that they have. And one way that the evolution of MRD and recurrence monitoring might go, it might be an evolution toward a genome product or might be an evolution towards more and more sensitive assays.

I do think that that's kind of over enough -- given enough time, I do think that's kind of inevitable that the product is going to continue to get more and more higher performing. I mean one kind of case study is like in NIPT in Panorama, I think we're on version 10 of that test. It's an amazing test compared to what we had launched in 2015. We've just continued to iterate. The workflows have continued to improve. The test performance has continued to improve. No different here. This is an example of how one could evolve Signatera over time to 10 years from now, you'd say, "Yes, I ordered Signatera like I used to, but Signatera has gotten -- has continued to get better." And I think that's a reasonable expectation to have.

And will you publish more? So far, the whole genome has very limited data out, a couple of posters, things like that. Will there be more publications.

Yes, it just takes -- yes, it takes -- one of the things about data is it just takes forever to read out prospective data sets, you have to just wait for the -- to see how the patients do over the course of months and years to kind of get the outcomes data that physicians need to really kind of evolve the standard of care. So we've had that time to do that with Signatera over the last 5 years. And it's just as you kind of iterate on the product itself, the subsequent versions of the test will show up more and more in subsequent data sets. So that will kind of feather in over time would be my expectation.

So would it be more -- like could we see a couple this year, do you think or it's more '27.

I think you could see some posters and you could see some data this year. And I think like the more time goes by, the more time we have to actually have the outcomes data that I think is really impactful.

Got it. So pricing guide I think you guided to $50 of increase back at Q3 by year-end '27. I think you got already like $30 in Q4, and you kept the guide. So it assumes -- I think that's right, maybe it's...

$20 in Q4 than $30.

Excuse me, right. So it seems like a modest increase. It sounds like you guys are still cranking on getting better payment, all the rev cycle stuff. So just talk a little bit about the pricing guide. I know you had some changes on some of the rates from Medicare as well?

Yes. I mean, consistent philosophy from us in terms of setting initial guidance, we want to set a bar that is high but achievable to start the year. And then hopefully, we can execute and continue to underpromise and overdeliver on that score. There's a lot of potential upsides to Signatera pricing this year, realized pricing. A couple of the categories include just better execution on Medicare Advantage. So coverage service, Medicare Advantage patient should be no debate. When it's a Medicare fee-for-service patient, we are reimbursed 99% of the time. And then frustratingly, that's more like 80% -- 75%, 80% for Medicare Advantage.

Well, why is that? Well, we've got to partner with that payer to clear up whatever the misunderstanding is that this is absolutely a covered service. So we can continue to turn the crank there. We've talked a fair amount on various earnings calls on execution in states where there's a biomarker law in place. So that's something that we've always expected that to be kind of a linear kind of grind and it's a similar process at a high level as what I just described for the Medicare Advantage payers, it's just a broader population. And I think that will be a contributor. Those 2 things will be a contributor this year.

And I think reasonably good progress is what I'm contemplating for that kind of an incremental $30 growth in realized pricing this year. Beyond that, I mean, we've talked already about expanded coverage decisions. I mean, we have excellent data in these additional tumor types. There's no reason why we can't get additional coverage, broader coverage for Signatera from MolDX and for Medicare. And that's something that if we were able to get that, I think that would be upside.

I would caution you that just the timing of when you get those coverage decisions affects how you would think about pricing throughout the course of the year. I expect to start to get those in the second half. But yes, I mean, I'm on balance, I'm kind of -- I'm biased toward the upside on the realized pricing versus the guide, but it's something that we just got to go execute on.

So Guardant continues to push, the smaller players, Personalis, private players, Tempest. There's a lot of players continue to view this market very attractively. I know you made analogies to NIPT in the past, but how do you think about Natera share 2030. You've got 90% share today. What kind of share do you have in MRD in 2030?

Yes, I don't know. I mean it's -- it almost -- I would argue that if we just do the things that we've always done, then the share will kind of take care of itself. And so the things we've always done is just start with what the patient and the doctor needs and work backward from there. So if we keep having new iterations of the test that just blow prior iterations out of the water, if we keep having very ambitious prospective outcome studies reading out in an excellent way, if we keep on investing in our kind of customer service and commercial channels to make it easy to order the test. I think that whatever the share is, it will be great for investors.

And more importantly, there's just going to be -- this Signatera and more broadly, MRD and recurrence monitoring will be something that has gone from a term that we wrote on a whiteboard at Natera in 2016. Now when you go to the academic conferences, it's kind of like an obvious thing that's happening. But if you fast forward to 2030, 2035, it will be something that everyone gets. Like you won't believe -- it would be like today saying, "hey, like I had cancer, I never got a CT scan." You'd say, what do you mean, you didn't get a CT scan. This will be what recurrence monitoring and MRD will be. And that's -- there's -- incidentally, there's room for more than one player to be successful there, and we welcome that.

So maybe one more final one on that, and then we'll jump to women's health and screening. But in terms of -- so you've rolled out whole genome, you bought Foresight. So you have that. You've got a tumor-agnostic assay now. So what are the other areas? And when you think about switching, why doctors would switch, maybe there's a more sensitive test, maybe you don't have the whole menu. What are the other areas you think doctors would switch? I guess if you're in the MR, we viewed it as someone has to be better or different. What are the other areas? I mean we talked a little bit about CGP bundling. Is that something that's a focus for you guys to enhance that CGP offering?

Well, I think that -- I think in the spirit of just kind of working backward from what can be useful to the doctor, I think is a good way to kind of get at your question is like, well, what are some different ways to enter the market. Well, what are some problems that we can solve. We do have a high-quality tissue comprehensive genomic profile that's available right now.

A lot of the big centers have their own offering there. But -- so if you're practicing rounding at MD Anderson, maybe that's like less compelling. But if you're out in Lubbock, it can be quite convenient to order both Signatera and the tissue CGP for us. I think that's starting to evolve where more and more physicians will want to order a CGP. I think that is -- there's another kind of secular trend happening there where genomics is becoming ever more kind of front and center to the -- understanding what the patient's journey ought to be with their cancer. So I think that's inevitable, and we're going to keep investing in that. So there's an ecosystem of additional products to offer alongside Signatera that I think would make the experience better, and we're going to try and do that.

So maybe to jump into women's health. So maybe just talking about Fetal Focus, right? So Fetal Focus driving new doctor usage, it's expanding the ordering base. Just can you elaborate on what that product is doing. And that product is not reimbursed, correct? Fetal Focus, right.

That's right.

So just talk about the importance of that and what kind of impact it's having on your women's health business?

I should say it just doesn't have -- there's not like formal coverage decisions. I mean there's potential to get reimbursed ahead of the formal coverage decisions. I think the path to kind of getting Fetal Focus kind of into -- or single-gene NIPT into the standard of care is a long road, and you've seen us kind of traverse that journey over the last 15 years with NIPT, where it's gone from something that's kind of a niche kind of new thing to something that is pretty boring and pretty boring in a good way, right? Like everyone gets this thing because it's so good.

I think we're excited about the Fetal Focus launch. It's an interesting solution for patients. And there's a meaningful segment of patients and doctors that want to have that as an option and want to avail themselves of that product in certain situations. So I think it's been kind of consistent with what we've always done. I mean if you look back over our history, once a year, once every 18 months, we have an important new product launch in the women's health space. I mean I think the one prior to this one would have been the RH launch that we were able to put together in the face of what was a really problematic RhoGAM shortage in the United States. And that was incredibly important for us and had all the kind of the commensurate benefits to us in terms of share gains and things like that. And I think Fetal Focus has the potential to have that kind of impact as well.

Maybe just moving over to PDNORO. I think on your website now, you posted that you've got a whole suite of -- you have a whole pamphlet discussing your offering there. Just where do you stand there? Is that product in beta? Just what are your plans on entering that rare and union disease for pediatric neurologists and kids?

Yes. I mean I think we have a really interesting product there and an offering that can be quite competitive. I think our standard practice with -- when we're launching in new areas is to go get the product together, get the data sets together and then go and interact with customers, get a launch going, see what we learn. And so as we kind of -- we get through that learning phase, I'd anticipate on an earnings call, at some point in the relatively near future, we kind of sit down and once we've had that learning, we'll be able to integrate it, come back to investors with a longer-range vision for that product. But we're pretty excited about it. .

And maybe just one on that front. The leader talks about a massive database they have, really gives them an edge in kind of making the right calls. Like do you view that as a competitive disadvantage for you guys entering?

I think it remains to be seen. I mean I think that's part of why we want to get out here with the launch. I mean, there are a number -- we've got a deep history of offering these types of products in various call points over the last kind of 15 years. We've launched a carrier screening test that's been very successful. We launched Renasight. That's been very successful. I do think that, that kind of deep history in, for example, kind of curation of variance can be -- is very important for differentiating the product. And I think we've got some points of differentiation there. And I'm looking forward to getting the feedback from the field.

Okay. Maybe just jumping over to screening, the proceed PROCEED-CRC study, you've got -- you had really nice AA sensitivity, I think, 22.5% at low 90s spec. I think you had a standard deviation of 15% to 31% on AA. So you've been really confident the degradation risk on your study is going to be less than prior studies, although each of the companies that have come out have kind of said the same thing and then it's been worse, right? So talk about the FIND study, like what's your enthusiasm, management sounded positive. Does that enthusiasm remain for CRC screening? And what do you think ultimately where that AA will land?

Yes. Well, first, I mean, there's a reason why you got to run the actual FDA outcome study is that like if the preliminary study was good enough, then we just get an approval. So I don't want to prejudge the results of the outcome study, you run it for a reason. And so we're going to get what we get.

On the point of the read-through from a preliminary study to an FDA-enabling study with the important above caveat, I think the only point that we're trying to make is that given that we've seen some meaningful degradation between these kind of initial studies and the FDA-enabling study readouts, we've tried to do -- make a good faith effort to understand why that might have happened to the field given that we're not the first study to read out now. We ought to learn from that, and we ought to try to be a little bit more rigorous or just make our best effort to make the preliminary study as real world as we possibly can in order to limit that.

Now what the ultimate result is, we'll see. I mean I would just note that the standard dev that you quoted is very important. I mean I think the midpoint was centered around like 24% sensitivity and then like one standard dev is like 16% to 30%. Why so wide. It's only a couple of thousand patients. That's why you got to run 25,000 to 40,000 patients to kind of tighten that up. So we'll see how that goes. Very excited about this, though. I mean, this is a very important unmet need. I mean this is another -- in addition to kind of understanding how to run the clinical trials, this is something that I think the field, like the companies in the space and really the world has kind of learned more about.

If you go back a couple of years, you might have thought that, look, like AA sensitivity in the mid-20s, like there'd be an open question as to whether or not that's even viable. I don't think that's a question anymore. I think there's a better understanding that there are 40 million people in the United States that are just going to go unscreened for their colorectal cancer because for a variety of reasons, they're not going to avail themselves of a colonoscopy or the stool test. And so the default is nothing. And that's not good enough. I mean we can make a really meaningful improvement to public health if we can offer a high-performing plasma test that has -- is much more likely to be complied with, right?

So it's really tough to build one of these things and to run the enormous clinical trial that you've got to run. So it looks like there's only going to be a handful of companies that are able to really offer a high-quality test, and we're looking forward to be one of them in a really, really large market. One of the ways I've noticed we've been able to really deliver benefits for shareholders is when we've been able to internally develop a product that is very relevant to a huge number of people, and we start to grow it, right? We get -- it's a high-quality test. The data looks good. we get a commercial launch out with an initial set of field reps and then it starts to grow.

And you're just going from 0 to growth on top of all the other amazing growth drivers we have in our existing business today, I think that can be very exciting for shareholders to say nothing of the huge benefit we can have for patients in this setting.

What kind of operating margins. I mean, I think the gross margins you've commented, given the pricing you guys are excited about. But on the operating margin standpoint, I know you maybe talked about leveraging your OB/GYN channel. Could you elaborate a little bit on what you think that might look like.

Yes, you got to monitor that. I mean I think that's been one of the criticisms of the field is that you can make a big difference for patients and get a lot of people screened. But if every nickel has to go back out the door on marketing, then it can be a tougher business and how do you manage that.

I think what I'm focused on in the first couple of years post the launch is the scale of the need, the size of the market relative to where we are, which is at 0, I think you can show a lot of promise there for a long period of time and show a lot of growth as you kind of mature the commercial operation. So I think there's a long stretch of time there where it can be a very positive story for the company. And I do think that longer term, it's a classy problem, but you've got to get to a place where the awareness of the test is such that the businesses can sustainably kind of offer the test and generate some kind of operating margins. I think that's -- we're kind of early stages of that market right now, so to be determined.

Maybe a final question as we wrap up, just on margins. Gross margins have expanded dramatically, you're free cash flow positive. But at the same time, you realize the benefits of investing in R&D, investing in sales because the market is really focused on growth, volume growth. How do we think about the evolution of your margins over the next -- by 2030. Like is it still going to be -- do you prefer to like stay just barely profitable and just really invest and then at some point, you hit the switch? Or could we see some meaningful expansion over the next 4 years?

I think you see meaningful expansion. That doesn't require your management team to change the philosophy. The philosophy is not going to change. The reality is that I think we've shown over the last couple of years that the way to kind of get to operating margins that investors want is to grow the top line with excellent products and just get the scale on the channel. You see that even in our guide for this year.

We're continuing to just be very ambitious in our goals for the R&D operation. At the midpoint, we're going to add another $175 million in investment just this year on top of what was last year a major expansion in our R&D efforts. So continue to double down on R&D. And yet on the SG&A line, pretty stable. It doesn't mean it will be exactly flat. You'll see what happens through the course of the year. But obviously, there's a huge delta between what -- where the commercial channels are needing to grow in terms of growth rates versus where R&D needs to grow and to say nothing, where the top line can grow much, much faster than that.

So it's just a natural evolution of the business where we're going to grow our way to profitability. That's a very healthy place to be because you just think about -- you look at particularly for like MRD and recurrence monitoring, the scale of the investment we're making in the future for the patients and physicians puts us in a great position to continue to be really differentiated in that area.

Awesome. Well, with that, Mike, I think we're out of time. Thanks a lot for being here.

Thanks for the time.

Appreciate it. Thanks, everyone, in the audience.

Welcome to Natera's 2025 Fourth Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded today, February 26, 2026.

I would now like to turn the conference over to Michael Brophy, Chief Financial Officer. Michael, please go ahead.

Thanks, operator. Good afternoon. Thank you for joining our conference call to discuss the results of our fourth quarter of 2025. On the line, I'm joined by Steve Chapman, our CEO; Solomon Moshkevich, President, Clinical Diagnostics; Alex Aleshin, General Manager of Oncology and our Chief Medical Officer; and John Fesko, President and Chief Business Officer.

Today's conference call is being broadcast live via webcast. We will be referring to a slide presentation that has been posted to investor.natera.com. A replay of the call will also be posted to our IR site as soon as it's available.

Starting on Slide 2. During the course of this conference call, we will be making forward-looking statements regarding future events and our anticipated future performance, such as our operational and financial outlook and projections, our assumptions for that outlook, market size, partnerships, clinical studies and expected results, opportunities and strategies and expectations for various current and future products, including product capabilities, expected release dates, reimbursement coverage and related effects on our financial and operating results. We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially.

Please refer to the documents we file from time to time with the SEC, including our most recent Form 10-K or 10-Q and the Form 8-K filed with today's press release. Those documents identify important risks and other factors that may cause our actual results to differ materially from those contained in or suggested by the forward-looking statements. Forward-looking statements made during the call are being made as of today, February 26, 2026. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. Natera disclaims any obligation to update or revise any forward-looking statements. We will provide guidance on today's call, but will not provide any further guidance or updates on our performance during the quarter unless we do so in a public form. We will quote a number of numeric or growth changes as we discuss our financial performance. And unless otherwise noted, each such reference represents a year-on-year comparison.

And now I'd like to turn the call over to Steve. Steve?

Great. Thanks, Mike. Let's get to the highlights on the next slide. We had a fantastic quarter. We processed about 924,000 tests and set another record for MRD clinical unit growth with 225,000 tests processed in Q4. MRD clinical units grew about 56% compared to Q4 of 2024. We generated roughly $666 million of revenue in the quarter, which is about $6 million ahead of our preannounced in January and represents approximately 40% revenue growth over Q4 of 2024. We were very pleased to generate gross margin of 66.9% in the quarter, which wasn't part of our preannounce and was well ahead of our expectations. All of that progress led us to generate over $107 million in cash flow in 2025, even as we doubled down on growth investments throughout the course of the year.

We're off to a great start so far in 2026, and we are excited to initiate our guide for the year. We expect to generate between $2.62 billion and $2.7 billion in revenues, gross margins between 63% and 65%, holding SG&A stable while we make targeted investments in R&D with the expectation that we generate another strong cash flow year in 2026. Mike will spend a lot more time on this topic later in the call.

We've had a lot of exciting news since the JPM conference in January, including publishing the outstanding performance of our LATITUDE tissue free MRD test, which has now been submitted to MolDX and launching the 21-gene fetal focused single-gene NIPT test. Data on fetal focus was just awarded an oral plenary presentation at the Society of Maternal Fetal Medicine Conference, the only single gene NIPT to earn that honor. It's worth reflecting for a moment on the progress we made in 2025. We had a transformative year financially with 40% quarter-over-quarter revenue growth and significant gross margin expansion while at the same time continuing to invest in our future.

