Natera (NTRA) FY Conference August 12, 2025 02:00 PM ET Company ParticipantsMike Brophy - CFOConference Call ParticipantsKyle Mikson - Managing Director & Senior Research AnalystKyle MiksonI'm Kyle Mixon. I cover life science tools and diagnostics for Canaccord. Please welcome me to a fireside chat with Natera here with us today. Natera is a leader in cell free DNA based testing for women's health oncology and organ health. With us from the company we have Mike Brophy, CFO.Thanks Thanks Mike for joining us. ...

Financial Data and Key Metrics Changes - The company generated $547 million in revenue, representing a 32% growth over Q2 of the previous year, and a 34% growth when excluding revenue true-ups [6][8] - Gross margin increased to 63.4% compared to approximately 59% in the same quarter last year, with consistent margins sequentially versus Q1 [7][14] - The revenue guidance for the year has been raised by $80 million, now expecting revenues in the range of $2.1 billion to $2.2 billion [8][56] Business Line Data and Key Metrics Changes - The company processed 189,000 oncology tests in the quarter, marking a growth of nearly 20,000 units compared to Q1, setting a new milestone [7][11] - Significant growth was noted in the Signatera product line, with new patient starts doubling the previous quarterly record [7][12] - Women's health products had their second-best volume quarter ever, despite seasonal trends [10] Market Data and Key Metrics Changes - The company is seeking Medicare reimbursement for additional tumor types, which could yield approximately $250 million to $300 million in annual revenue [13] - The company reported a record low in Days Sales Outstanding (DSOs) at 57 days, indicating improved cash collection efficiency [15] Company Strategy and Development Direction - The company is focused on expanding its product offerings, including the launch of Fetal Focus, a new NIPT for inherited conditions [9][26] - Investments are being made in artificial intelligence to enhance diagnostic capabilities and operational efficiency [25][46] - The company aims to maintain operating expenses while increasing revenue, indicating a strategy of scaling without proportional increases in costs [20][58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory, citing strong data and increased adoption of products [6][8] - The company is positioned to leverage its existing infrastructure to expand its market presence and improve patient outcomes [75] - Management highlighted the importance of upcoming clinical trial readouts, which could significantly impact practice guidelines [66][68] Other Important Information - The company exited its legacy paternity business, which had previously contributed to volume numbers [10] - The PEDAL study published in a high-impact journal demonstrates the potential of donor-derived cfDNA in predicting kidney transplant outcomes [30][31] Q&A Session Summary Question: What drove the record Signatera volumes? - Management noted strong data presentations at ASCO and significant growth in new patient starts, indicating a broad adoption of the product across various tumor types [61][63] Question: What are the key upcoming clinical trials? - Management highlighted the INVIGOR-11 trial and several colorectal trials that could influence guidelines and practice [66][68] Question: How is the company addressing the competitive landscape in early cancer detection? - Management emphasized their in-house R&D capabilities and the alignment of their PROCEED trial with FDA protocols, aiming for a strong performance readout [79][80]

Financial Data and Key Metrics Changes - The company generated $547 million in revenue, representing a 32% growth year-over-year, and a 34% growth when excluding revenue true-ups [5][6] - Gross margin increased to 63.4% compared to approximately 59% in the same quarter last year [6][15] - The company raised its revenue guidance by $80 million, now expecting revenues in the range of $2.1 billion to $2.2 billion [7][58] Business Line Data and Key Metrics Changes - The company processed 189,000 oncology tests in the quarter, marking a sequential growth of 20,000 units, which is a new milestone [6][11] - Signatera saw record growth in both sequential growth and new patient starts, with new patient starts being double the previous quarterly record [6][12] - Women's health products had the second-best volume quarter ever, following a strong Q1 [10] Market Data and Key Metrics Changes - The company is seeking Medicare reimbursement for additional tumor types, which could represent an annual revenue opportunity of $250 million to $300 million [13] - The company reported a significant increase in cash collections, with days sales outstanding (DSOs) down to 57 days, a record low [16] Company Strategy and Development Direction - The company is focused on launching new products, including Fetal Focus, a new NIPT for inherited conditions, and expanding its oncology data pipeline [8][30] - Investments are being made in artificial intelligence to develop new diagnostic biomarkers and improve operational efficiencies [19][47] - The company aims to maintain operating expenses while increasing revenue, indicating a strategy of scaling without proportional increases in costs [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory, citing strong data and new patient starts as key drivers [6][12] - The company is committed to maintaining cash flow positivity while investing in growth opportunities [60] - Management highlighted the importance of upcoming clinical trial readouts and their potential impact on market positioning [70][81] Other Important Information - The company exited its legacy paternity business, which had historically contributed to volume numbers [10] - The PEDAL study published in a high-impact journal demonstrated the utility of donor-derived cfDNA in predicting long-term outcomes after kidney transplant rejection [30][31] Q&A Session Summary Question: What drove the record Signatera volumes? - Management noted strong data presentations at ASCO and significant growth in colorectal and breast cancer monitoring as key drivers, along with a record increase in new patient starts [62][63] Question: What are the important upcoming clinical trials? - Management highlighted the INVIGOR-11 trial and several colorectal trials that could influence guidelines and practice [66][70] Question: How is the company addressing the competitive landscape in early cancer detection? - Management emphasized their in-house R&D capabilities and the alignment of their PROCEED trial with FDA protocols as a strategic advantage [80][81]

Natera, Inc. Q2'2025 Earnings Presentation 2 Q2 2025 highlights and recent business updates August 7, 2025 Safe harbor statement This presentation contains forward-looking statements under the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this presentation, including statements regarding our market opportunity, our anticipated products and launch schedules, our reimbursement coverage and our product costs, our commercia ...

