Natera Q2 2026 Earnings Call - Record MRD Volumes and First FDA Companion Diagnostic Approval Drive Raised Guidance

Operator: Hello, everyone. Thank you for joining us, and welcome to Natera’s second quarter 2026 earnings conference call. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Mike Brophy, Chief Financial Officer. Michael, please go ahead.

Mike Brophy, Chief Financial Officer, Natera: 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 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 site as soon as it’s available. Starting on slide two.

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 sixth of 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. Now I’d like to turn the call over to Steve. Steve?

Steve Chapman, Chief Executive Officer, Natera: 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 Guidelines 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 and 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-$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. 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. 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 change in 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 am 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. 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 in 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 were pleased to see Signatera ASPs increase again. Signatera ASPs were up to roughly $1,275 as we continued 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 how we think a mature Signatera ASP can 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 two 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 for 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 volume scales, and we’re already executing on that roadmap. 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?

Solomon Moshkevich, President, Clinical Diagnostics, Natera: Thanks, Steve. I will talk through some of the catalysts that hit in the second quarter. 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 low fractions. During pregnancy, fetal fraction is the proportion of placental DNA circulating in the mother’s blood. When that fraction is low, detecting chromosomal abnormalities becomes significantly more difficult, with one prior study indicating sensitivity as low as 62% for trisomy 21 using a different technology. Despite this limitation, most other labs who use a counting-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 measurements, triploidy detection and twin zygosity 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 studies supporting this launch included over 3,300 patients with more than 240 low fetal fraction cases. We detected 100% of the trisomy 21 cases in that cohort. We launched this in May. The reception among OBGYNs 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 multi-year 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 has continued to exceed our expectations, driven by the strength of the expanded trial. The year before, in 2024, we launched our fetal RHD test, addressing a significant unmet need given the nationwide RhoGAM shortage that year. Amazingly, the demand for RHD testing has continued to steadily increase despite the alleviation of that original shortage.

Taken together, these three 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, it represents a meaningful expansion over the initial CMS proposal. Now, in year one after surgery, Medicare will cover six tests for patients with kidney transplant and 12 tests for patients with heart and lung transplants. In years two and three, Medicare will cover four tests per year across all three categories, which is significantly higher than their 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 helped move the needle on this final policy. We have spent years building the clinical evidence base that made this outcome possible, the August 30th 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 their 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 tumor concept, treat on MRD, at the highest level. In June, the Japanese PMDA approved Signatera for patients with colorectal cancer, supported by the GALAXY study. We expect a 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 that are already strongly supportive of MRD assessment in the adjuvant setting. 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 IVDR 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. With this submission, we are building on this momentum with our newest submission to the Japanese PMDA to 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%-25% will be muscle invasive. Our submission is supported by data from the IMvigor011 trial. 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. 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 calls 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 reference 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 guidelines 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. 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 roadmap. Alex?

Alexey Aleshin, General Manager of Oncology and Chief Medical Officer, Natera: 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, built its early evidence on retrospective biobank studies. These studies are valuable, they’re efficient, and they let you establish prognostic performance across many tumor types quickly. 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. It 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 seven 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 seven 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 over-treated.

When a patient is considered high risk, the standard is to add a CDK4/6 inhibitor on top of endocrine therapy. These are difficult drugs to take. More than 60% of patients experience serious adverse events, and a full course of therapy can carry a US retail cost north of $400,000. 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. 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, HER2-negative breast 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.

Critically, we’ve built the infrastructure to run these ourselves efficiently and cost effectively. Owning operational execution means we control the quality, the timelines, 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 adenomas, a notoriously difficult target and a strong signal for the underlying technology. Case-controlled 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?