In a few years, when we look back on it, I think the key investments we made in our commercial channels, product launches and clinical studies will prove to be engines for continued growth. You can see here on the page, just a few of the product highlights. We significantly expanded our MRD product portfolio by launching the genome version of Signatera in the LATITUDE MRD test, both of which complement Signatera beautifully. We delivered the strongest year yet for Signatera data generation, highlighting body IMVigor011 publication in the New England Journal. Then at the end of the year, we welcomed Foresight Diagnostics to the fold, which gives us the phased variant technology, which unlocks the next level of ultrasensitivity, is already paying dividends as we'll discuss today. We also advanced Organ Health and Women's Health with significant investments in products like fetal focus key studies like the randomized ACIS AMD trial in organ transplant.

Okay. Let's get into some of the business trends on the next slide. I want to jump straight to MRD clinical unit volume. Q4 represented yet another record growth quarter. Based on our internal data, we estimate that more than 50% of oncologists in the United States ordered a Signatera test in the quarter, which just shows you the extent to which MRD is rapidly becoming a part of the standard of care for many cancer patients. Physicians continue to show a desire to adopt MRD broadly in their practice, which plays to our strength given the breadth and quality of our data. We're off to a great start to [ 4 ] in Q1.

The next slide shows revenues, which was another area of significant outperformance this quarter. As I mentioned, we came in about $6 million ahead of the preannounce on very strong overall volume growth and another quarter of sequential improvement in ASPs. We had an excellent oncology quarter and continued to see strength in women's health and organ health. Signatera ASPs stepped up to roughly 1,225 in Q4. We had about $60 million in true-up this quarter, consistent with our preannounce as cash collections continues to accelerate, and we posted another record for DSOs at 47 days compared to 68 days just in Q4 of 2024.

The next slide shows our gross margin traction over time, and we had excellent margin execution in Q4. Top line gross margins were a record, as I mentioned, at 66.9%, and we had about 3% of that is benefit from the revenue true-ups. Stripping out the true-ups, we posted a record organic gross margin quarter at 63.7%. Along with strong ASPs, we had a very lean COGS quarter in Q4, which drove significant organic step-up of 240 basis points just compared to the third quarter.

Looking into 2026 and beyond, we've got a strong set of margin expansion opportunities, and we think the cash collection trend continues to bode well for ASPs into 2026. To further improve ASPs, we've submitted for much broader Medicare reimbursement for Signatera. As a reminder, a portion of the tests that we perform today are in indications that aren't yet covered by Medicare, but where we submitted for coverage. We have a good track record of getting coverage given the quality of our data, so this could be an opportunity. We are also starting to see commercial payers come on, given the breadth of progress that's been made on the biomarker states. In addition, we are increasingly seeing opportunities to deploy AI-enabled workflows to help ensure that we get reimbursed for covered services. Mike will spend a little more time on this in his section.

We have several core opportunities underway as well that will hit throughout the year, including both lab workflow opportunities and also deployment of AI to reduce many routine manual steps. All in, we're in a good position for margin expansion going forward.

Okay. With that, let me turn it over to Solomon to discuss more details. Solomon?

Thanks, Steve. Getting into some of our recent data and announcements, I want to begin in our women's health business with fetal focus, our next-generation single gene NIPT. This test powered by Natera's ultrasensitive linked SNP technology, directly analyzes fetal sell-through DNA to screen for serious inherited conditions. It addresses a significant clinical unmet need by enabling fetal risk assessment when the mother is a carrier of a recessive mutation, but the father is unavailable for screening, a common real-world challenge in prenatal care. Our expanded 21 gene offering announced in early January is the broadest single-gene NIPT product in the market with impressive flexibility as it can either be ordered upfront along with the Horizon carrier screen, or it can be ordered later after Horizon carrier status has already been reported.

The test performance is robust with overall sensitivity across conditions of 96% and overall population-weighted specificity of 98%. The competitive strength of this product offering is fueling meaningful growth in new OB/GYN and MFM accounts. Of course, a major source of strength or fetal focus is its prospective blinded validation in the EXPAND trial with confirmed genetic outcomes on all positives and negatives. The EXPAND trial was selected for an oral plenary presentation earlier this month at the Society for Maternal-Fetal Medicine Annual Meeting. Scoring an oral [indiscernible] at SMFM is extremely rare, even in the age of sell-through DNA.

So it's a strong indicator of the scientific and clinical relevance of this work. We're pleased with the feedback during and after the conference, and we look forward to submitting these results for publication in a leading peer-reviewed journal. We also look forward to significant new product enhancements in 2026 for our women's health customers to be announced in the future.

Moving to the Organ Health portfolio now. We continue to invest meaningfully improving the clinical utility of Prospera donor DNA monitoring across all organ types. In addition to the early detection and treatment of graft injury, our vision is that Prospera can also help reduce unnecessary biopsies and unnecessary immunosuppression. In the field of heart transplant, we recently completed enrollment in the novel ACIS EMV trial, the first randomized controlled study directly comparing surveillance with Prospera against protocol endomyocardial biopsies, or EMB. Protocol EMB, which often occur monthly or even more in the year 1 post transplant is currently the standard of care for the approximately 4,500 patients per year in the U.S., who received heart transplants.

So the goal of the trial is to show that patients can safely avoid most of those protocol biopsies. ACC EMB has enrolled over 300 patients across 17 transplant centers in the U.S. randomizing participants 1 month after transplant to surveillance either with Prospera or with EMB in a 2:1 ratio, with clinical follow-up for 12 months. We look forward to reading out the results in mid-2027 once all follow-up data has been collected and analyzed.

Complementing this approach now on the lung side, new data recently published in the Journal of Transplantation Direct highlights how Prospera-guided monitoring can reduce unnecessary surveillance biopsies for lung transplant recipients. Lung transplant patients are typically monitoring of transbronchial biopsies, usually 5x or more in the first year after transplantation. These procedures are invasive, risky and associated with significant potential morbidity. In this study, the Ohio State University Wester Medical Center, performed a prospective study incorporating Prospera monitoring into routine care.

Based on low-risk Prospera results, clinicians elected to forgo the 9-month surveillance biopsy in about 75% of patients. Over the ensuing 3 months, those patients experienced no significant differences in acute rejection rates lung function metrics or immunologic markers compared with patients who did undergo the biopsy. This is an important validation of the biopsy reduction concept in lung transplant, and we already see it driving engagement among clinical leaders in thoracic transplantation. Strong clinical data like this has continued to fuel meaningful share gains for Prospera in thoracic as well as renal transplantation.

And with that, I want to turn it over to Alex to discuss our most recent data in oncology. Alex?

Thanks, Solomon. Here, we're highlighting what we view as exceptional momentum in bladder cancer going to the ASCO GU conference. As a single meeting alone, we have strong set of abstracts and oral presentations that collectively reinforced the critical role of Signatera across the bladder cancer continuum from risk stratification to treatment selection to enabling new care pathways like bladder preservation. A key theme here is, can we spare the bladder, which we think is one of the most important clinical questions in the field. Studies such as IN-BLADE and RETAIN show that CT negative patients who underwent active surveillance had similar outcomes to CTA-negative patients who had a cystectomy, suggesting that Signatera can identify candidates for bladder sparing approaches, potentially avoiding or delaying radical surgery in appropriate patients.

And finally, data sets like NIAGARA going to the next frontier, combining ctDNA and urinary tumor DNA and to provide complementary insights into residual disease risk and local disease biology. A direction we believe can further strengthen patient selection for bladder preservation strategies and expand market size across urologic malignancies.

So the takeaway is, ASCO GU's 1 conference, but it's a great example of the consistent drumbeat we're driving, using high-impact data to expand Signatera into new indications and to deepen penetration across existing workflows. And importantly, we are executing this playbook across multiple histologies.

Moving to the next slide. We're highlighting exciting interventional data in head and neck cancer from the Phase II SYNERGY trial in frontline recurrent or metastatic head and neck squamous cell carcinoma. What makes SYNERGY especially important is that it's not just showing ctDNA is prognostic. It demonstrates the benefit of CTA-guided treatment and adaptation in real time. Here's the clinical problem synergy addresses. In advanced head and neck cancer, physicians face a difficult sequencing decision, start with immunotherapy alone, and risk undertreating patients who need rapid cytoreduction or start with immune therapy plus chemotherapy and risk overtreating patients who may not need prolonged chemotherapy exposure. The question is whether we can achieve the best of both worlds, using Signatera-guided adaptive treatment approaches.

In the study, patients started on either pembrolizumab alone or pembrolizumab plus chemotherapy and then Signatera CTA dynamics were used to escalate or deescalate chemotherapy in real time. The first important result is that 74% of patients deescalated a chemotherapy at least once for the median of two chemotherapy cycles delivered versus the typical six cycles. This is a meaningful reduction in chemotherapy. And the question is how that affected patient outcomes. Amazingly, the outcome showed an objective response rate of 63%, which is really strong compared to the 19% to 36% seen in the original registrational trial. And importantly, the rate of grade 3 or higher toxicity was only 48%, which is a clear improvement over historical precedents. The punchline is that synergy supports a future where Signatera becomes a treatment navigation tool in the metastatic setting in head and neck cancer and across other cancer types, helping physicians and patients optimize their therapeutic strategy in real time.

Furthermore, this head and neck indication is already covered by MolDX under our I-O treatment response monitoring indication. We expect multiple similar studies to read out over the next few years, a testament to our investment into prospective clinical evidence generation that started many years ago.

With this, let me turn it over to John to discuss progress on our MolDx submission and our face variant technology. John?

Thanks, Alex. I'm excited to announce that Natera has submitted our first tissue free MRD assay to MolDx in colorectal cancer. LATITUDE is a methylation-based assay that delivers MRD insight without meeting tumor tissue, making it a strong complement to our flagship Signatera platform, enabling MRD assessment even when tissue is unavailable, insufficient or delayed. In January, we published clinical validation from the GALAXY study in NPJ Precision Oncology. In a large data set spanning 195 patients and 1,230 time points, LATITUDE MRD positivity was highly prognostic for recurrence with a hazard ratio of 10 post surgery, has a ratio of 31.9% in post-treatment surveillance, 84% longitudinal sensitivity, 97% sample level specificity and a 4.6 month median lead time ahead of imaging.

When you look across published tissue free MRD assays and CRC, we think these performance metrics are excellent. Importantly, the data also support clinical actionability and include a predictive signal for adjuvant chemotherapy benefit. Our recently submitted technical assessment is a key step towards broader reimbursement and scaled adoption in CRC. Another driver of MRD growth as we expand access and streamline ordering. We also look forward to validating this tissue free technology for other cancer types later this year.

Beyond LATITUDE, Natera also has a full suite of Cigna tariff submissions now under review by MolDX in a broad range of histologies, and we are excited to further expand insurance coverage for cancer patients.

Moving on, I also want to describe an exciting new technology that we have integrated into our tumor-informed Signatera platform, phased variants that is driving our detection threshold down to unprecedented levels below one-fragmented tumor DNA in a background of 10 million normal copies. As a reminder, Natera closed the acquisition of Foresight Diagnostics in December and immediately integrated phase variants into our Signatera platform, where we expected to enhance performance in MRD across all tumors. This product is available today for research use and will be launched clinically this year.

So what are phased variants and why do they matter? Tumor-informed MRD testing has traditionally focused on identifying ctDNA with single tumor-derived variants. Phase variants take this concept further. Instead of looking for a single mutation on a fragment of ctDNA, we look for two or more mutations on the same physical DNA fragment. What makes phase variance powerful is not simply tracking more mutations, but rather how this approach fundamentally reduces the impact of background errors and enables vastly better sensitivity. Background errors that are routinely introduced through sequencing chemistry and artifacts and biology can become an issue at very low tumor fractions. But with phase variants, the probability that such errors identically replicate multiple variants on a single fragment is so low as to be almost zero.

So that dramatic reduction in error is what enables confident detection and thresholds 10 to 100x lower than conventional approaches. Analytically, this translates into an LOD 95 of approximately 3 parts per 10 million and detection below 1 part per 10 million. And this technology is backed by very strong patents. Clinically, we believe this further widens our moat in MRD test performance. It's also a fantastic addition to our pharma services offering, generating significant excitement with partners. In fact, we've already signed an important prospective pivotal trial, which we'll be announcing when it kicks off.

With this, let me turn it over to Mike to review the financials. Mike?

This stage is just a summary of the financials compared to last year. You can see what an impactful year 2025 was in terms of revenue scaling and gross margin improvement. Steve noted that we put up a very strong gross margin here in Q4. And while the core ASP and COGS trends do look very strong, I think you also benefited from a few tailwinds specific to the quarter. For example, we had a nice high margin contribution from pharma in Q4 and in our reported unit ratio to test a session in the lab was a little higher than usual. That tends to help gross margins because we only book revenues on the tests that have been fully reported out.

I would also note that we significantly narrowed our operating losses in Q4 as compared to last year, even as we significantly stepped up our investments in OpEx. We actually generated net income in Q4, although that was helped along by a one-timer, which was a below-the-line deferred tax item related to the Foresight acquisition. We think our path to profitability remains very clear, and we are sticking to the plan we've laid out in the past. We fully intend to keep our foot on the gas in terms of investing in the business as we grow our way to profitability. Finally, on this slide, you'll just note that our balance sheet remains pristine with over $1 billion in cash and securities.

Okay. Let's get to the guide on the next slide. Steve previewed the key pieces on revenues and gross margins, and we are well positioned to generate cash again this year. I'll just remind you that consistent with prior years, this guide does not presume any meaningful contribution from revenue true-ups. We will likely have some true-up benefit in '26, but I expect true-ups as a percent of revenue to decline as we continue to wring out the towel on all of the operational improvements we've launched in revenue cycle management over the last few years. Beyond that, it's important for you to think about our underlying trends and unit economics. And I think guiding with future true-ups stripped out of the forecast makes it easier to understand and model the business. That's important context for evaluating year-on-year trends. For example, our gross margin for 2025 ex true-ups was about 61.5%, so centering the guide at 64% for this year represents our expectation that we continue to ring the bell on COGS improvements and additional ASP gains.

I'd also note that we are exhibiting some caution on this initial gross margin guide, given, one, some of the drivers of the Q4 improvement may not repeat every quarter. And two, we've got some products launching that aren't yet reimbursed, as John mentioned. But when I reflect on the coverage road map that John described, I can certainly see a path to margin outperformance this year.

Okay. On the next slide, this slide gives you that same bridge for revenues. Backing out the 2025 true-ups, you can see that the midpoint of the guide implies roughly 25% growth over what was a monster year for us in 2025. The revenue guide presumes continued growth in women's health volumes and ASPs and another strong year of growth for the Organ Health products. On Signatera, Steve called out that we are already off to a really strong start so far in 2026. The guide calls for another excellent year on volume growth, which we are poised to deliver on.

On the Q3 call, I noted that we expect another net $50 bump to ASP for Signatera over the near future. Given that we are up roughly $20 an ASP for Signatera just in Q4, the guide implies another $30 or so ASP growth embedded in this initial guide. Of course, that does leave us some aside room as the guide discussed potential for much broader reimbursement, that's not embedded guide just to start the year, along with our kind of standard operational improvements as we expect again. Just a note on the overall pacing of the quarters.

We expect Signatera and Prospera to just grow sequentially quarter-over-quarter this year. And for women's health, I think it's worth baking in the usual seasonality that we see where Q1 is a big volume quarter, Q2 is down sequentially, and we recovered Q1 levels in Q3 and Q4.

Okay. The next slide here is just to give you some insight on the OpEx guide for the year. Overall, at the midpoint, we are slated to grow OpEx about 9.5% and just a bit better than what we previewed on the Q3 call and well below the roughly 25% pro forma growth implied by the revenue guide. The components of the OpEx gives them important insight on where we are as a company. After making the investments to get to the right-sized commercial channels, particularly in oncology, we are now in a place where we can drive substantial top line growth, while holding SG&A roughly stable in 2026.

Our plan is to stay focused on 2030 and beyond by continuing to invest in best-in-class products in clinical trials. The major components of the growth in R&D include a substantial investment in the FINE trial for early cancer detection in colorectal cancer and the investments we are making in large clinical trials in technology development focused on MRD.

I'll just reiterate once more that we are going to stay in growth mode. And if important new opportunities arise this year, we are not going to be shy about adding some short-term operating expenses to yield long-term results.

And now let me turn it back over to Steve.

Thanks, Mike. In summary, we had a great year across the business. And as you can see on the slide, we have several exciting milestones anticipated as we move through 2026.

Okay, and with that, let me open it up to questions. Operator?

[Operator Instructions] Your first question comes from the line of Catherine Schulte with Baird.

Maybe first just on Signatera ASPs. On the Medicare side, a few moving pieces there with the ADLT surveillance coming down, but the adjuvant bundle rates going up. Can you just talk through the net impact from those changes and how that factors into your kind of plus 30 annual guide?

Yes. Thanks, Catherine. Mike, do you want to take that?

Yes, sure. Thanks, Catherine, for the question. Yes. So the changes on the ADLT rate and on the bundle roughly net each other out given kind of the mix that we've had in terms of recurrence and bundles over the past year. So the net 30 -- what that really -- what that embeds in the guide is us just continuing to execute on broadening the percentage of time we're reimbursed for covered services for Medicare Advantage volumes and more progress in the biomarker states. It leaves as upside the additional coverage decisions and all the efforts that we have ongoing with MolDx that John Fesko was talking about on the call.

So as I mentioned, I mean, I think the strategy with these initial guys for us over the last 10, 11 years has been to just start with demanding but achievable kind of initial guide for the year. And that's kind of how I would characterize this ASP guidance.

Okay. And then can you give us an update on Signatera mix by indication? If you were to receive a pan-cancer indication on solid tumors for MolDX, I guess what would that mean for ASPs?

Yes, I'll take that. So yes, I think we kind of said before, obviously, CRC, breast, bladder, lung, and some of the bigger ones there that we're already covered for making up the majority. But there's a good 30%, maybe 35%, something in that range that fall into kind of the non-covered bucket. That's kind of where we said if we can get coverage for the remaining Medicare indications, it could be based on the run rate, a couple of hundred million dollars in gross profit and revenue. And we submitted now for a significant number of additional indications that would I think, capture the vast majority of the remaining outstanding histologies. And we have a good track record of getting Medicare coverage just given the significant amount of data that we've generated. So hopefully, that remains as upside on the ASP as Mike said.

Your next question comes from the line of Puneet Souda with Leerink Partners.

And first one, maybe just given the strong growth in Signatera that you're seeing here, despite the seasonality, despite the holidays, you put up a very strong number. Last year, you're talking about sequential 8,000 to 10,000 increases, Mike, maybe for you. How should we think about that number, sequential increase number this year? And on the data catalyst side, maybe could you remind us what's the most sort of needle moving this year in terms of the data? And any thoughts on NCCN? And just I have a follow-up on prenatal?

So maybe let me comment just for a second on some of the data. And then maybe Mike, you can kind of talk about the pacing. And I don't know, Alex or Solomon, if you guys want to comment on the data. But what we've been focusing on is really generating a lot of evidence in a broader set of indications. And I think you're starting to see a lot of that come out. So we just had this interventional trial in head and neck cancer, which we think is a great indication. I think there's about 70,000 patients per year there. I think last year, kind of the tail end of the year, we had a gastroesophageal study come out that was pretty significant. We had a pancreatic study come out that's pretty significant. So we're now generating the type of data in these other indications that we think can really move the needle, and I think that, that's exciting. So Alex or Solomon, do you guys have any other studies that you want to call out specifically before we talk about the pacing?

I think that's a pretty good summary. I think Puneet, if you just look at ASCO GU this year, I was actually at the conference earlier today, a ton of excitement probably 3 or 4 pretty practice-changing studies that we have commented on during the pre-read. And I would say pretty much at every other conference later this year, probably 5 or 6 major ones. You probably will expect to see a similar drumbeat of clinical readouts. So we're expecting data in breast, additional GI indications, IO monitoring. And then some of the larger prospective randomized studies should start reading out in the next year or 2 as we get closer to that, we'll provide some additional guidance.

And. And then just on the -- yes, just on the pacing. I mean, I'm kind of in the same place as I have been in terms of the approach. I think the right way to model the growth of the Signatera units, just to take the trailing 4 quarters average for the sequential growth units. That was [ 19,500, ] I think, last quarter. And now I think if you do the math, including the Q4 number, I think it gets you to something like 20,000 units. I think that's a decent bar for evaluating in Q1. And then as you continue to grow, the reason why I like that approach is that it does update itself and it kind of gives effect to the compounding effect that we have in the business, given that it's a repeat volumes per patient. And so I think that base expectation will just kind of continue to grow. During the last 4 quarters average, just kind of smooth out any of the just the random solutions you'll have quarter-to-quarter in terms of number of days or weather, holidays or what have you. So I think that's right approach and keeps getting keeps getting higher and the business just keeps on performing better and better.

Okay. That's super. And then a quick follow-up on fetal focused product. I just want to understand your marketing approach today and your ability to take share in the market with an existing assay that is more of a single assay you have two assays here. So maybe just walk us through the patient workup conversation, marketing of this assay? And how do you think about share gain in this? And how should we think about the growth in overall women's held from that share gain this year?

Yes, I'll take that. I mean I think the real question is really do physicians like the product. And from what we're seeing is there's significant interest in the fetal focus test. I think we're hitting all the right marks. I mean we're seeing the volume really increase. And I think we're in a position to see that continue throughout the year. So from a marketing standpoint, our test works in a very similar way to other single-gene tests on the market from the standpoint of how it's ordered or what the flexibility is when you order. So you can decide either to order the upfront basically, if the mother is positive, then the fuel focused test will be run. And I think that's kind of comparable to how others do it? You have to sort of know the mother is positive before you can run the fetal test. And then I think separately, although I don't know exactly how others do it, so do you think separately, the other option is you can order the test send the blood and then wait and see if the mother is positive, and we can sort of reflex to it. So there's different approaches, but we offer all the different approaches. And I think it's -- we're flexible from the standpoint of how people want to access the test. But we're seeing a lot of uptick. If you look at the SMFM [indiscernible] presentation. Certainly, that's a prestigious collection, 1 that we're excited about. And I think that, that speaks to the strength of the data.

Your next question comes from the line of Dan Brennan with TD Cowen.

Maybe just on kind of saying on Signatera. Can you just give a little color as we exited 2025? I know there was a question on pan cancer. But just walk us through kind of tumor types kind of what you're seeing in the key drivers. And as we look into '26 for this continued kind of sequential growth in Signatera, like is -- are you seeing any -- obviously, IMVigors driving bladder, but across the landscape, like kind of what are you seeing on what's baked in? Just want to get a flavor of what's going on in the field.

Yes. So I guess when you're looking at sort of across different tumor types, there's a lot of different activity across the board. I mean if you just look at all the data that's come out over the last several years, you highlighted IMVigor. I mean, certainly, that's been driving a lot of momentum in bladder. I think this recent data that Alex mentioned at ASCO GU, looking at bladder preservation. I think it's going to generate a lot of excitement, but it's all the data that we generated historically now as physicians start to use the product, maybe they use it in one tumor type, they become comfortable with it. They like it. that they see data come out in another tumor type and they start using it in another tumor type or maybe they start within a tumor type, using it on one category of patients, they realize they like the data that's being generated and then they expand within that tumor type 2 another category. So all of that together, I think, is powering the growth. There's not one, it's not like there's one factor that's unlocking growth or that is going to really kind of change things. It's a big flywheel effect of having over 100 peer-reviewed papers, having a large commercial team, having a large medical affairs team and being present in many, many offices now seeing more than 50% of doctors ordering the product and then continuing to invest in new clinical trials and rounding out the product portfolio with signature genome and LATITUDE.

Okay. Great. Maybe just on one outside of Signatera. Mike, just in terms of the modeling for 2026 between women's health, and claims heard you say something in the prepared remarks about some seasonality in women's health. Can you just give us a bit more of a bridge on those businesses, and how we think about whether it be price volume, total revenue, anything to help with the model there?

Yes, sure. No. So I think that for the Prospera for the organ health products, I mean, I think they're going to just continue to grow kind of on a secular growth trend, right? So this was about a 50%-plus grower in '25, and I expect another year for Morgan Health this year. And that's really kind of driven by, I think, just the evolution of that market and the primacy that [ software DNA ] is continuing to exhibit in terms of caring for patients. For women's health, I mean, it's actually -- Steve mentioned, we're off to a great start. Q1 usually is our big quarter. I expect just to continue to grow volumes in the kind of mid-single-digit range for women's health. And I think you can do better than that. on revenues because there is, I think, used a squeeze in terms of achieving pricing gains as we've done in the last couple of years. Let me pause there. I don't know, Steve, if you want to compare and contrast, I don't know if you want to add to that?

No, I think that covers it.

Your next question comes from the line of Doug Schenkel with Wolf Research.

It's Doug. This is a, I think, follow-up maybe on Catherine's question earlier, and sorry, if I just misunderstood the answer. But on Signatera volume and mix, what was the breakdown between exome genome and LATITUDE in the fourth quarter? How are you thinking about mix in 2026? And how does that play into kind of upside and downside scenarios for gross margin? And then I guess sort of related, is it fair to assume that CRC will dip below 50% of total Signatera and LATITUDE for that matter, volume as indications like breast and lung continue to accelerate and gain further traction this year?

Yes. It's a good question. So I'd say on CRC, certainly, we think over time, things will sort of normalize to meet roughly kind of what you would see in the marketplace from the standpoint of cancer prevalence. I mean obviously, breast is going to be the largest over time. And so I think CRC will normalize, but still driving a good part of the volume at this point. We're already starting to see -- while CRC is growing, and we're maintaining our share there. Some of the other tumor types are really starting to accelerate. And I think that's great for us because we've spent the last years generating data in these other tumor categories. And now some of that data like this head and neck data is just coming out now for the first time, and we're in a position to capitalize on that. When you look at the mix of exome genome and the LATITUDE, I think the vast majority of volume is exome. We are seeing some interest in genome in certain physician offices and academic centers, and it's great that we can service that those that are interested in that. We've sort of built in an increase over time there, and that's part of our existing model. And then from a LATITUDE standpoint, I think the initial kind of idea there was there's a small portion of cases, maybe 5% or something in that range where we're not able to get the tissue in CRC. And in those cases, we can now serve those patients with LATITUDE, but there's also another opportunity, which is just the sort of physicians who just want tumor naive. And while we think the vast majority of people, and what we're seeing is the vast majority people are tumor informed, there is a subset that want tumor naive, and that's a growth opportunity that we haven't really pursued. And I think that's an opportunity for us as well as we move forward. Hopefully, that gives you a little bit more color.

Your next question comes from the line of Casey Woodring with JPMorgan.

Maybe the first one, curious if there's any meaningful contribution from lymphoma or multiple myeloma volumes embedded in the 2026 framework for Signatera. And just more broadly, how should we think about potential upside from heme MRD volumes?

Yes, it's a great question. So I'd say when you look at the model that we just sort of outlined, I would say the contribution is relatively limited, but we think, again, that's a big opportunity for us. If you look at the overall market, now the strength with bringing the Foresight team and just their experience and the amount of data that they that they generated there, the reputation that they have there. I think it's a big opportunity for us. So again, it's sort of conservative in the model, but when you look at the potential for upside there, I think that could really be one of the growth drivers.

Got it. That's helpful. And then maybe just another 1 follow-up for me. On Japan, I think you've said in the past you could see approval for Signatera there in '26 with preliminary coverage to set up a launch in '27. What would this preliminary coverage decision mean for Signatera ASPs and the volume opportunity next year? And curious if coverage would be capped until we see a full readout from Circulate Japan? And then any thoughts on the build out from a sales force perspective in Japan or lab capacity, and what that would mean for OpEx?

Yes. So I'll make a couple of comments and then maybe John or Salmon, if you guys want to jump in. But we've already built out a reasonable size sales team there and established a strong distribution partnership and we're in a position to launch very soon when we get the final approval. From an ASP standpoint, we think the ASP is going to be good. If you just look at sort of historical precedent. And I think we're in a great position. Obviously, we've generated some incredible data in Japan. The test is sort of already baked into the guidelines. So I think we're in a great position to generate a lot of volume and revenue as we look into 2027. I think throughout the calendar year '27 and finishing '27, Japan is going to be making a very, very solid impact on our revenue.

Yes. Just to build on what Steve said, there's more to similar amount of patients with colorectal cancer in Japan and the U.S. despite the smaller population when you look at similar molecular genetic products, you see pricing highly similar to the U.S. We do not need to wait for the end to circulate to launch or rather the readout you're referencing. We're in the final stages now with the regulatory authorities there and looking forward to a big launch later this year.

Your next question comes from the line of Subbu Nambi with Guggenheim.

This is Rickie on for Subbu. Wondering what you saw with respect to market share changes in the women's health market in 2025 and then what your guidance and some of the volume comments you made for women's health is assuming with respect to further market share gains.

Yes, it's a great question. So we don't really have data on what everybody else is doing in women's health. But I can say from -- for us, we had a record year we did very, very well in women's health, and we're off to a great start in Q1. And I think all of that was done really without having the 21-gene fetal focused test, which we now have. And we're seeing that physicians like it. And it's given us an opportunity to go close new customers that previously, we haven't had access to. And I think it's a good opportunity for us. So we don't really know exactly about others share, but I can say for us, we're growing our business, and we're seeing record numbers.

Your next question comes from the line of Dan Leonard with UBS.

I'm wondering how you're framing the opportunity around higher for Signatera. You now have a couple of shots to go there between Signatera genome, which you haven't talked about in a while and now the phase variant product as well. So just help me provide some better framing or context around what the opportunity looks like there.

Yes. So certainly, I think on today's call, we kind of mentioned the phased variant approach getting down below 1 part for 10 million in LOD studies. And we think that, that is like incredibly strong performance. If you look at, I think, the published analytical validations, I think that performs very, very well. The -- what we're doing is, we're trying to give the best product possible to positions and backing that with very strong data. And so we have the XRM MRD test, which works very, very well. We think has shown incredible performance when you look across the studies. Then for those who want genome-based test, we're making that available as well. We announced at JPMorgan that we're versioning the genome-based offering, and that's going to now include phased and structural variants, and that's going to be launching soon. So I think we really will have gold-plated MRD offering for those that want that. And then on the other hand, we have highly published, highly tested, reliable MRD product with significant numbers of outcomes data with the Signatera exome product. And that's setting up like an incredibly competitive positioning for us. And we've also -- obviously, that would be Latitude tumor-naive MRD. Now of course, there's competition, but we think we're in a good position, and we've put ourselves in a great spot by generating a lot of data and innovating and investing in research and development to continue to lead the pack.

Appreciate all that. And then just on the topic of SG&A, can you help me better understand how you're able to keep SG&A flat in 2026, yet still grow revenue, I think it was at a pro forma clip of 26%. What's making the sales force more efficient?

Yes. Mike, do you want to comment on that?

Sure. I mean I think it's just [indiscernible] I mean we wanted to grow way to the next level for ceratin getting closer to profitability not by making cuts by making investments and growing the top line. So we did that in [ space ] in '25, we built out the commercial teams really across the board with a particular concentration in oncology. Those teams are ready to go, and they are in a position to drive a lot more a lot more top line than they have today just because they've been new, and they're kind of -- they're coalescing. So I think it's a good case study in how we can drive leverage in the business. And not to say that we won't make -- like I said in the prepared remarks, we won't make opportunistic investments, not to say that things won't come up that we think are worthy uses of capital, but I think it underlines our kind of core strategy over time.

Your next question comes from the line of David Westenberg with Piper Sandler.

How should we think about -- how MolDX is going to think about histology types for Latitude. Basically, what I'm kind of asking here is how can you use your infrastructure and learning to kind of speed that precious and coverage? And how is ADLT going to work as you know you have a whole genome, LATITUDE, all those kind of things. Is there a way to tuck it in, or is it just completely different. There's no possible way? And how should we think about reimbursement periods?

Yes, that's a good question. So we think the -- we're not planning to submit an ADLT for LATITUDE just based on the fact that there's other tumor, not even more tests on the market, and there's other MRD tests. So we don't think tumor naive are eligible for an ADLT. And I think that we've kind of said that previously without getting FDA approval. But when we look at other tumor-naive MRD products, and how they've been priced, we think that, that's sort of well established, and we'll be able to kind of get similar pricing. So we submitted for CRC as we launch other products in the future, we're going to generate and published validation data for those and then submit for those as well. There's not really a shortcut process. You have to generate the data and publish it and submit it. And luckily for us, we started this back in 2015, trying to generate data. And so we have kind of 10 years now of data that we can rely on. And in some cases, we have biobanks or samples we can go back to and rerun when we're looking at the LATITUDE product. And I think that's going to help us get moving very [indiscernible].

A quick follow-up for Mike. How you're thinking about the ROI on some of these R&D investments. You mentioned on the call, technology advancement for MRD. Can you kind of just explain what that means? And are there any, in your mind, NCCN generating studies that could be coming out soon and tissue types other than CRC and muscle invasive batter cancer. Obviously, I don't mean soon, Mike, next 6 months, I got like 2 years, 3 years.

Yes. I mean kind of the basic components of how I think about returns to capital invested on R&D generally. I mean, Signatera is a great case study is just, hey, what is the TAM? And what is the potential for incremental both volume growth and pricing growth. And the R&D really hits on both of those metrics. I mean in terms of the volume growth, when you have you have a study that's in the New England Journal, that's like a LANDMARK study in most invasive bladder cancer, that drives a lot of incremental volume. Over time, we hope that it we also kind of drive kind of guideline inclusion. So the volumes at what is already a high-margin product, drive very clear ROICs. And then the data that ultimately gets you into guidelines drives the ASPs much higher than they are right now. So if you just recall, I mean, when we get paid, we get paid something like [ $3,000 ] per test the ASPs as we've been talking about are in that kind of [ $1,220 ] range, right? So the delta there is just kind of non-covered tests and the way that you get there is investment in more clinical trials, more evolution of the product. And you can get really comfortable with the ROCs because you see these volumes, right? Like these volumes are repeat volumes, you get very comfortable that we can have very rapid volume growth. So any investment that drives incremental realized pricing per test, it's easy to see where the ROCs come from there.

Your next question comes from the line of Daniel Markowitz with Evercore ISI.

Just 1 quick one on the OpEx guide. It's nice to see the operating leverage should really start to turn on in 2026. But it sounds like you're leaving yourself some freedom to spend should it make sense and you see an opportunity with the ability to fuel future growth. I guess, how do you define the threshold of what makes sense to spend on in excess of the guide? Because I'm sure there's no shortage of opportunities that could fuel future growth.

Yes. Look, I mean, it comes back to the question that David just asked. I mean it really just comes down to ROICs, I mean, whether that's a small acquisition like what we did with Foresight or internal projects. We take each project with kind of an ROIC framework. And I'm still the newcomer on the management team on the phone here. I mean, this is your [indiscernible] for me and all these other guys -- each one of these guys have been here longer than me. So we've got a very long time together evaluating all of these different opportunities and then trying to just rank each one and understand. There's a risk benefit, there's an execution challenge associated with each one, and we just try to make the right decision kind of based on what the right returns are and what's best for the patients.