Mike Brophy, Chief Financial Officer, Natera: Great. Thanks, Alex. 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 that 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 growth 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 non-cash 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 zero currently to millions of tests per year. 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-$2.91 billion, which implies 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 in the business, obviously with Signatera, but also given the better-than-expected seasonal dip we experienced from 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. 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 four 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. Really to drive ASPs meaningfully higher, we are going to need to expand MolDX indication coverage, get some benefit from the bladder NCCN guideline, and eventually get guidelines in additional indications. Our approach this entire year has been that those drivers are going to help us in 2027, 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. What you’ve seen this quarter is the benefit from ASP improvement and a normalizing tests reported to accessioned 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 from COGS reduction projects next year. We are holding steady on OpEx. We’ll keep the same mindset we have to 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.

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

Operator: We will now begin the question-and-answer session. If you’d like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you’re muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Puneet Souda with Leerink Partners. Your line is open. Please go ahead.

Puneet Souda, Analyst, Leerink Partners: Yeah. Hi, guys. Thanks for the questions here and a really impressive quarter for Signatera. First one, if I could, Steve, you talked about a bit about 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 2027 and maybe just if you could double-click on what’s powering this growth. Is it the sales rep, the commercial execution? Clearly data’s strong, NCCN data readouts. I mean, you could say all of those things, but maybe just the principal component that you think is driving this and keeps this sustainable in terms of quarter-over-quarter growth, that remarkable growth that we’re seeing here.

Steve Chapman, Chief Executive Officer, Natera: Yeah. Thanks for the question. 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 was received very positively after the IMvigor readout. 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. All of those things have put us in a position to now be executing and outperforming. We’re super excited to see the planning that we put in now coming to fruition. Ultimately, we really focus on the sort of the four or five core things across all of our businesses.

One is 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. We’ve continued to extend our lead. The third is focus extensively on user experience. We’ve done a lot of things to implement new ways to reduce TINT issues on tissue to be able to accept more samples, mobile phlebotomy expansion, so forth. The fourth is the team. 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. 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.

Mike Brophy, Chief Financial Officer, Natera: I wouldn’t say necessarily we’re going to repeat that immediately. If you look at, 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. Q3 is off to a very good start. I would expect us to be kind of somewhere right in the middle there.

Puneet Souda, Analyst, Leerink Partners: Got it. A follow-up for you on, 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. This clearly lays out 2027, 2028 readouts that are steadily going to be coming out. Are there any specific readouts that you would point to? Maybe if you could just dial a little bit into the ER101 study. Again, how should we think about that? Is that something of a practice-changing study? Is that how we should be thinking about that study? Thank you.

Steve Chapman, Chief Executive Officer, Natera: Yeah. Alex, go ahead.

Alexey Aleshin, General Manager of Oncology and Chief Medical Officer, Natera: Hey, thanks, Puneet, for the question. I think slide 13, this is just the prospective portion of our studies. I think on top of this, we still continue to invest and read out biobank studies as well. We do expect a large bolus of readouts in the next few years. The way I would think about, especially the prospective readouts, I would say there are definitely a few studies that we’re monitoring very closely. I think VEGA is, for example, a good study that we’ve discussed in the past. A lot of these studies are also, I would say, important in smaller indications. Because they are prospective and many of them are now interventional, I think that the readouts do have a significant impact in terms of changing care and possibly changing guidelines and reimbursement.

We can’t, given the number, provide details on every single study, and exact dates for when it will read out. Some of this is variable, some of this we don’t control, because some of these are being done with collaborators. As we get closer and enter 2027, we’ll try to provide a little bit more guidance about the studies that we think are important and a little bit more information about their timing. Going back to ER101 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 we said in the prepared remarks, pharma level. Many of them are actually randomized.

SIGNAL-ER 101 is not randomized. It’s not randomized because we couldn’t randomize it, but because we’re actually looking for performance. For the ctDNA negative arm to do so well, really what we’re doing is almost comparing to close to 100%. 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’ve designed and plan to initiate in the next few months.

Puneet Souda, Analyst, Leerink Partners: Got it. Great. Thanks, guys.

Steve Chapman, Chief Executive Officer, Natera: Puneet, let me just add to that a little too.