And ladies and gentlemen, that's all the time we have today for questions. This does conclude today's conference call. Thank you for your participation, and you may now disconnect.

[indiscernible] Healthcare Conference. My name is Casey wording from Life Science Tools and Diagnostics team. Pleased to be joined by the management team of Natera. The company will go through their corporate presentation, then we'll do the Q&A session afterwards. So with that, I'll pass it to Steve.

Yes. Great. Thanks for having us. This is the standard safe harbor. So the mission of Natera is transforming the management of disease worldwide. And we do that with a proprietary technology that can detect extremely tiny quantities of DNA that combines molecular techniques with bioinformatics techniques that were developed at Natera. We first applied this technology in cell-free DNA in 2013 with Panorama which is a cell-free fetal DNA test that looks at chromosomal abnormalities. We were the fourth company to launch in a very competitive market. But today, we are, by far, the market leader with more than 50% market share. We took that same technology, and we applied that in the field of organ health, where we look at donor-derived cell-free DNA in the setting of an organ transplant to identify rejection non-invasively, a product there is called Prospera. And then, of course, in the field of oncology, where we look at circulating tumor DNA in the setting of minimal residual disease or recurrence monitoring and our product there is Signatera.

So we've been quite successful over the years, and we follow the same formula for success. Number one, we want to always have leading-edge technology and focus on constant innovation. The second is to be the leader in peer-reviewed published clinical data. The third is to have excellent customer patient experience. And then the fourth is to have broad and talented commercial teams.

So 2025 was a great year from us from a volume standpoint. We had a record year in women's health, in Organ Health and in oncology. We just released our Q4 numbers, and you can see we had 924,000 units in Q4, driven by incredibly strong growth, particularly in Signatera MRD. In Signatera, we were pleased to announce the fastest growth quarter ever in the history of the company. We had 22,800 growth units over the previous quarter for a total of a 22 -- excuse me, 225,000 clinical MRD tests in the quarter. We're super excited about the acceleration that we saw really pan-cancer across multiple different tumor types, and this is driven by very strong data readouts that we had in the second half of the year and just a continuation of the strategy that we've had throughout the course of the year.

Revenues were up 39% in Q4 over 2024 in a similar period with $660 million that was driven by very strong ASPs across the board and outperformance on volume, as I showed on the previous slide.

We also had record gross margins and very strong cash generation for the year. In fact, we actually had greater than $100 million in free cash flow generated throughout the course of 2025.

So I'm going to shift gears a little bit and talk about some of the innovation that is driving the growth or that may drive growth in the future. So first, in women's health, we recently announced the 21 gene single-gene NIPT test, which we call Fetal Focus. Now historically, with carrier screening for autosomal recessive diseases, you screen the mother. And if the mother is positive, you screen the father. And if the father is positive, then you get an amnio or CVS on the baby to find out the risk of severe genetic diseases.

Well, the challenge with that is sometimes the father is not available and you're not able to complete the screening module. So we developed a new test single-gene NIPT test called Fetal Focus that enables us to look at the cell-free fetal DNA directly to look at the severe autosomal recessive and X-linked disorders, things like cystic fibrosis. We think this is filling a major gap in clinical care, and we're seeing a lot of excitement around this product. So product leverages our ultrasensitive LinkedSNP technology. We're doing a broad assessment of over 21 genes. We think -- of 21 genes, we think this is today the largest panel that's available throughout the industry. We offer the test as a frontline offering, those that just want to order it upfront or as a reflex test where you can screen the mother and then attempt to get the father. The father is not available, you can order the reflex test.

And this is all based on a very robust clinical trial that we did called the EXPAND study. It's still ongoing, where we're collecting about 2,000 samples. And uniquely, we have genetic outcomes on all the positives and all the negatives in the study.

We recently reported a readout from the EXPAND trial where we had 96% sensitivity with 98% specificity across approximately 300 samples. And again, we have about 1,800 enrolled. To date, we're enrolling 2,000 samples overall, roughly. So really excited about this product. There's a very significant amount of interest in this category by physicians, and we've seen a lot of new closed customers in kind of the tail end of Q4 and leading in now into Q1 as a result of having this in the portfolio.

In oncology, we've also been innovating. So last year, we talked about launching tumor-naive MRD, and we also talked about launching a genome backbone for our Signatera tumor formed MRD test. And we did both of those. So we launched the LATITUDE tumor-naive MRD product in colorectal. That's actually results have just been accepted in a major publication, which should be out in the next couple of months, and then we'll be submitting for reimbursement there. We're also now expanding that to other tumor types as well. And with our genome test, we had a successful launch. We can get down to 1 part per million LOD, so extremely ultrasensitive and that had a great reception in the field. We've seen uptick there exactly as we thought we would.

But we're not done innovating. And we were excited with the recently announced acquisition of Foresight Diagnostics because this adds to the ultrasensitive strategy that we have in MRD. So Foresight has a unique technology that they call phased variants where there's 2 variants that are traveling on the same homolog. And this allows you to get really exquisite levels of sensitivity and limit of detection down to 1 part per 10 million. So I just announced previously with the standard genome testing and traditionally ultrasensitive tests, they're talking about 1 part per million, maybe 3 parts per million. Here, we're talking about 1 part per 10 million and an LOD95, that's been shown to be 3 parts per 10 million. So we're now in the process of incorporating this proprietary phase variant technology into the Signatera test. And in short order, probably late spring, early summer, we're going to be launching a new version of Signatera that incorporates phased variants and structural variants and increases the number of variants that we're tracking. Now we're still going to be taking our same tried and true multiplex PCR NGS method that does extremely deep sequencing, like roughly about 150,000x coverage at each of the variants that we detect because we think that, that's the best approach rather than doing thousands of different variants. But by incorporating phased and structural variants plus slightly increasing the number that we're tracking, we think we really have now a gold-plated MRD test that is really incredible. And I'm excited to be in a position to roll that out.

In addition, we also are able to now move into the lymphoma and hematologic cancer space with Foresight, and that's an exciting area where they've generated incredible data. They have Phase III clinical trials going, and we're excited to be partnered with them to move into that space.

So in addition, we think the next wave of innovation beyond ultrasensitivity will come from enhanced MRD. And we're excited this morning to announce an enhancement that we've been able to develop, which is based on AI and a foundation model that we built that looks at digital pathology that looks at the entire genome and exome sequence and transcriptome, where available, combines that with over 1 million longitudinal ctDNA time points and clinical records longitudinally collected all of these about 300 patients. We've taken all that together. We built a foundation model where now when we get a CTA sample, we can take the digital image, the MRD result, plug it into the model and get an augmented MRD score that actually can improve the overall precision of the risk score that's given.

Now we've generated statistically significant data that shows that this augmented model using AI and using our foundational model, can improve upon ctDNA alone, and we're in the process of submitting that to ASCO. So we think in the future, when you order MRD, we'll get all of this other information, digital pathology, would get your genome sequence from the tissue and from your germline. We pulled that into our model, and we can give you not just the ctDNA score back but also this unique AI-driven score that comes out of our foundation model. So we should be rolling that out roughly mid-year.

And this is really unique to Natera because to generate this type of model, you saw the partnership we announced with NVIDIA. To generate this type of data, you have to have -- or this type of power with the foundation model, you have to have millions of data points to input it. We have more early stage and adjuvant stage, tumor genome and exome sequencing and more longitudinal CTNA time points and clinical data than any other company has ever generated. So we're uniquely able to do this to improve upon augment traditional MRD testing.

Now we're also working on AI enablement in other areas. So one is to just use these foundation models to identify new prognostic and predictive signatures or in partnership with pharma companies to develop new actionable drug targets that they can go after. Another area that pharma is interested is real-time patient matching. As I said, we have all this early-stage data that nobody else has. It's a very different set than what other companies have. And since we announced our AI initiatives, we've seen really significant number of pharma companies that are interested in partnering with us and getting access to our unique data set and our unique capabilities.

Another area where we've built a moat and we're continuing to invest is in clinical data. So obviously, we had a very significant amount of clinical trials readout in 2025. And most notably, I think, was the IMvigor011 trial that was featured in the New England Journal of Medicine, focusing on muscle-invasive bladder cancer. But we have many other readouts as well. PALLAS, DARE, I-SPY, all in breast cancer, an area that we previously said, we've invested over $100 million in evidence generation in breast cancer.

We had the 702 study in colorectal cancer and a series of other trials that we just had so many readout. We can't list them all here. But we're not done. We're continuing to invest heavily into data generation and into new prospective clinical trials, both with consortium groups and pharma partners but also directly ourselves.

We've recently announced big trials in breast cancer, MiRaDoR, HEROES and the TEODOR study. And in fact, we have another major de-escalation trial in breast cancer that is to be announced. So we're upping our focus on breast cancer. We're investing another $100 million into clinical trial evidence development, specifically in breast cancer because we think that there's an important clinical unmet need there. So very significant investment. And then, of course, we just announced the STELLAR study in partnership with Exelixis in colorectal cancer.

Now we think this is a very exciting trial. It's a Phase III pivotal trial that's going to start in mid-2026, looking at their drug, zanza and resected Stage II and III colorectal cancer in patients that have completed their initial course of adjuvant chemotherapy but are still MRD positive. So we think this is a great opportunity to take a set of patients that are highly likely to recur and have an actionable therapeutic for them should the trial work out.

But what's exciting about this as well beyond just this particular study is that all the patients that are getting enrolled are clinical commercial Signatera patients. So because I think now pharma companies are realizing and they're saying MRD-positive patients is a great cohort for us to go after and to try to build new drugs to target into new clinical trials. We have all the MRD-positive patients at Natera. We know where they are. We generate them as part of our clinical testing business. So pharma companies are now coming to us saying, "Okay, we want to partner with you based on your clinical testing that you're doing to go after these MRD-positive patients and build clinical trials on top of that." So this is really just the beginning of this trend to come to Natera and do trials off of the commercial business. And we think this is a great opportunity. This treatment on molecular recurrence concept of patients that are either still MRD positive or are in remission and then become MRD positive is a very significant trend and area that we're seeing a lot of interest.

And then lastly, I'll just touch on our early cancer detection screening initiative. So we are excited to generate very strong colorectal cancer screening data in 2025 and then also solid data in advanced adenoma from the prospective PROCEED trial that we announced at the end of 2025. And in 2026, our goal is to complete enrollment in the FDA enabling FIND study. So we are well underway now enrolling. In fact, our run rate for enrollment right now is already 20,000 patients, and that's before we turn on a bunch of new sites and a bunch of new recruitment channels.

So we're super excited about the trajectory that we're on, actually ahead of schedule and we think we're going to be able to collect 35,000-plus patients this year, complete the enrollment and be in a position to submit to the FDA in mid-2027, which is our goal. We think this is a big driver of growth for Natera in the future, and we're excited about this opportunity.

So last, I want to finish with a series of milestones for 2026. First, we have mentioned we have submitted for expanded MolDX coverage. About 30% of the tests that we run today are in a category where they're not necessarily covered under Medicare. We said in December, we had submitted 7 additional MolDX submissions, and we think there's an opportunity to expand upon that as well. So that could be a big driver for us this year.

We're also working intensely to integrate the Foresight business. As I mentioned, we're going to be launching Signatera genome with phased variants and structural variants in mid-2026.

We're well underway working with Japan. We think we're going to have regulatory approval this year and be in a position to launch. We're expanding our tumor-naive LATITUDE test into other tumor types.

In women's health, we've launched the Fetal Focus test now with 21 genes. So we're seeing extreme interest there. We think that's going to be a great opportunity.

We plan on completing the enrollment for the FIND study in early cancer detection. And then in AI and partnerships, we announced our partnership with NVIDIA, which we think is great. We also are in a significant partnership with Ultima Genomics for launching new CLIA products and using their sequencing platforms. And we expect continued growth in ASPs and volume as one of the main drivers.

So with that, I think we'll conclude the presentation and open it up for Q&A.

All right. Great. Thank you. Thanks for that, Steve. So maybe I start, we guys preannounced a solid top line beat. Maybe walk us through the performance in the quarter across each segment relative to your initial expectations. And then digging into it, Signatera had another record quarter of sequential growth units. Maybe walk us through the drivers there. And is it fair to flow the strong performance into the 2026 outlook and assume quarterly growth units for Signatera are at the high end or slightly above that kind of 18,000-ish quarter-on-quarter average that you've seen in the last 4 quarters.

Yes. So we really saw 2025 as a whole was a record across all of the different areas that we do business. Women's Health, we saw significant growth. Organ Health, we saw significant growth. And then, of course, in oncology, we saw significant growth. So I think there was a time not too long ago where if we had grown 15,000 units quarter-over-quarter, everyone would have been going crazy. But I think now we've reset the bar for ourselves with a record Q3 where I think we grew like 21,000 units or something in that range. And now, again, in Q4, a new record in Signatera quarter-on-quarter growth.

We're seeing significant interest. I think the beginning part of December ahead of the holiday, we saw like just very strong weeks coming in both new patients and recurring patients. I think the the start of the year here, we're off to a great start as well. I just kind of been watching the numbers come in. So everything is setting up for an incredible growth trend as we go forward. We invested a lot in 2025 in adding salespeople, increasing histology specific medical directors and teams. And I think as we look into 2026, we're going to start to see some of that investment directly impact the unit growth. So we've got a lot going on. We also had some great data readouts, getting good feedback coming out of ASCO GI as well, which is always good. I think it's going to be another good year.

And you called out share gains in women's health as well as strong growth and significant interest in Fetal Focus. So maybe just walk us through the competitive dynamics seen in the quarter and how Fetal Focus contributed to growth from a volume perspective in 4Q?

Yes. So I think in women's health, we have been in a great position where we've had more than 50% market share we've been innovating. But one of the areas where I think there's an opportunity for us is in this field of single-gene NIPT. Now for a period of time, there's been maybe 1 company that was the only company that had a single gene NIPT test, and I think that helped them grow and take share. We still grew our share and had a great year, but of course, other companies that have this single-gene NIPT product also did well. But now we're in a position where we have single gene NIPT and that helps us both to defend from share losses from competitors that come in and try to take our business, but also to grow business from competitors that don't have a single gene NIPT offering.

And we're excited about our product. It's the largest panel that's available. We've done a thorough validation. The EXPAND trial, I think, is a very good clinical trial. We've got this unique LinkedSNP technology, and we're seeing record growth on a weekly basis coming in significant interest in the product line. I think it's going to be an opportunity for us to continue to grow and continue to take share.

You gave a lot of color on Foresight, but just walk us through Natera strategy in the lymphoma market, including which specific indications you're interested in targeting how that Foresight technology will enable this and what call points that Natera has in this part of the market already and then the competitive landscape there? And then lastly, beyond lymphoma, what is Natera's interest in the broader EM MRD market such as multiple myeloma?

Yes. So there was really two reasons why we were interested in partnering with Foresight. And the first was the phase variant technology and the intellectual property around phased variant technology we did a ton of research and we were in a lot of different experiments. We looked at 5,000 variant panels. We looked at all these different opportunities, and we determined that phase variants is the path to get the most sensitive assay in MRD. And after that, we began our discussions with Foresight, and we were able to acquiring the company and get access to the full set of intellectual property plus the proprietary technology. And now we're in the process of incorporating that into Signatera along with structural variants and that's going to be rolled out pan-cancer across every tumor type.

Now another reason why we pursued the company was for the lymphoma clinical opportunity and pharma opportunity. Foresight has developed a significant leadership position in DLBCL, non-Hodgkin's lymphoma, follicular lymphoma, and we thought that, that was an area where Natera, although we've had a small presence could be helped significantly by the acquisition.

Now that's not a small market. There's something like 70,000 new patients per year, which is maybe just slightly smaller than what we see with stage II and III colorectal cancer and to be able to just jump ahead and leapfrog several years by acquiring Foresight and partnering with them, we thought it was a great opportunity.

Now there's an opportunity to expand upon the list of indications that I just listed off. But so far, I think we're really excited about the DLBCL in non-Hodgkin's lymphoma opportunity and the work that they've done, and we're going to secure that and then go from there.

That's helpful. Maybe one on Signatera genome. You had some new data presented at San Antonio Breast from the international randomized Phase III PALLAS study. It looked like look, Palace looked at the use of MRD in post-surgical Stage 2 and HER positive and HER to breast cancer. Walk us through the main takeaways and early feedback from physicians there. How do you see this readout potentially translating to impact on volumes?

Yes, it's good. You guys do you want to take that, Alex? Actually, it could be a good one for you or so.

Yes, absolutely. Yes. So I think that was very large, probably one of the largest adjuvant studies that were run looking at palbociclib or Ibrance, would improve outcomes in early-stage breast cancer patients. Unfortunately, the study was negative in all comers. So a very similar story with the IMvigor011 study that we analyzed a few years ago. And this is the first of, I think, probably 2 or 3 presentations I will have on this data that looked at just the prognostic question. Can Signatera at the post-treatment postsurgical posttreatment time point on treatment and an end of treatment time point, predict which patients are at very, very high risk of recurrence? There's always been a question about any MRD technology this type of low shedding breast cancer. Is it sensitive enough, especially from a single time point to identify, and we usually say at least, I think around 50%, if not higher, of all the recurrence and I think for the first time, we have shown definitively that the answer is yes. So I think that really helps kind of move the field forward, and we're also looking forward now to the predictive data where we're going to actually ask the next logical question, well, in CT positive patients, do these individuals actually derive benefit from palbociclib while the ctDNA patients do not. And if that turns out also to be a positive finding, I think that's going to be another kind of big advancement in the field where we basically replicate the whole IMvigor010 story, but now in this much bigger market of HER-positive breast cancer.

And in terms of reimbursement, what's the process to get coverage with this new Foresight technology integrated into Signatera genome? Do you need to generate new data to submit some LDX for coverage?

Yes. So I think anytime you kind of work on a new assay, it's always important to be interacting with MolDx and kind of make sure that there's there, and we do that. And I think the relationship there has been positive when we have the data. The key is generating the data, and we're in a position to be able to generate data send it to them because we have so many studies that we've done, so many biobanks that we've done, and that's kind of the plan here.

Okay. Maybe moving to the STELLAR trial for treatment on molecular occurrence with Exelixis that you highlighted during the presentation. Maybe just talk a little bit about how the drug is being used in this trial and the potential pathway to read this out and submit to NCCN. Could this trial read out ahead of the other escalation trials like Modern and circulate U.S.? And could it be the next potential guideline submission?

Yes, it's a good question. Solomon, do you want to take that or.

Yes. I think, first of all, it's the trial is sponsored by Exelixis. So it's Terra's partnering on the trial, but it's not ours. We're not running it. I think what's important and exciting about this announcement is it signals where the field is going when Signatera becomes standard of care in clinical practice. So Exelixis rather than setting up a whole expensive screening arm to test 20 patients to find 1 positive to randomize into their trial, they're able to come to us, as Steve said, and pre-identify patients who already meet inclusion and exclusion criteria just based on their commercial MRD testing. And that's a big deal because it accelerates the operation of the trial, and it increases the probability of success for trial enrollment. On the flip side of that, it's this addresses a significant need for physicians and patients who have completed definitive chemotherapy in Stage II and III colorectal cancer. They're positive on Signatera they do a scan to look for some evidence of disease on a CT scan or a PET or an MRI. Hopefully, they found it and they can intervene. But if not, the doctor and the patient are saying, "Okay, what do we do next?? Now they can go on to this STELLAR316 trial, which is awesome for the patient. So it since Signatera is the only MRD assay that is allowed as part of the enrollment for the trial, we think that also makes physicians more comfortable to come in off the sidelines if they haven't been using Signatera in this way. and to adapt it clinically. So there's a really strong network effect here, and we expect more trials like this in the future.

Investors appreciate the size of the MRD market and how early it is in terms of penetration with Natera currently running the vast majority of tests as of now. Maybe just walk us through how you see Natera's market share evolving over time. In therapy selection, for example, there isn't just 1 player with 90% share, but maybe MRD is different. So where shower shouldn't we draw parallels to therapy selection, maybe as a proxy for the evolution of market share in MRD?

Yes. I think that's a good question. I mean we are focusing now on penetrating the market as deeply as possible and then making our tests and our offering unique and I think that's the right approach. And you do that by constantly innovating. So you saw 2 years ago, we had exome 16. Now we have exome 16, we have genome. We just announced phase and structural variants. We launched tumor naive MRD. We're expanding tumor-naive MRD. So we're innovating, we're spending a lot on R&D.

You also do that by generating a lot of peer-reviewed evidence where we now have, I think, over 100-something peer-reviewed publications and interventional trials, FDA enabling trials. And that really sets you apart. And so there's other areas where you can look like, for example, with RNA expression profiling where there's been 1 player that got 95% market share, and they've been able to maintain 95% market share by doing the big clinical trials by generating the data and by having their first-mover advantage. And I think we're hoping to follow that path, and we're trying to do all the right things and make all the right investments to maintain significant share down the road. And so far, I mean, we launched in 2019, here we are 7 years later, and I think we're still in an excellent position.

That's helpful. Maybe shifting to early cancer detection. Natera has made meaningful strides here in 2025, including releasing multiple data sets and initiating enrollment for the FDA enabling find CRC trial. With so much going right for Signatera and MRD, maybe walk us through why early cancer detection is worth pursuing, including running a large outcomes trial, which requires meaningful investment?

Yes, it's a good question. So MRD is extremely underpenetrated right now. We think it's low single-digit penetration, and we're investing heavily there. But we've also built capabilities to develop technology that we think can solve some of the biggest problems like, for example, early cancer detection. And our technology is working incredibly well in our initial studies and in the PROCEED prospective trial. And so us to be able to run the FIND study and bring this to market, I think, is well within the scope of what Natera is capable of doing, and we think it can have a big impact on patients. We think it's a huge TAM, some, say, maybe $50 billion or $30 billion. So it's definitely worth pursuing both for the impact we can have on patients. but also for the overall financial impact on the company.

And the FIND trial is already well within our budget. It's already built into our budget for 2026. And we generated $100 million in cash last year. We -- on our balance sheet, we're in a great position. So we think it's worth us pursuing.

Maybe as a follow-up, Natera released encouraging data on advanced adenoma sensitivity for your test as shown in the PROCEED-CRC trial. Historically, we've seen some degradation in test performance when moving from case-control smaller scale studies to full FDA trials. Maybe walk us through your view on why this degradation, particularly in AAA sensitivity has occurred historically? And what is Natera doing to mitigate this in the fine CRC study?

Alex, why don't you take that?

Yes, absolutely. So I think this is something we've been kind of paying attention to now for a few years. And again, I can't speculate for other studies, but I think there's been concern that certain case control studies, selected advanced adenomas from a different set than normal controls, advanced adenomas might have been symptomatic. And all of that can create some bias where it's a little bit easier to detect those lesions. I think when we set out to kind of really develop and validate our assets, first of all, we said, hey, we have some time, what can we do to really optimize the technology upfront. So we did extensive discovery. I think we also have the ability test samples that had gold standard Signatera results. So if you're detecting a signal, you can verify it's correct because you do have that match Signatera. And then also, I think we were able to optimize the and when we went to actually start clinically validate the assays performance, we said, "Well, let's make sure we use samples that as closely represent the FDA enabling study as possible. So PROCEED is really actually the same exact study. It's the same centers. It's using the same enrollment criteria using the same vendors for sample storage and processing. And I think because of that, we are really confident that we are really testing an average risk population that is as representative of the FIND study as possible, and I think that's when we see those results. I think that we are encouraged that at least we're taking all the right steps to minimize the risk of degradation. Obviously, we can't predict the future, but at least that's been our kind of strategy from the very beginning.

Helpful. Maybe just one on the model, maybe you can loop in mic here. 2025 was a significant investment year for Natera with commercial team expansion, new product launches, meaningful data generation. You pointed to a preliminary framework of 10% year-on-year OpEx growth in 2026 weighted towards R&D maybe walk us through the long-term framework for operating margins and how investors should think about operating leverage in the business.

Yes. No, thanks for the question. I mean I think the general framework is that we're just going to grow into profitability. as the top line matures. So in order to grow that top line, you've got to have the infrastructure in place just a little bit ahead of time. That's exactly the process that we undertook to go from being a cash burning enterprise and now one that consistently generates cash. So I'll just remind you, going back to 2022, we got to a point where we were burning about $100 million per quarter, and we set out a target to get to cash flow breakeven within a couple of years, and we hit that target exactly. If you look at our operating expenses back then as compared to now, in absolute dollars, the OpEx is much bigger now than it was when we were burning cash. The difference is that the top line, the revenue line is just more mature. We're further along in the commercialization and reimbursement for Signatera. And we still have miles to go on that front while the OpEx line in terms of the operations are getting much more mature. We've got a fully mature revenue cycle operation team now that can actually get leaner going into the future. Same to be said for kind of more broadly on Signatera operations and just clinical, commercial kind of operations in general.

On the commercial front, just in terms of our sales rep accounts, we had to make a very meaningful investment in getting just getting our sales our commercial operation to scale with other players over the last year, where previously we've been subscale. And from here, there's not really an obvious need to kind of double that team again, right? Meanwhile, the revenues absolutely can do that kind of doubling. So I think we'll just kind of naturally kind of grow into, first, EBITDA profitability and then EPS profitability.

Okay. Maybe we have 1 more minute here. Just on the Signatera ASP front, you pointed the Signatera ASP stepping up $50 in '26 to maybe exit the year somewhere in the $1,250 range. There are a few moving pieces to that. You have a headwind from the ADLT rate resetting, offset by biomarker bills and closing the gap for Medicare Advantage and covered tumor types. So can you just walk through the puts and takes and the drivers to get to that net $50 increase?

Yes. I mean, sinter ASPs were again positive in Q4. And I'll just note, just on the presentation, all the results for Q4 were preliminary, and we'll have final numbers when we file the 10-K. But I expect ASPs to be positive in Q4, growth in Q4 over Q3. I expect to have growth in Signatera ASPs in 2026 over 2025. You mentioned some of the puts and takes. You have some ADLT modest headwind, but you've got a lot of positive drivers as well.

I mean Steve made reference to the huge amount of effort we've put into getting Medicare reimbursement for a much broader swath of tumor types. So that's kind of #1 on my list. You've got the biomarker state laws, which will continue to be a tailwind.

And then the other piece I'd say is we still have just kind of generalized execution where we can just get just actually get reimbursed for covered test kind of across the portfolio. So I think Q4 is indicative of what we can see through '26, and I expect that to be a modest improvement in ASPs from here.

All right. Well, looks like we're at time. We'll have to leave it at that. Thank you to the Natera management team for joining us. Thank you for everybody for joining us here. Enjoy the rest of the conference.

Great. Thank you.

Thank you.

All right. So last run of the day. I'm Doug Schenkel. I lead Wolfe's life science tools and diagnostics effort. It is my pleasure to have Mike Brophy of Natera with us. Mike, thanks for making the trip.

Yes. Thanks for having me here.

We really appreciate it. So Natera is a leading diagnostic company focused on leveraging cell-free DNA technology across prenatal testing. And more in focus these days is the market leader, a pioneer in really advancing the field of minimal residual disease testing or MRD. So again, thanks for being here, Mike.

Yes. No, thanks for having me.

Lots to cover. I know we won't get through all of it. And between the 2 of us, we have a hard time doing that. But I think it's a good problem to have in the case of Natera because there's so many great things going on right now. I thought we would spend a few minutes just doing kind of a state of the company to kick off. Then I do want to spend no surprise, a bit of time talking about where we are in MRD in terms of market penetration, competitive dynamics and some reimbursement developments fairly recently.

And then a more recent announcement, really leaning in more on early cancer detection. I think it makes sense to spend a little bit of time there.

Okay.

So state of the company, let's talk about Q3. It feels like it was a while ago, but I think you reported 2 weeks ago. It was another outstanding quarter. You beat revenue expectations by $25 million, excluding true-ups. You increased full year guidance. I think it was by $160 million. You're now tracking to 30% growth on a $1 million -- sorry, multibillion-dollar base. What have been the biggest surprises that have driven upside to targets this year?

Well, I think that the -- look, the -- I guess I'll start with just the ramp of Signatera has been transformational. I think for the space and for patients and for increasingly just the way that cancer patients are cared for the United States, Signatera is becoming much, much more the standard. If you go around to some of these academic conferences, just walking around, I think it's much more sort of the median presumption that cell-free DNA ought to be getting deployed in helping to guide a patient's cancer journey. And that's totally different than it was even 18 months, 2 years ago. So that's a real credit to the team. And I think that's a function of all the data that we've delivered and the receptivity from the oncologists and from the patients because there's a couple of things.

I mean, this fits in perfectly into their kind of existing clinical workflows and the clinical utility is just immediately apparent, whether you're trying to figure out -- like there's so many kind of known inefficiencies around the way that people get treated for cancer because we just don't know, for example, would you have a surgery, you have a tumor removed, like, hey, should you go right to chemotherapy or should you watch and wait or should you escalate? Like there's so many of these little micro decisions that oncologists have to make in partnership with their patients all the time to like have this tool that just informs that better, saves the system a ton of waste and it makes for a much better experience and better outcomes for patients. It's just fundamentally because that works so well, we've just seen a massive ramp in the utilization of the product.

More generally, I could tell you that same story in women's health and organ health. Just rewinding 10 years ago, I'd be amazed to be telling you now that something like 80% of women get an NIPT in the United States, they ought to, right? It's just so easy to do and it's so much better than what went before it.

But it's nonetheless heartening to see that market continue to mature. Organ health is in the middle of this curve where you're seeing this kind of rapid, I think, changeover from a previous like total reliance on pretty invasive biopsies toward -- and we're not there yet. We're sort of in the transition phase toward kind of just having cell-free DNA just be the tool that helps you kind of monitor how a patient is doing post-transplant. And then in chronic kidney disease, there's just -- there's a huge chunk of people who have chronic kidney disease because of a pathogenic variant that they've inherited. And you treat these people differently if you just know that information. So that's like now in the guidelines to be part of the workup. So kind of across the board, it's kind of the same story is, hey, we're solving these important problems for the patients and the physicians. It's fitting -- these products make sense for them to use and so they're just using them. And so that's happening pretty organically.

As part of the function of taking costs out of the system, we've had a better and better time of it in terms of just getting paid for tests when they are covered by insurance. And that's been a huge change for us even over the last couple of years. We made a massive investment in our own team, which was a little bit frightening to do because you kind of have to do these things kind of upfront and then hope that it works. And the way that we have historically allocated capital of Natera is that we wait to see what's working and then we feed it capital to kind of keep it going. This was like, hey, you got to like build a pretty good team and then see if they can -- if we can get paid on covered services more frequently, and we certainly have. And so the revenue growth in the women's health business has been outstanding this year.

So when you have a large business where we have a very strong position and then the revenues are really ramping just because the fraction of time you're getting paid is increasing, that sets you up to really blow through targets and exceed expectations. And so that's kind of what's happened this year. I think we're really set up to continue to do that in '26.

I do want to talk about some of the other products, but Signatera specifically. You did outline a long-term framework for Signatera to grow to $5 billion in annual sales, gross margins approaching 70% with healthy EBIT margins. How would you describe line of sight to that as we sit here today versus 6 months ago?

Yes. And I'm not trying to spin you guys on a particular number for Signatera revenues. I mean I think that the investment community has very good visibility and people can -- are welcome to disagree. I'm just saying, look, like how big is the addressable market.

Somewhere between 15% to 30%.

No, I mean it's something like -- I mean, I've seen thoughtful estimates in that range. And then what share should we have of that over time at maturity? Like I just don't think it's -- I don't think it's unreasonable to think that the Signatera revenues ought to be something in that zone, $5 million, $8 million, is it more? The point is that when we're making decisions right now about what to build and what to do, that's a big target, and we ought to be doing those things to build. And so I think that's important context for investors. Just -- the main thing I want to do when I come to conferences like this or we talk on the earnings call, I just want you guys to just sit next to Steve and me as we're kind of allocating capital inside the business, like what are we seeing? Like what kind of -- what's the decision-making framework?

And the decision-making framework for Signatera is, hey, we're going to do something like a little less than $1 billion in revenue in oncology this year, and this ought to be 5x, 8x, 10x that. So there ought to be a huge number of just -- we ought to be hair on fire with obvious things to do and we are in that zone, and that's very much our mindset right now.

You've talked about OpEx growing slower than revenue while still investing in MRD studies and now moving a bit more aggressively, investing in early cancer detection. There's more commercial expansion to be done. How should we think about how you're balancing the opportunity versus OpEx?

Well, look, I think like the philosophy is very similar to the philosophy that we've had here, which is that we would like to just do the right things in terms of make the investment to do top-notch R&D, top-notch clinical trials, have an excellent user experience and then have that be so successful that we grow into that infrastructure. So we've done that multiple times over the life cycle of this company over the last 10 years. One recent case study is, I think, like middle of 2022, we had a quarter where we burned about $100 million in cash in the quarter.

And that was not a good time in the market to be burning so much cash. And so there were some very polite but persistent enquiries like, hey, guys, what exactly is the plan? And we said, look, like we're going to grow into this. We'll get to cash flow breakeven by middle of '24, and then we expect to be kind of sustainably generating cash flow thereafter. If you look at the level, just absolute dollars of R&D and OpEx that we had in the middle of '22 and compared it to the last quarter, much, much bigger now. I mean we've massively expanded the R&D effort, massively expanded the commercial operation, the user experience operation since then, and yet we now sustainably generate cash. So I think it's really the same story as you kind of progress toward EBIT and then EPS is that there are kind of natural sort of limits to what one needs to do in terms of having a commercial operation, in terms of having a user experience operation.

R&D, I think, is a little different. I mean I think there are kind of -- the amazing thing about Signatera is -- I mean this is like the thing people -- I've said this before, but it's a little bit like Star Trek. I mean there's always another planet, like there's always another important clinical trial that you could be doing.

And we're going to do them. But I think that when you think about an OpEx base that's kind of approaching $2 billion and we say, hey, it's going to grow 10%. There's some industrial logic around like 10% on that's an incremental $200 million. one can get a lot done with those dollars. And the way that, that works for us in terms of an overall P&L is the math we've already gone through. I mean the revenues can grow much more quickly than that.

Q3 was another record quarter for Signatera clinical volume. As we sit here today, like would you be willing to at least kind of ballpark where you are in terms of penetration in your largest tumor types?

Yes. I mean I think -- so I think breast cancer and some of the -- basically all the tumor types, we're basically nowhere in terms of -- I mean, we have so much room to run that's not really even worth considering. I think what we should do like colorectal cancer, we should just do that one just to give you an example of kind of the most penetrated one. And again, guys, I'm not trying to get you to agree with me on like a specific market size, like I'm happy to have different ways to cut this. But there's something like 200,000 people every year in the United States get diagnosed with colorectal cancer. Now you've got to make a decision around like, okay, what fraction of those people are relevant for Signatera use let's say, it's 125,000, again, different estimates, your mileage may vary on that. Then you need to say, look, this is a repeat monitoring test. And so what is sort of the annual testing volume as a TAM? I'd like to -- I do times 10. That sort of comports with the idea that people get about 10 of these tests over the course of their cancer journey over 5 years.