Puneet Souda, Analyst, Leerink Partners: Yes, please.

Steve Chapman, Chief Executive Officer, Natera: 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." That’s sort of what we’ve done, and that’s why you see a lot of our investment going into these clinical trials. SIGNAL Breast is the first one that we’re announcing, but there’s going to be a suite across all different histologies. Stay tuned and it’s a big part of our strategy going forward.

Puneet Souda, Analyst, Leerink Partners: Fabulous. All right. Over and out, guys. Thanks.

Operator: Your next question comes from the line of Dan Brennan with TD Cowen. Your line is open. Please go ahead.

Dan Brennan, Analyst, TD Cowen: Great. Thank you. Thanks for the questions. Congrats on a strong quarter. Maybe could I start just on Signatera volumes again, given how strong it was this quarter. A couple of thousand tests from the weather recapture, say, the 32,000. I guess, Steve, you talked about that sales force expansion productivity, which is just beginning to hit. I’m just wondering 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 these salespeople are probably just getting going with that productivity enhancement.

Steve Chapman, Chief Executive Officer, Natera: Yeah, I think that’s right. 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’s some things like even in bladder, for example, where the IMvigor protocol is sort of moving to kind of an every six-week protocol as outlined in the approval. 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 six months. 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. Like I said, our previous all-time record had been, I think, 25,000.

If we can outperform that, I think that would be a good achievement. 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. Very strong momentum. I think we’re crossing this sort of tipping point in the field where doctors are really starting to believe in MRD as a core part of their practice. I think we’re the major beneficiary of that, given the breadth of our presence in the field and the amount of data that we put out, the size of our sales team. Everything’s sort of starting to come together.

Dan Brennan, Analyst, TD Cowen: Terrific. Maybe just on the price of a $25 sequential increase ahead of expectations. I think you’ve had 25 and 22 the last two quarters sequentially. What I’m hearing, I know Mike talked about more of the benefit in 207, but I heard Solomon say several commercial payers 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. Just wondering if you can unpack that all. Is there a chance this price really begins to take off here the next few quarters more so? Is $25 sequential still the right way to think about it for a little while? Thank you.

Steve Chapman, Chief Executive Officer, Natera: Yeah. Mike, do you want to take that?

Mike Brophy, Chief Financial Officer, Natera: Thanks for the question. As we mentioned on the prepared remarks, the guide that we put out presumes just stable ASP $1,275 for Signatera through the balance of the year. I think, if you were looking for 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. 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. Where if you think about the timing of the accrual for Q3, we’ve got to be receiving reimbursement from that unit effectively right now for us to count it in the Q3 results.

That tend to be things that are kind of more tactical in nature. These are things like improving Medicare advantages, compliance with reimbursing for covered 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 vision for getting to $2,000. Feel better about that now than I really ever have, since we launched Signatera six, seven, eight years ago. But I think just if you’re looking for kind of tactical kind of moves over the next couple of quarters, 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.

Dan Brennan, Analyst, TD Cowen: Got it. Thanks, Mike.

Operator: Your next question comes from the line of Dave Westenberg with Piper Sandler. Your line is open. Please go ahead.

Dave Westenberg, Analyst, Piper Sandler: All right. Thank you for taking the question. Yeah, congrats on the good MRD numbers. 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 a 50% growth rate. Can you tell us, is there still market education from some of these competitors? 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 on the market and they do seem to be getting traction at this point.

Steve Chapman, Chief Executive Officer, Natera: Yeah, that’s a good question. 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. It’s not necessarily a sort of a new dynamic. 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. 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. 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.

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. 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. 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.

Dave Westenberg, Analyst, Piper Sandler: Great. No, thank you. Very good. 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 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 in, say, 2028. Thank you again for the questions.

Steve Chapman, Chief Executive Officer, Natera: Yeah, it’s a great question. 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. I think we’ve sort of reported before that we had seven submissions in, which are at various stages, and we’re excited about the opportunity of getting 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. There’s a lot of opportunity beyond that. As we turn out new publications, we generate new data, we start to see upticks in these other histologies as well.