But also if you think about multiple vintages, multiple class years of patients that are starting with us, that kind of creates this waterfall effect. And once you're kind of in the year 5, like we are now, if the rows are the patients and the columns are the years, you can kind of sum the columns and you kind of get to kind of on average, kind of 10 tests per patient, if you will. And so I kind of do times 10 as an annual -- to get to an annual testing volume TAM and also like I can multiply by 10, and that makes life a little easier for me. So if it's 1.25 million tests as an annual opportunity just in the United States. Colorectal cancer is about half of our volume, okay? So we did about 200,000 clinical units in the quarter, it's 100,000. So we're run rating about 400,000 units. I mean, so that's 400,000 on 1.25 million. And in my experience, just having been exec in the space for a long time, that's -- you might as well have -- you have the infinite headroom at that point.

I mean there's just nothing that you'll do that where you're running into the top of the market when you're that underpenetrated. NIPT, as I mentioned, is probably 80% penetrated. And you do see some of that. I mean you do see some of those dynamics where like everyone is getting an NIPT that's going to get one, you feel like sometimes. And then sometimes there's growth opportunities. But colorectal cancer, there's plenty of room to run. To say nothing of the fact that we're going to -- we're hoping to launch in Japan in 2027, which would effectively double the annual volume TAM available to us. So lots of room to run.

Yes. Should we be spending more time on the Japan opportunity? Not -- I mean, I don't mean here, but just as we update our models and think about the long-term.

Maybe. I mean I think that it's one of these things where we've never launched in Japan or we haven't had like a major launch like that in a different country. We're working with the Japanese FDA right now, and that's been a very good collaboration so far. I'd hope to get -- hope that we can get FDA approval from Japan sometime in '26 and then queue up and get the coverage, at least for a preliminary coverage decision into '26 and then a launch in '27. And so it's interesting to see which -- among investors, who has a time horizon that can accommodate that. And I'm kind of have -- I don't -- I passed no judgment on that.

I do think it's an interesting opportunity in terms of further fulfilling the mission of the company. I mean the point is if you solve these big important problems, then the reimbursement and the volumes, they tend to take care of themselves if you're solving the super important problem. And this is a very important problem in Japan. Colorectal cancer is a very common disease. The Japanese key opinion leaders and just the health system in Japan has been very on top of it in terms of being forward leaning in terms of running these amazing prospective clinical trials. A lot of our outcomes data is Japanese data because the system in Japan is so well disposed to innovation, okay? So I think it's a very favorable situation for us to help a lot of people. And then when you're doing that, like I said, I mean, the revenues and the volumes ought to flow.

Obviously, and you just put it well, the focus of the company is trying to solve a big problem and lead to better clinical outcomes. As I look at the menu of products you're offering, there's base Signatera. There's whole genome Signatera. There's now Latitude, which is tumor agnostic. From a strategic standpoint, again, you're trying to solve everybody's problems. Is there also from a business standpoint, the idea that you've built this infrastructure, you've built thought leadership, you own this market right now have a solution for everybody at this point and competitively don't leave a lot of room for others to maneuver where you can't go.

Well, we certainly don't. I mean, I wouldn't characterize us as owning any market. I mean this is a huge, huge problem that a lot of companies are going to be -- a lot of smart companies are going to be deploying a lot of effort to help solve. And that's a good thing. I mean that's kind of how things are supposed to work, and we kind of welcome that. We welcome the pressure of having to be as good as some of these other really sharp groups. And so there's a lot of room to run there.

In terms of the different kind of the portfolio, I think that for the vast majority of physicians, I mean, they're kind of ordering Signatera and they're very focused on like what is the clinical trial data for Signatera. I think investors are -- tend to be more focused on like the components of like is it a genome backbone or is it an exome backbone? And that's because there's publicly traded companies that contribute to those things. Like there's not really like a bunch of different companies to invest in for PCR primer manufacturing. And so I get fewer questions about like what upgrades are you doing -- are you making to the PCR primer design. But those things matter for performance as much or more than like exome or genome backbone. And so the pricing is the exact same. It's -- people are ordering Signatera.

So I think there's like kind of -- it's much more of a blend from the perspective of the patient and the physician than it is for the investors, and that's fine. But I think that's worth you knowing because that has implications for how these things grow. I think Latitude is a little different just because I think there has been kind of now kind of a fairly broad understanding that if you can do it, you'd rather have a tumor-informed assay. I mean there's just such an advantage. Yes. I mean that's such an advantage to know that information, like shouldn't we leverage that information to deliver a better product? We should. So historically, the question was, well, can we do it? Like how often can we do it? And the answer is we can almost always do it. Like we can almost -- yes, it's a huge chasm to cross to kind of build the infrastructure to make that a reliable service, but we've done that now. It's very painful to do, but we've crossed it. So now people can just have a tumor-informed assay.

But not every time, and it becomes an important problem if you will get an FFPE block in for a patient and then we get the block and there's no tissue in that block. Well, that's a hard problem for us to solve. Like I can't like -- but it's still disappointing to report back to the patient and the doctor, hey, like there was no tissue in this block, like we can't build you a test. So to have Latitude there as a reflex, you say like, look, like if we don't -- if we -- for whatever reason, if we can't get access to tissue on the time line that you need it, we'll just reflex to Latitude. But our promise you is that we're going to keep trying. And like for the second one, we'll try again. Hopefully, we can get you on to the tumor-informed platform. So I think Latitude is a different conversation and that it kind of does solve this incremental problem, and that's useful to the patients and the physicians.

Using that framework, any guess as to how much Latitude could account for as a percentage of volume long-term?

Well, you see like in the Q3 results, it is tiny, right? I mean it's a few hundred units on like 200,000 total, which wasn't surprising to me. It's hard to know exactly like what the uptake would be if there are certain use cases where it's particularly relevant. I'd be reluctant to hazard a guess other than to say like -- I mean, I think one thing that we've learned is I do think the vast majority of patients over time will get a tumor-informed assay just because it just makes sense and it is achievable. So we'll do it.

I think Signatera genome reimbursement is a little more straightforward Latitude, what comes next there?

Yes, we'll just -- we'll get the coverage. There's already a player that has tumor-naive coverage, and we'll just -- the same pathway, I would anticipate sort of the same pricing, that type of thing.

A few loose ends. MolDx, I think you've talked about, is it 7 MolDx submissions by year-end. Is that right?

Well, we've got them queued up and we're -- I don't know if like they all get in by the end of December or what have you. So we're -- but there's a lot -- the point is that we have data and we've got kind of submissions in flight ready to either in flight already submitted or submitting, we're in that process.

What percentage of current CMS volume will those cover?

Well, something like very roughly something like 30% or so of our volume that comes in from Medicare patients come to us from -- like they have a cancer type that we haven't yet been able to go to MolDX with and actually get coverage for. And so that's disappointing for us. I mean, we've done a lot of work, and we've got the data in order to merit generating the volumes, and we just haven't been able to complete that step with MolDX. So that ends up being -- that's an opportunity for us, right? I mean, because I think we've shown you that we know how to engage with the Medicare program. We can show high-quality results.

The results we've shown in the clinical trials across tumor types has been remarkably uniform. I mean it's very similar types of performance almost regardless of the cancer type. And so we're just going to work with them and get those submitted. Bad news is that they haven't already been submitted. Good news is that, that represents kind of an incremental upside opportunity for us in terms of ASPs.

So more coverage across the Medicare population. I guess, sort of related, sort of overlapping, but not completely biomarker bills. I think we're up to somewhere between 20 to 25 states right now that have biomarkers bills in place. Are you starting to see any increase in coverage as a result of biomarker bills?

Yes. And these things work kind of in conjunction with one another, right? So like the more Medicare reimbursement you have, the more volumes are relevant for biomarker reimbursement because the biomarker.

You cleaned up for me there.

Yes. Yes. So it's a thing. I mean that's why getting the submissions to Medicare are important because they do have this kind of amplifying effect with our biomarker bill effort. I think I said on the Q3 call, I think on the $1,200 ASP stack, I mean, probably $25 of that, one could attribute to the biomarker states. So there's some judgment in there. I mean it's not -- I mean, I'm kind of -- I'm making an estimate there, but I think $25 is probably fair. That's about where I hope to be. I mean if you can go back and look -- listen like Q3 call like last year, I mean, I think I said $25 or so. That's kind of where we've landed so far. That will be sort of a thing that we grind on with payers. We have a good history over time as a very high-volume lab now of being -- having kind of a collaborative ongoing relationship with a huge swath of the big payers in the United States.

And we got to go to them, and we've just got to point out to them that, hey, this is a patient that's in a state with a biomarker law. They have a cancer type that's covered by Medicare. We have duly provided the service that's valuable to them and to you. We think that you've incurred an obligation to cover this patient. And then that's a dialogue with the payer oftentimes, it's around logistics, it's around like, hey, like the payer doesn't necessarily have the systems to be able to proactively kind of understand which patient should be covered and which should not and what can we do to make that easy on them. And that's the thing that will take 6 months of a dialogue. And then once you get it fixed, then you tend to get coverage from that payer.

So positives, more MolDx submissions, broader reimbursement within Medicare or that population, triggers more biomarker bill activity, which gets you reimbursed more broadly. The thing with biomarker bills, though, is they don't typically -- they mean coverage, they don't tell you a rate. So the reason I bring this up is, do we need to be conscious of the fact that like while there are some positives, at some point, there may be adjustments to the ADLT rate.

Well, look, so there's -- there's a -- this is how -- this is kind of the rubber meets the road on this dynamic. So a lot of Medicare patients receive their Medicare benefit from a commercial payer. Like if you're over 65, you can choose to have just your Medicare benefit administered by the federal government. So you have like Medicare fee-for-service in the parlance. Or maybe you get your Medicare benefit from UnitedHealthcare. And for a lot of payers, that's a very important part of their business is they're just -- they're a service provider on behalf of Medicare and they deliver the health care benefit for these Medicare recipients, okay? That means that when I get Medicare coverage, it's incumbent upon me to not just contract with Medicare fee-for-service as a program, I got to go around to all these commercial payers, and I got to get a contracted rate for Signatera. That's largely done.

I mean most of the big volume payers, I already have -- I mean, I've been in network with all of them for a decade because we've been a big lab forever. So we just call up the relevant people at a big payer and we negotiate a rate for Signatera. If you look at my in-network contract for Cigna, Aetna United and any of these big payers, like Page 4 of that contract is like a list of all of my products, NIPT, carrier screening, Signatera is on there. And then there's a negotiated rate, okay? And so when the coverage changes, like when their coverage expands, we've already done the logistics with the business team with these payers to have a contracted rate.

So like if you're some Blues plan in a biomarker state, you're already -- like we already have a contracted rate with you for Signatera and you're already paying me on the Medicare Advantage patients that you see that you cover. But now I'm just coming to you with another patient that ought to be treated just like the MA patients are treated. So there's not this need to go back and like redo rates or things that redo contracts. I mean the contracts are kind of already locked in there.

And bigger 011 showed that Signatera guided use of adjuvant [ atezolizumab ] can drive a very meaningful improvement in disease-free survival in overall survival. Should we think this could be a trigger to NCCN guidelines inclusion?

Yes, we'll have to see. I mean I think that the -- so I think the study -- the broad consensus is that the study was very successful. The study was powered for disease-free survival, and we were able to generate an overall survival signal really early on. So that's just -- that's a smashing success. That's why the study is actually published in the New England Journal. This is really -- this is kind of groundbreaking data. So it's very likely that Roche and Genentech will be able to use this data to support an FDA approval, okay?

So what typically happens when you have a new drug approval is that the relevant guideline committee for that cancer type will convene and they'll just update the guideline to just incorporate, hey, there's a new on-label drug in this indication, and this is how it can be incorporated into the standard of care. I would presume that given that Signatera will be in the label for atezo in this use case, that there'll be some reference to that this has to be cell-free DNA enabled in order to order this on label for bladder cancer.

And then -- so I think that process is sometime over the next year, I would expect those things to happen. I would just -- bladder cancer is overwhelmingly the bladder -- muscle invasive bladder cancer patients are Medicare patients. So it's very important to us to have this data. I think that it confers kind of a halo effect across the entire franchise. I think it does is a very strong argument to be using Signatera in the management of your bladder cancer patients, particularly your muscle invasive bladder cancer patients. And then, yes, I think the guidelines are another one of many kind of steps that we've had here to further validate the effort.

We're about out of time. I have 3, I think, important questions.

Speed round. Let's go. Let's go fast. That's you too. You got to come on. Let's go, let's go fast.

All right. You're making me nervous. So early cancer detection. Is it fair to say, one, you wouldn't move into this if you thought it was going to be a me-too product. And two, you feel like the biggest way you can differentiate is leveraging the samples you have in CRC, which nobody else has access to.

Well, look, I mean, back to the important problems, right? I mean there's 40 million people in the United States that should be getting screened for colorectal cancer that are just not doing anything, okay? I'm 46. I had a colonoscopy this year, probably only because I work in a company where I'm so constantly exposed to people who are of my age to have colorectal cancer. So I wouldn't got it. Otherwise, I mean, I have other things to do, and it was a huge -- it was like a 3-day ordeal. So I'm much more sympathetic to people who are not getting screened than I was when I was like 35. I was like, of course, you should get screened. Well, it's not that easy, right? You got to take 3 days off of work. And that's an amazing luxury that I have.

I can just reschedule my Friday calls to Monday. Not everyone can do that. I mean, so it's a very important problem. I think the data that we showed on a preliminary basis was extremely promising. okay? That -- why do we even bother running interim data? A couple of things. I mean we want to understand before we undertake a very -- a big investment in a large FDA-enabling study. We want to know internally, we want to have some good confidence that we have a shot for this thing to work, okay? The data read out beautifully. Does that mean that it's a guarantee that the FDA-enabling study will read out in the same exact way as the interim study? No, it's not a guarantee. I mean that's why one has to run the bigger study, but it's certainly good enough for us to feel very confident in going forward on this and making the right investments to take our shot at solving this problem.

There's not going to be that many companies that are in this space, okay? I had previously thought maybe there'd be 6 or 7 of these players. It turns out it's very hard to run that study. It's very hard to run a blood test that actually reliably catches does this job in terms of screening this population without throwing off too many false positive. It's a hard problem. So I think the paucity of companies that can solve the problem and the preliminary performance that we put up, combined with our history of doing a good job in getting these important solutions to patients, I think, sets us up very well to solve this -- helps solve this huge problem. And it won't be just us, but we can be a big part of the solution.

$30 million to $50 million incremental spend, something like that.

It's more than that. I mean it's going to be more than that.

More than that.

Yes. Just the trial itself is going to be more expensive than that. Again, happy to do it because just in terms of just the capital allocation, I mean, hopefully, you guys -- when you heard us kind of step through the results, you can at least -- you don't have to agree with us, but you can at least see what the thinking is as to why that is a useful -- that's the ROICs there out to pencil out. I mean that's worth us taking a shot on.

Last one, not doing justice to your other great businesses in prenatal and organ health. But certainly, from an opportunity and competitive standpoint, it sounds -- competitive dynamic standpoint, it sounds like you feel as good as ever.

Yes. I mean there's -- as always, there's just a flow of great companies that are in there competing and coming up with new ideas, and I love it. I really do. And it makes us -- it forces us to be better all the time.

Like Fetal Focus.

Well, I mean, I think that's one example. I think like there's a lot of innovation going on in organ transplant, for example. I've been very pleased with the -- just the drumbeat of new features and new data sets that we've just continually published in both of these areas. I mean the heart data that we were able to publish in organ transplant, I mean, I think is incredibly important for heart transplant recipients. And that's just -- I don't know how many people in this room are investing in the company because of the heart transplant opportunity. I kind of don't care because like we can do this. This is right on the run for us. And we're really ramping that business extremely quickly because we're solving an important problem.

NIPT has been amazing. I mean I have 4 kids, my youngest one is 10. He's the only one that got where we got an NIPT. I mean this is like a new thing. And now like 80% of women get an NIPT is -- we've played a critical role in just changing the way that women are cared for in their pregnancy. And that's been -- I mean that's part of the mission is why Matt started this company is that he had a situation in his family where partner had a child affected by an inherited disorders, is absolutely awful. And now that happens much less frequently because of Matt, because of all the effort over the last like 15 years.

All right. This is fantastic. Thank you as always.

Yes. Thanks, guys.

So I am going to go ahead and kick it off. I'm Tycho Peterson from the Jefferies Life Science team. We're pleased to have Natera with us today. We've got Steve and Mike here.

Maybe to kick it off, could we just do a quick look back at 3Q record clinical MRD volumes. Talk a little bit about some of the momentum you saw coming out of the quarter.

Yes. Thanks, Tycho. So we had a great quarter across the board in all product areas, but particularly in Signatera, where we saw record growth from a net unit standpoint quarter-on-quarter versus Q2. And that very strong momentum has sort of continued into the beginning part of Q4, as we mentioned on the call. So what we're seeing is continued interest from physicians in ordering the Signatera test on new patients and then also ongoing monitoring and surveillance of existing patients or patients that are potentially at risk for recurrence.

The growth is being driven by clinical data. So we had an excellent new publication that came out IMvigor011, which is an muscle invasive bladder cancer in addition to strong colorectal data that was read out earlier in the year. That, combined with continued execution and interest from physicians is driving a lot of the growth.

And we tend to get a fair number of questions just kind of on penetration where we are today, kind of low single digit today. CRC, obviously, the most penetrated. So maybe talk about momentum in other indications and I guess, how you think about the different subsegments evolving?

Yes. So initially, when MRD testing -- when we started doing MRD testing, it was largely focused in colorectal cancer, and that's where we had the most data. But over the last several years, we've now published more than 100 peer-reviewed papers, and we started to generate a lot of very good evidence in the pan-cancer setting, a lot of different histologies. So now we've seen really strong growth in breast cancer, bladder cancer, pan-cancer immunotherapy monitoring, ovarian cancer, lung cancer, those are all areas where we have coverage.

And then there's a long list of other cancers like pancreatic, uterine, gastroesophageal, renal, areas where we're starting to see a lot of interest. We're seeing volume grow. We're in a position to submit for Medicare coverage. And I think that could drive a lot of the growth as we move into the future.

And you mentioned IMvigor earlier and I guess, coming out of that readout at ESMO. Can you just talk about the importance of the clinical utility data and talk about the path to potential companion diagnostic?

Yes. Do you want to take that?

Yes, sure. I mean -- so the data from IMvigor011 was kind of a landmark publication, not just for Natera, but for the MRD space. I mean this was -- I think this is really the first truly prospective interventional outcomes trial that's run in the space. We ran this in partnership with Roche for their drug atezolizumab just kind of a high level of how that works. So Roche had actually run a previous Phase III trial with atezo in muscle invasive bladder cancer that read out in something like 2021 and 2020, something like that.

And before they unblinded that data, they prespecified an endpoint to see what was the treatment response for the fraction of patients that were Signatera positive. That was about 40% of the patients. And in that first Phase III study, unfortunately, the drug did not meet its primary endpoint on all comers, but had an enormous treatment effect in the Signatera positive population. So we partnered with Roche, we rushed around. We launched a second Phase III trial IMvigor011, where entrance criteria for the randomization was being Signatera positive.

So these are muscle invasive bladder cancer patients. They are getting serially monitored with Signatera. When they turn positive, then we randomize them plus and minus atezo, so placebo versus atezo. And then that's what just read out at ESMO. And the results were incredible. I mean the study was really only powered to show a disease-free survival result, and we were able to show an overall survival result in a very short period of time. Patients had a fantastic response that were Signatera positive on the drug. And the Signatera positive patients who were given placebo did very poorly comparatively to the atezo arm.

So landmark study, publication in the New England Journal kind of headline data set coming out of ESMO, lots of interesting subcuts of that data. For example, patients are getting serially monitored before being randomized. And so one of the open questions historically has been, well, what if you have a patient who turns positive not immediately after adjuvant treatment or whatever the previous treatment was and they're negative and then they turn positive Signatera later and then you try and treat them. Are there any impacts to that patient? Do they pay a price for waiting for delaying their treatment?

And the answer in this bigger study was no. Indeed, those patients who were negative for a period of time and then turned positive and they were randomized, they actually did better. And that's probably a function of them probably being low-risk patients within this cohort. But nonetheless, that was a very, very powerful kind of piece of the readout for us. And it just really highlights the clinical utility of Signatera to help guide treatment for patients, both in terms of escalating them to a drug like atezo, but also there's an element of deescalation in that data where you can just monitor these people, see when they turn positive, then intervene and they do quite well.

It married up quite well with the data set that we had earlier this year at ASCO in colorectal cancer with Celebrex, which is just a very inexpensive NSAID that's offered routinely in that setting. Historically, there's been broadly supposed that patients who have Stage III colorectal cancer have that disease because they have some kind of inflammatory response that's just gotten out of whack. And that inflammation is what's causing their polyp development.

So the thought is, look, we'll give them an NSAID, we'll knock down that inflammation response and they'll do better. So unfortunately, when you give -- there was a prospective clinical trial run, gave Celebrex to all-comers, it didn't work on all-comers. It sounds familiar, right? It sounds kind of similar to the IMvigor story. When you just rerun that analysis to see -- to separate responses between Signatera positives and negatives, it's two totally different stories, okay? So they had a wonderful treatment, like a 40% treatment effect among the Signatera positive patients. So there, again, you show that you can really -- you can delineate these patient populations and deliver a huge amount of clinical utility and get them the right treatment if you just know who's positive and who's negative.

So from the Celebrex data in ASCO, which I think led to a huge step-up in volumes here in the summertime. Now we've got this in a truly prospective interventional study. It just shows the kind of the momentum that we have going with the clinical trial and data development and it sets us up really well for '26.

And how does this play into kind of the broader discussion around guidelines? I mean everyone is kind of focused on NCCN. How do you think about guidelines coming? Will it be indication by indication or kind of more broad sweeping?

Yes. So I think from a guideline standpoint, the goal is to just generate Level 1a evidence like we did with IMvigor and then submit that to the guideline committees, and we'll be doing that with bladder. Certainly, we've got a lot of other data that has come out and will be coming out in colorectal, breast cancer, other indications.

Now with something like bladder cancer, where there's a drug involved as well, I think there's a path for FDA approval potentially of the drug and then for guidelines to sort of come into play around the therapy that would enable the use of Signatera as well.

So there's a couple of different paths. But the good thing is we're on the right path, and we don't necessarily need guidelines in order to be successful because we're seeing an enormous amount of demand. We're seeing a demand in pan-cancer, and we're starting to get reimbursed both for Medicare and now from commercial payers because of some of the biomarker bills. So when guidelines do come through, that will be kind of the cherry on top. But I think we're already going to be in a great position.

And you -- on the 3Q call, talked about seven additional MolDX submissions for uncovered indications. Can you just talk about how you think those ramp? What can you say about the indications? And then you've talked about this $250 million to $300 million incremental revenue target. How do you think about those contributing?

Yes. So when you look at our volume today, and we talk about our average selling price, which I think was $1,200 or something in that range. So what that includes is a bucket of tests that we get paid for and then another bucket of test that we just get 0 on, right? And the average there across all those tests is around 1,200. So if you look at the tests that we're not getting paid on today from Medicare, that's probably about 30% of the volume that we're running.

And we think we have a path to get reimbursed on that long tail of indications today that we're running and not getting paid on. Seven of the indications we're now in a position to submit and those are sort of mostly the larger indications covering that 30%. So if we can submit those Q4, which we think we can do, and those flow through to getting coverage, which there's no guarantee, but I think we've done a pretty good job generating coverage because we have good quality data. We think that can be worth a couple of hundred million dollars in revenue and gross profit based on our current run rate trajectory on an annualized basis.

So there's opportunities to improve the average selling price and the gross margin through gaining coverage through Medicare, but also through these commercial plans.

You guys have been busy in the meantime, you launched Latitude, right, tumor naïve and then whole genome. Maybe talk about each of those independently. Why is there a need for you to be in whole genome in tumor naïve and think about -- and maybe just also touch on how you think about those contributing to revenues.

Yes. So I'll start off with tumor naïve MRD. And tumor naïve MRD is something where the tissue is not available, which is a pretty rare circumstance, I think, maybe around 5% or something in that range. then the doctor may want to option to reflex to a tumor naïve option. Now we can offer the test as sort of an upfront option. If you don't want tumor-informed, you can just choose it or we can offer it in the setting of if you order tumor-informed and we're not able to obtain the tissue, we can use the tube that you sent and reflex that for tumor naïve.

So it's actually been quite successful. The data looks really good. We had a pretty solid large-scale study there that data looks very strong. We've had good uptick. But we are seeing that most people prefer the tumor-informed version if they're able to get access to it. But it's great that we have this for the physicians that do want it. Then on the Genome side, historically, a lot of the Signatera testing was done off of an exome backbone. And what we do is, we sequence a whole exome and then we select specific targets that we want to go after, and we use a multiplex PCR capability combined with next-gen sequencing.

And that allows us to go extremely deep at each particular variant that we're going after. So incredibly low limits of detection at each individual variant. So we think it's important to pick the right variants and go extremely deep, like 150,000-plus x coverage at each location. Now one option that we've looked at is doing that entire Genome as the input sequence rather than an exome. And when you do the Genome, you actually have more variants to choose from to go into your input assay.

But you don't just test every variant that you find, you still have to be highly selective with the variants that you're detecting. So we take the same approach. We sequence the entire Genome. We have a very well-selected variant set that we choose, highly curated. And then we go extremely deep at each particular variant, like in the range of 150,000x to maximize both sensitivity and specificity. Now that's different than what a lot of the competitors are doing, where maybe they'll do a Genome and maybe look at 3,000 variants, but they sequence each one at a very low coverage level, and they're may be less discriminate when they select variants.

So we think our approach is the right approach. And it's -- we're pleased to see that when we run clinical trials, that the performance data looks incredible and physicians are very happy with what they're seeing in clinical practice.

You noted ASPs earlier. Mike, you talked about, I think, $50 in Signatera ASP growth next year. Just talk a little bit about the contributors there. Is it biomarker bills? Did you bake anything in for guidelines? Is it ADLT dynamics? And what are the kind of issues around PAMA if that does come?

Yes. Nothing baked in for guidelines. I mean I think Steve touched on the one driver, which is we've got a whole swath of additional tumor types that we have excellent data for, and we're submitting to MolDX for coverage on. So I think that's step one. For our currently covered tumor types, when we submit a claim to Medicare fee-for-service patients, we get paid almost every single time like we should.

Disappointingly, when we submit those same claims to Medicare -- for Medicare patients who have Medicare Advantage, we only get paid about 75% of the time. So there's a gap. And so -- and we've moved that gap from 30% to 75%, but there's still a meaningful hole to close there. You mentioned the biomarker state laws. I think Q3 was the first time that we actually had measurable in my view, kind of contribution from biomarker state reimbursement included in the ASP build for Signatera.

So all those three trends are really the things that will kind of continue to mature in 2026. Longer term, you've got some important drivers launching in Japan as a potential driver where that obviously would be accretive -- would grow your volumes, but we think it could well be accretive to ASPs. And then ultimately, guideline inclusion is, in our view, inevitable, and it will come at different points for different tumor types, and it's kind of fine when it comes, as Steve mentioned. The things that are baked in for next year are really just, hey, reasonably good execution on those kind of first three objectives that I mentioned.

Maybe on early cancer. So you had CRC readout. Maybe just talk a little bit about that, how we should think about AA degradation as you move forward with the FDA-enabling study with FIND?

Yes. I'll make a couple of comments, and then maybe, Mike, you can jump in. But we started working on early cancer detection several years ago as we were working on our tumor naïve assay. And I think initially, the idea was to kind of have just a very targeted program until we met certain performance milestones. And part of that was us collecting this fully prospective trial, the PERSEE study, where we collected about 5,000 colonoscopy matched samples in the same way that you would do in an FDA-enabling study.

And the idea was if we could run that and get good performance, then that would give us the confidence to move to a more expensive FDA-enabling trial. So we've kind of hit every single milestone. The data looks really good on colorectal and advanced adenoma. So we've moved on to now, which is recruiting today, the 40,000-patient FDA-enabling FIND study. We expect to have that finished recruiting in 2026 and then be in a position to submit to the FDA in 2027. We've taken a lot of steps to reduce degradation.

I think some of the groups that have kind of read out before us had seen where their case-controlled studies had one metric or one performance metric. And then in the definitive trial, they saw a reduction in performance. So number one, we collected all the samples in the PERSEE study in the same way that you would in an FDA-enabling trial. So rather than using patients who already symptomatic and drawing a blood draw maybe post colonoscopy, all the patients in the PERSEE study were asymptomatic and the blood was drawn pre- colonoscopy.

So that's one example. I think the second is when we developed the test, we were able to develop it knowing that advanced adenoma performance was important, whereas I think maybe that wasn't sort of part of the thinking many years ago when others kind of had to lock down their assays. So we definitely did have algorithms that were built specifically for advanced adenoma performance and then importantly, we have this enormous database, several hundred thousand patients where we've done whole exome or whole genome tumor sequencing, and we have longitudinal monitoring on those patients.

So where we're able to do development work using samples from our clinical trials, for example, like some samples from the CIRCULATE-CRC study, we actually have Signatera blood draws at some of the matched locations where we were using blood draws for development work where we can look at the VAF levels and we can confirm that actually what we're seeing with the early cancer detection development assay sort of matches what we're seeing with Signatera.

And I think that's unique to us, and that's really helped us, I think, to get where we are today. So -- right now, it's full steam ahead on this CRC test. And we think we're going to be one of the top players in the space when we get on the market. And this is going to be an enormous growth opportunity for Natera as we get into 2027.

And assuming you can kind of maintain 20% on AA, I guess, is that good enough for USPSTF? How do you think about guidelines there?

Yes. I think we'll be in a good position. I mean if you look at some of the other competitors kind of in that range of like 84% sensitivity on CRC and maybe like 13%, 14% on advanced adenoma. That seems to be where kind of the competitive competitors are that are on market or have completed their FDA-enabling studies. So we'll have to see where we ultimately pan out. But if we're in that range or we're better, we're going to be in a very competitive situation.

And maybe just touch on the decision to go indication by indication as opposed to broader panel. And then how do you think about what channel you're going to need? Do you need to expand the PCP sales force significantly?

Yes. I think the use case and the reimbursement in colorectal already sort of exists. And so that's sort of an easier area to come into the market, which is why you've seen others do that as well. Of course, I think over time, like the ability to do an MSA is important. And we obviously have that capability and are continuing to build that capability, although the first initial focus will be on colorectal screening. I forgot the second part of your question.

That was on the channel. How big a sales channel do you need? Or do you partner?

Yes. So there, I think we have options. I think for some of the groups that have been kind of watching the space and kind of seeing the different performance readouts, we have had some inbound requests groups that said, hey, we may want to be a distributor or be the primary channel to the primary care. We have to kind of see how that's going to pan out. But the way we usually do things at Natera is pretty efficient with regards to thinking about spend and approach. And then once we find something that works, we really put a lot of energy behind it. So I think we'll have to cross that bridge when it comes.

Mike, maybe just to touch on the path to profitability. You talked about 10% OpEx growth next year. [ Street's ] got 16% or so revenue growth. And how is the $200 million cost-out program that you kind of launched in 2Q tracking?

Yes, striking well. I mean I think the fundamental way that we will kind of grow into being a sustainably profitable company is the same way we've grown into a business that sustainably generates cash flows. So many of you will recall, we set out a target, I think, in the middle of '22 in a quarter where I think we burned about $100 million in cash in the quarter. And we said, look, we're going to be -- we'll be cash flow breakeven by the middle of '24. And we're not going to do that by cutting.

We're going to grow into generating cash. And if you look at operating expenses now versus the operating expenses are much, much higher than they were then. And yet we're -- we've guided to generate full $100 million in free cash flow this year. So I think investors ought to be able to take heart in that trajectory, and we've now done that several times over -- in the history of the company where we've kind of built up a commercial and lab infrastructure and then gotten scale in that infrastructure.

It's arguably easier to do that with a repeat monitoring test than it has been for any other test in the history of diagnostics, certainly easier than any of the products in which we've gotten scale on previously. So our basic strategy is to continue to be disciplined allocators of capital to high ROIC organic projects, not to have a ton of waste, but just to fund the things that matter for top line growth, make sure that we get paid for covered services, keep the cost of goods sold lean.

And then I think on the commercial operation, it's -- there's a natural kind of scale to these things. You don't need 5,000 sales reps for -- to cover 11,000 oncologists, so just you kind of level out at a rational level, and you can continue to grow the revenues quite rapidly for years after you've kind of gotten that scale. So I feel great about our current position and our ability to ultimately kind of get to profitability.

Maybe just in the last minute, I want to make sure we hit on NIPT, launched the new 20-gene fetal focus assay a couple of weeks ago. You had a V1 in August. So maybe what is the right time to kind of launch a new assay? And just talk about the EXPAND trial as well.

Yes. So this is actually a really exciting innovation in our women's health side. So traditional carrier screening looking for inherited disorders in pregnancy, you screen the mother. If the mother is positive, then you screen the father to determine the risk for the fetus.

Now one of the challenges is that the father is not always available for screening or they're not -- they don't show up or perhaps don't know who the father is. So we developed a new technology that enables you to detect inherited disorders directly from the cell-free fetal DNA. This is called fetal focus. And effectively, where the father is not available, you can still screen the pregnancy for these inherited disorders. So we're seeing a lot of interest here. Many companies in the space don't have this technology. So we think this will help us drive share.

Great. Thanks for taking the time.

Thanks, Tycho. Thanks, guys.

Next up, we have Natera. We're lucky to have with us Mike Brophy. Mike, welcome.

Thanks for having me.

Mike, I'll start off. You just reported Q3 results. I'd ask perhaps you can reflect back on performance and what were the highlights.

Yes, had a very strong Q3 result, $592 million in revenue. That's year-on-year growth of 35%, which is actually faster than what we've grown in the year-on-year over the first couple of quarters of 2025, even though the business has continued to ramp. I mean the comps get much, much tougher and yet the growth rate was still higher.

Another kind of fantastic volume quarter really across the board. I'd call out women's health had a very strong kind of sequential quarter as we had hoped and expected. Organ health continues to be on an absolute tear and then you have the Signatera results. So 202,000 units in the quarter, fastest growth -- sequential unit growth quarter ever, 21,000, 21,500. So a big step-up in Signatera. That implied another massive quarter for new patient starts and a continued drumbeat on the -- on people staying with us through recurrence monitoring.