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.

Mike Brophy, Chief Financial Officer, Natera: Thanks.

Operator: Your next question comes from the line of Daniel Markowitz with Evercore. Your line is open. Please go ahead.

Daniel Markowitz, Analyst, Evercore: Hey, guys. Congrats on the good results, thanks for taking my questions. 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. The one I wanted to specifically ask about is the seven indications submitted to MolDX. Should we think about that in 2027? Is it coming online in the first half and maybe it’ll take a few quarters to get fully rolled out and realized? Then once it’s fully ramped, in terms of the PNL impact, could it be like $200 plus contribution to ASPs on that path to $2,000? Are there any incremental costs that come with it?

The way I’m thinking about it could be a really nice step up to the ASPs and also a nice inflection towards positive EBITDA. Is that the right way to think about it? Any color would be super helpful.

Steve Chapman, Chief Executive Officer, Natera: Yeah. It’s a great question. I would say with regards to the timing, it’s always hard to say. Generally, we’ve been able to sort of work through these submissions very successfully over time. 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. That’s why we feel like we’re in a good position on these. I don’t think that timeline of at some point over the kind of second half of 2026 and then kind of into the first half of 2027, I think that’s a reasonable timeline. Which is basically rolling coverages over the next sort of 12 months or something in that range.

Frankly, I think it’s good that they’re very sort of strict in the way that they are. I think that’s benefited us because we’ve generated so much data and so much quality data. 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. 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. Mike, do you want to comment specifically on sort of what number you think this might give us?

Mike Brophy, Chief Financial Officer, Natera: Yeah. 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’d estimate that’s worth something like $150 to the ASP, perhaps $200. Daniel, I think your estimate’s roughly in the right range. Obviously that’s a transformational difference when you start at $1,275 and you add that. Steve mentioned the timing to starting to get these coverages and I think that’s right. 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 think rolling approvals over the next 12 to 18 months is probably the right way to think about that.

Daniel Markowitz, Analyst, Evercore: Great. Thank you. 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? Will you be able to be trued up on, like retrospectively, since biomarker bills went into effect? In other words, should we expect some outsized true-ups in the quarters and years to come based on the biomarker states? Thanks again for taking the questions, guys.

Mike Brophy, Chief Financial Officer, Natera: Yeah. Thanks for that question. I’m not really expecting a lump of true-ups specifically from biomarker. The way that you see this happening is you get a biomarker state law, you interact with payers in that state, it’s kind of a linear kind of grinding process that takes quite a bit of time as we’ve described in the past. 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. More generally, we said this in the prepared remarks. The ambition is to have the true-ups kind of gradually come down, you’ve seen that happen both in terms of absolute dollars, but particularly as a % of revenue. That’s the plan.

Operator: This question comes from the line of Tycho Peterson with Jefferies. Your line is open. Please go ahead.

Noah, Analyst, Jefferies: Hey, team, this is Noah on for Tycho. Thanks for taking our questions and congrats on the quarter. I wanted to ask on Women’s Health. I think the high single-digit growth was a little bit better than we were expecting. I’m curious, what are you seeing from an underlying market growth standpoint? One of your competitors flagged some share loss there. Curious if you think you’re going to benefit, share gain there.

Steve Chapman, Chief Executive Officer, Natera: That’s a good question. We definitely think we’re benefiting from share gains here. For the last couple of years, we’ve had some big investments sort of behind the scenes in technology development, and 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 product. I think right now we’re in probably the best position we’ve been in from a competitive standpoint, and we’ve really started to see the impact of that over Q2. Typically 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.

The sales team is feeling very positive right now in women’s health.

Noah, Analyst, Jefferies: Thanks. That’s a helpful color. 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 are coming from. I think you mentioned an AI project last year that could drive $200 million in cost savings over time. Any incremental progress there and how you’re thinking about the longer-term path to profitability?