Gross margins were excellent in the quarter, 64.9% was the printed gross margin, again, is the best ever, 61.3% ex the true-ups. So very strong, more than 100 basis points. I think it's like 120 basis points sequentially kind of more on the organic gross margin improvement just over Q2. So continue to have very lean COGS and continue to progress on the ASP front.

On the clinical side, of course, we had some amazing data at the ESMO conference. We had data that was published in the New England Journal of Medicine, a very proud achievement for us, prospective interventional outcomes trial in bladder cancer with Signatera. I'm sure we'll get more into that, partnered with a drug that unfortunately, did not meet its primary endpoint when evaluated in all-comers several years ago, '21, I think, '22, something like that.

And then paired with Signatera had a fantastic treatment effect, actually delivered a positive overall survival result, even though at this stage of the progression of the trial, we're really only powered for a disease-free survival outcome. So a very, very strong result there, strong result across the board across a range of different data sets at ESMO, very good momentum that we've seen so far in Q4 across the board.

On the guide for the year, we're able to kind of massively step up the revenue guide, bumped the gross margin guide once again. And then on the bottom line, we've said previously that we hope to generate free cash flow through the course of the year. And we bumped that guide to -- we're going to -- we think we can generate about $100 million of free cash flow for the calendar year 2025. So that should give you some confidence that even as we continue to just deploy investments in to grow the top line that we're really getting scale on the business.

So I'm really happy. This is -- as we've talked about, this is year 10 for me here, and it's a lot of the hard work that we've been putting into this business over a period of time is really bearing fruit right now. We've got a very exciting kind of 2026 setup. So...

Well, a lot going on. Let's start off trying to unpack that Signatera sequential ramp, if it's even possible, right? I mean you've had a lot of different announcements over the past 10 months or 9 months, which could have contributed to that sequential acceleration. When you talk to your reps, what do they attribute the strength to?

Well, I think that the -- it's interesting. I think it's hard to ascribe the success of Signatera to like one particular driver. I think it's really kind of the confluence of events. I mean, one is the operations are really humming. So in terms of people's turnaround times, their ability to kind of get the result when they need it kind of in the flow of their kind of typical clinical decision-making, that is just -- that's -- we're just really firing on all cylinders there. So very pleased to see that.

I think the reps have continued to progress in terms of their ability to describe all the different ways in which Signatera can deliver clinical utility. And one of the ways that they've been helping that is that we have had a drumbeat of amazing clinical trial results. One example from earlier in the year was the CELEBREX data that was presented, I believe, at ASCO early in the year, where -- maybe I'll just give a quick summary of that. I mean -- I think the presumption among physicians in the field is that a lot of patients with Stage III colorectal cancer, they have this polyp development in their colon because they have some kind of inflammatory cascade that's gone awry.

And so it makes sense if you knock that down with an NSAID that you ought to be able to help these people. And yet when the prospective study is run, frustratingly, the mechanism, obviously, is multifactorial, and it doesn't actually work on all-comers, okay? But you know that it has to be working on some people, but you can't just give it to everyone absent that data because you -- there's a fear that you will kind of create bleeds for these patients if you're kind of chronically dosing them with CELEBREX, for example.

Then you just rerun that study, very similar setup to the IMvigor study I just described. But now you just parse the patient population by who is Signatera negative and who is Signatera positive. And when you just look at the response to CELEBREX among the Signatera-positive patients, there's a wonderful treatment response because that's a very practical, easy-to-understand use case for using Signatera to help triage your patient, help manage their journey.

And I can't prove this to you because there's a bunch of different data sets that have also been amazing, and the team has been kind of congealing quite nicely. But I personally think that, that was -- that's an important driver for why we had record new patient starts here in Q2 and Q3. So that's just one example.

It's important to kind of continually have this kind of drumbeat of data, which rewind 5 years ago, you'd hope to have one readout like that per year. And now because we've been continually investing in the development of the evidence, now you kind of -- this IMvigor data, we started working on this in 2018, 2019, and now it's reading out. So almost every major conference that we have will have this kind of a drumbeat of very interesting data sets that can continue to highlight the utility of Signatera in the field.

Got it. And you opened up talking about your operations. Can you quantify turnaround time? Where has it been? Where have you taken it to as a contributing factor?

Yes. I mean the most common turnaround time is for the plasma test, and that's -- I mean, you're within the window I mean you're within typically a week of order to getting the result back, which fits in nicely with the clinical workflow. For the initial time point, you're kind of inside that, call it, month to 3 weeks error bars around that. But it just -- that fits in very well with when the physician needs to engage with the patient on the next step in their journey.

I mean typically, a patient will have a surgery to have a tumor removed. And they don't decide on a chemotherapy like that within the next couple of days, they go home and rest. We see how they're doing. We -- there's evaluation of the tumor in the pathology lab. There's all kinds of other kind of clinical workflows going, but then you have a follow-up meeting with the patient, call it, 30 days out. And it's nice to have the result within that kind of decision-making window, and we're well within that clinical decision-making window, the vast majority of the time we're finding.

And were there times in the past where you weren't and that's incrementally improved?

I don't think -- I mean, we got to a place where we -- these turnaround times were pretty tight and within this decision-making window reasonably quickly. Of course, I mean, you rewind 5 years going back to the launch. I mean this is something that's hard to get right kind of right out of the box. And so we've had to make very significant investments in order to get that whole operation going.

I mean -- and you probably recall this, I mean, one of the main pushbacks that we had when trying to raise money to create this new category of cancer care was that this is too hard to do. It's too hard to execute. It's going to be too finicky to like get the tissue from the path lab and build a personalized test for each cancer patient. No one's ever done that before. So we decide whether or not it will work and you just won't be able to execute it.

And so showing now that we really -- we can execute this at scale, I think, is absolutely critical to bringing the technology and bringing the utility to a huge set of patients, and we can clearly do that now.

And how would you describe the trend in rep productivity?

Yes. I mean I think it's -- one of the interesting things about rep productivity in the space is that we -- unlike any other diagnostic test that we've offered or I've been associated with, you do have an ongoing relationship with each of these patients in a way that you don't quite have the same level of that in other areas like in women's health, for example, where this is a repeat monitoring test, okay?

So you deliver a result and you're going to interact with that patient again 3 months later. And so there's an element for the sales rep where the service itself has ongoing utility. And so that tends to enhance the rep's productivity because they're really a service provider. I mean they're like a problem solver for the office rather than like a traditional sales rep.

I mean they're there to like provide information and make sure the service is working as expected and to coordinate questions and things like that more than they are trying to like make sure that the doctor order the test. The ordering patterns and the volumes are really flowing to us as a function of people's kind of emergent need for the test versus like a sales rep -- sales activity per se.

Got it. Okay. And what feedback are you hearing from your team on the competitive environment and your competitive win rate for Signatera?

Yes. I mean there's been -- for the full kind of 5 years that we've been in the market, there have been very impressive companies that are buying to be -- to offer their own solutions. I think particularly once we show that this market can exist, and this is an incredibly -- can be an incredibly important kind of category of cancer care, start an influx of competitors in the 2020, 2021 time frame. So competition is nothing new.

And I mean, it's to be welcomed. I mean it's good for the system to have a bunch of different companies, smart people trying to come up with incremental new ideas or new ways to help these patients. So that's been fantastic. In terms of the competitive response, I mean, it's really -- it's not even really how we even think about it. I mean we just try and just lock in on like what are the use cases or unmet needs that the physician and the patient have and just really trying to be as aggressive as we possibly can be in trying to solve those problems for the patient and the doctor, right?

And if you're doing that, the competition question kind of takes care of itself because you're always going to be running into other companies that are also trying to do that as well. So the result of that so far is that it's been relatively muted in terms of other players generating meaningful volume. I don't expect that to be the case forever. I mean I think it's just too important of a use case. I think there's lots of interesting companies that are trying to do interesting studies and things like that. And I think that's all to the good. I don't think that is harmful to our investment case whatsoever.

Has your team had to play the Signatera genome card to any meaningful degree?

Well, I mean, again, I mean, it's not like a card that one has to play. It's something that's part of our offering. And it's something to let physicians and patients know about if they'd like to avail themselves of the genome. And there's arguments for and against, and every physician has got to kind of make that decision with their patients. So it's something that we're very happy to offer and proud to offer.

The early data looks amazing on it. It does not have the same level of validation as the exome and nor could it because I mean we just launched it fairly recently. I think what's more of the trend is less about having some opinion about one aspect of the workflow or another and just wanting to order Signatera. So like if we updated our PCR primer design, like that could potentially have implications for assay performance and yet you'd never have physicians or customers really worrying about like what version of the assay or the PCR primers are getting.

They're just getting Signatera, right? And it's kind of backed up by that data. And I think that's kind of similar, whether it's exome or genome. people just want Signatera. It's priced the same. So I think that's -- it's interesting because like I think investors because of the companies that are available for them to diligence, they want to zero in on like the sequencing backbone, but there's a million variables that affect performance that ultimately, you just got to prove out the data.

Well, I don't anticipate I'll be diligencing PCR primer design.

Well, I would welcome it. I mean it's -- I mean I make that one up, but like -- I mean, improvements to the algorithm. I mean it's something that we care about. It's something that we monitor and we learn by watching outcomes for patients as they flow through our system. Hey, like we don't -- we may not understand mechanistically why one potential improvement to an algorithm might be advantageous, but it looks like it would be. So we just -- we make the improvement. And so that's a way for the product to continuously improve, and that's what we love.

You mentioned you've had a couple of record quarters now of first-time patients for Signatera. Can you bring us current on what proportion of your Signatera volume is first-time patients versus recurrent customers?

Yes. I think this number would be variable quarter-to-quarter. Like for example, in a given quarter, something like 10% to 15% of the total volumes are typically initial time point patients. And sometimes it's 15% and sometimes it's 10%. And I honestly think that there's just a little bit of randomness in there just because it's not a huge number as a percent of total, and it's just the vagaries of the calendar are when people showed up.

I think that the total volumes are kind of instructive of what's happening. You see them ramping and a function of -- that's a function of 2 dynamics. One is, obviously, you do have a continual flow of new providers and new patients coming kind of into the top end of the funnel, if you will. And then because we're doing a good job for these people, there's an interest in staying with us and having multiple Signatera tests delivered over the course of their cancer journey because the Signatera test can answer different questions as you progress in your journey.

So you got to have very high -- we want to have very high kind of continued ongoing volumes with patients for whom we've got them started on Signatera. And we've got to continue to deliver data and make the arguments to physicians and patients to have more and more people adopt the test. I mean something -- we've quoted this stat historically, but I think the last time we quoted, it was like a little less than half of the oncologists in the United States, we estimate had ordered a Signatera test in the last quarter. And that number, I think, can continually go up so long as we're just continuing to deliver data and continue to show people how -- what the utility is of the test.

Okay. So there's nothing proportionally changing between first-timers and recurrent. It bounces within a band and it's part of the overall trend.

Yes. I think that it's -- from my perspective, it bounces within kind of an expected zone so far quarter-to-quarter. And I think that you do have -- you will have occasional quarters or outliers and then you see it kind of come back in the next quarter. So I've been very pleased with that. The total number of new patient starts obviously keeps going up. I mean -- and that's -- you can see that in the total -- the volumes keep going up.

What about your mix between adjuvant and surveillance? Where does that stand?

Same answer, and it's really a function of the same dynamics. And like it's a function of that, I think for modeling purposes, I mean, I think historically, we've talked about the adjuvant treatment volumes being about half of the volumes and the recurrence monitoring volumes being roughly the other half. That will also bounce around quarter-to-quarter.

When I'm trying to model this business, I try and think about it as being roughly proportional. Over a longer term, one would expect, just given the momentum of the math of people staying with Signatera over the course of their cancer journey, one would expect the mix to shift more and more toward recurrence monitoring. So I wouldn't be surprised if that happens. If anything, we try and forestall that with all these activities I just described to make the case for new cancer patients starting with us at the beginning of the journey.

Sure. And then one of the things that struck me from your bigger presentation was the disclosure that in muscle invasive bladder cancer, you have less than 10% penetration. What is that penetration figure across your bigger tumor types, colorectal, lung, breast cancer?

Yes. Well, so to calculate a penetration, first, you need a denominator. You need some kind of estimate of like the total addressable market. And here, I think thoughtful analysts can come to different numbers. And so I'm not trying to ascribe like, hey, this is the right number. I'll just share how I think about it. And I think the reasonable people can have different takes on these variables.

One is like what is the incidence rate of a cancer, which is due in the United States to make it easy on me. I think that the incidence rate for colorectal cancer, for example, is something like 200,000 new patients a year. Then you need to make an assessment of what fraction of those patients are relevant to Signatera. I would argue that a very high proportion of those patients would have a disease that is relevant for Signatera. Maybe it's 150,000, just again, rough justice.

If you came up with a different number than that, then I wouldn't necessarily push back. Now it's a repeat test. It's not just a onetime test. How many tests are patients going to get over the course of their journey? We're seeing, on average, they get about 10 tests over the course of their whole cancer journey. And once you have enough years of patients starting on Signatera, if you think about what my quarterly volume is a blend of all of these different patients that have started using Signatera at different years, okay?

So it does kind of -- it does start to look like a waterfall if you think about kind of building the volumes on an Excel spreadsheet. And over time, I think we're kind of there now. You can start to sum the columns, right, which are kind of the years and you also get to about 10, okay? So also because I like to have easy math to do, I think about taking the incidence rate, assessing what fraction of the patients are relevant to Signatera and then just multiplying that by 10, not as like an iron number, but just like a rough directional justice of what the TAM might be for volume TAMs every -- volume TAM every year.

So that -- in my example, that would be 1.5 million tests per year. About half of our volume is CRC volume these days, roughly half. So that would have been 100,000 in the quarter. So run rate that, which kind of overstates where we are, but just to be conservative, let's run rate that. So that's 400,000 a year on 1.5 million, that's about where we are, and that's by far the most penetrated tumor type. I mean breast cancer is nowhere.

So I think the other tumor types are very, very small. And the net of all that is the kind of the single-digit penetration that you've heard us talk about previously. Just in colorectal cancer, I would also point out, we're pursuing FDA coverage in Japan, which would effectively double the number of patients that are available to us as a TAM for colorectal cancer. So still very early days in this market.

Sure. And sorry to make you do math on stage.

That's why we pick 10. That's why we do the [indiscernible].

But to use your example of 10, most of those are surveillance. And if we think about your volume mix being 50% adjuvant, 50% surveillance, I think it's possible to come up with some math that suggests that the adjuvant CRC is far more penetrated. Do you have any thoughts on that math and its implications?

Well, I think that what that would be is like a leading indicator for the total TAM. And so that would kind of augur well for like the total volumes kind of continue to go through. I think that we deal in a number of markets, like I'll give NIPT as an example, where the market is probably 75%, 80% penetrated and yet there's still plenty to do, right?

You have to kind of get to this kind of 70%, 80% penetration level in our experience before the total TAM even really becomes a consideration in terms of like what you would model for future growth. I'll just tell you, having just been an executive in the space for a long time and dealt with a market that has gone from very low penetration to now with NIPT, very high penetration, with colorectal cancer, in particular, we're very much in the early category where there's not -- there's -- it's more a function of like, hey, can we get enough commercial people in the field to offer this to more people.

I mean that's like very much more the mindset versus like, oh, gosh, is there going to be a slowdown? I think that's really premature. I mean I think you're years and years away from that.

Okay. Another topic from the call I wanted to touch on were the 7 additional Medicare indications you plan to file or submit to MolDX. Can you talk about that, that's a lot for 1 year and pros and cons in submitting 7 versus wrapping them all up in one big package and going after pan-cancer.

Yes. Well, I think that's a possibility is that you end up with like a pan-cancer -- just a pan-cancer coverage. I think the way -- whether or not you get coverage in a pan-cancer setting or you get individual coverage decisions for 7 different indications, you kind of get to roughly the same place in terms of like the tumor types that are covered. So I'm not hugely stressed about one outcome or the other there.

And by the way, you do -- we feel very strongly that if you expect physicians to order this test in these different tumor types, many physicians want data in the specific use case, in the specific tumor type where they're ordering. And so we feel like it's very important to deliver this data across a very broad swath of tumor types for now.

I think over time, like what we've shown is that the data looks very, very similar across a bunch of different tumor types. And so I think one can start to get some comfort that this works reasonably well in a generalizable way, understanding that different cancer types are different. They get treated differently and tumor-specific data will always be part of like the hallmark of the package that we offer.

Okay. Well, let's migrate over to IMvigor. As I mentioned to you yesterday, I relistened to the webinar, and it struck me how bullish it was. I think Alexey made a comment, category-defining broad implications beyond muscle invasive bladder cancer. Gosh, that's hard to put into a model. How are you thinking about that?

Well, I mean, I think we're very proud of the data. We're excited to be able to partner with Roche in an important clinical trial. I think that what we've seen historically, and I gave you the CELEBREX data as an example, which is not -- didn't have anywhere near the level of a claim that this IMvigor data has is that it does -- I think it has historically been a call to action for increasing numbers of physicians to consider integrating Signatera into their clinical practices.

So it wouldn't surprise me if you -- if that becomes its own call to action, its own driver as you go into 2026. I think some of Alexey's comments just reflect the fact that this data just hasn't existed before. This prospective interventional overall survival data that's outcomes driven is very hard to do. And again, we started working, I think, on the initial IMvigor study in -- before the pandemic, 2018, 2019. And here in 2025, now we've got outcomes data. So it's just -- it's a statement about the time on task that's required to deliver that level of evidence and how important it is.