Steve Chapman, Chief Executive Officer, Natera: Mike, do you want to take that?

Mike Brophy, Chief Financial Officer, Natera: Thanks. Thanks for the question. I think I mentioned in the prepared remarks there were a couple of one-time expenses in Q1 that I wouldn’t forecast from the guide to have them repeat in the second half around non-cash accruals of stock-based comp and some litigation expenses. That makes up the majority, I think of that delta. 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 just 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, where 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. We continue to just a lot of progress there.

Operator: Your next question comes from the line of Kallum Titchmarsh with Morgan Stanley. Your line is open. Please go ahead.

Kallum Titchmarsh, Analyst, Morgan Stanley: Hey, guys. Thanks a lot for taking the question. 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 run in the region. Thank you.

Steve Chapman, Chief Executive Officer, Natera: That’s a good question. Solomon, I’ll have you comment on the sales penetration. I’ll comment first on the coverage. I think as we said on the last call, we’re sort of initially looking for that sort of adjuvant coverage. 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 shortly after that. There’s a lot of opportunity there just given the number of CRC patients that are diagnosed. Now also I think bladder as well is going to be a big opportunity. Solomon, do you want to comment on the penetration?

Solomon Moshkevich, President, Clinical Diagnostics, Natera: Sure. Hi. Thanks for the question. 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 U.S. when we introduced Signatera for colorectal cancer. That’s because 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. The reimbursement is really going to be the unlock because 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, we’re supplementing that distribution partner with direct sales effort, sales implement effort and marketing in Japan. We feel pretty confident we’re going to be able to get this out very quickly. We think given the

Steve Chapman, Chief Executive Officer, Natera: Japanese thought leadership with the GALAXY study, that there’s already a strong understanding and appreciation for the technology. It’s really going to be about user experience, making it easy to order, easy to get results, and we look forward to launching.

Kallum Titchmarsh, Analyst, Morgan Stanley: 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 in a little more what those actions are and when you think those can come through the P&L? Thanks, guys.

Mike Brophy, Chief Financial Officer, Natera: Yeah, thanks for the question, and 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. As they scale, you get some natural efficiencies with workflows in the lab. And then also once you see, you can 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’s quite easy to calculate returns on invested capital for those projects.

We’ve generated very high returns on these COGS reduction projects over the last decade. 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.

Operator: Your next question comes from the line of Subunami with Guggenheim. Your line is open. Please go ahead.

Subunami, Analyst, Guggenheim: Hey, guys. Thank you for taking my questions. There are two topics I want to address. 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 timelines here? What is driving the investment? 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? Do these mixed dynamics start to flip later this year? Thank you so much.

Steve Chapman, Chief Executive Officer, Natera: Yeah, thanks for the question. I’ll take the first one on ECD. We’re actually really tracking along at where we thought we would on the FDA enabling study, the FIND study. We think we’re going to be done recruiting this quarter, which is sort of what we outlined in the prepared remarks. That’s really on schedule. We’re excited about that. We’ve kind of backed that with this readout of PROCEED that we had early, I think at the JPM conference previously, which we’re excited about. 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. These are all expenses that, over time, will go away.

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. Mike, do you want to comment on the margin?

Mike Brophy, Chief Financial Officer, Natera: Yeah, no. It’s very similar to the topic we were covering with Calum. We did have a huge number of new Signatera starts commensurate with the blowout in volumes that we had for Signatera. We had some very promising growth in a bunch of these new products where the COGS aren’t yet optimized. As I just mentioned, we’ve got ample opportunity 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.

Subunami, Analyst, Guggenheim: Thank you so much.

Steve Chapman, Chief Executive Officer, Natera: I’ll just reiterate this point on new patients. New patients coming in for Signatera was way up. We’re seeing this very significant excitement. The good thing about that is that sort of usually foreshadows a significant growth in recurrence monitoring and surveillance in the future.

Subunami, Analyst, Guggenheim: Perfect. Thank you so much, guys.

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