Financial Data and Key Metrics Changes - The company generated $520 million in revenue for Q1 2025, representing approximately 37% growth compared to $368 million in Q1 2024 [7][32] - Gross margins improved to 63% in Q1 2025, up from 52% a year ago, with underlying gross margin improvement of about 110 basis points from Q4 2024 [8][33] - The company generated $23 million in cash during the quarter while increasing investments in growth [8][20] Business Line Data and Key Metrics Changes - Women's Health volumes increased significantly, with over 40,000 units processed sequentially in Q1 2025 compared to Q4 2024 [14][81] - Organ Health saw over 50% year-on-year growth, driven by interest in donor-derived cell-free DNA tests [14] - Signatera clinical volumes grew 52% year-on-year, with a record increase of approximately 16,500 units compared to Q4 2024 [8][15] Market Data and Key Metrics Changes - The company processed 855,000 tests in Q1 2025, an 8% sequential increase over Q4 2024 [13] - The oncology segment is seeing significant growth, with over 45% of oncologists in the U.S. ordering Signatera tests last quarter [16] - The company expects revenues for the full year to be in the range of $1.94 billion to $2.02 billion, reflecting a $70 million increase from prior guidance [9] Company Strategy and Development Direction - The company is focused on expanding clinical utility and innovating to help more patients, particularly in oncology [16][21] - There is a strategic emphasis on increasing average selling prices (ASPs) through improved reimbursement operations and expanding into new tumor types [18][20] - The company aims to achieve gross margins above 70% over time, with significant potential opportunities identified [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of volume growth and ASP improvements, despite potential short-term headwinds from new product launches [35][36] - The company views 2025 as a crucial investment year, particularly for Signatera, with expectations of continued strong cash flow generation [20][37] - Management highlighted the importance of upcoming clinical data presentations at major conferences, which are expected to drive further growth [25][29] Other Important Information - The company has maintained a strong balance sheet with nearly $1 billion in cash and no debt outside of a line of credit [33] - The DEFINE study in heart transplantation demonstrated Prospera's ability to predict clinical outcomes, outperforming traditional biopsy methods [10][22] - The company is preparing for significant data presentations at ASCO, with nearly 30 abstracts planned across multiple tumor types [28][29] Q&A Session Summary Question: What drove the sequential volume growth in Signatera? - Management noted that strong clinical utility and data performance resonated with physicians, contributing to record growth [42] Question: Which clinical studies should be focused on for potential market impact? - Management highlighted the I SPY two trial and the DARE study as significant upcoming studies that could influence market volumes [45][46] Question: Were there any disruptions in Q1 due to weather or calendar dynamics? - Management acknowledged weather challenges but indicated that patient demand for tests remained strong, minimizing impact on volumes [54][56] Question: What is the outlook for ASPs and reimbursement? - Management expects stable ASPs in women's and organ health, with modest improvements in Signatera driven by increased Medicare Advantage coverage [74] Question: Can you provide an update on the colorectal screening front? - Management confirmed that the PRESIDE study has met its enrollment goals and will report results by the end of the year, with an FDA enabling study also underway [67][68]

Financial Data and Key Metrics Changes - The company generated $520 million in revenue for Q1 2025, representing approximately 37% growth compared to $368 million in Q1 2024 [5][6][14] - Gross margins improved to 63% in Q1 2025, up from 39% in previous quarters, with an underlying gross margin improvement of about 110 basis points from 59.3% in Q4 2024 to 60.4% in Q1 2025 [15][16][30] - The company generated $23 million in cash during the quarter, indicating strong cash flow generation despite increased investments in growth [6][17][30] Business Line Data and Key Metrics Changes - Women's Health volumes grew significantly, with over 40,000 units processed sequentially in Q1 2025, continuing strong growth from 2024 [12][30] - Organ Health saw over 50% year-on-year growth, driven by interest in donor-derived cell-free DNA and germline tests [12][30] - Signatera clinical volumes grew 52% year-on-year, with a record increase of approximately 16,500 units compared to Q4 2024 [6][13][14] Market Data and Key Metrics Changes - The company processed 855,000 tests in Q1 2025, an 8% sequential increase over Q4 2024 [11][12] - The oncology market is expanding, with over 45% of oncologists in the U.S. ordering Signatera tests last quarter [13][14] - The company anticipates that Signatera could eventually generate more than $5 billion in annual revenue, reflecting significant market potential [17][30] Company Strategy and Development Direction - The company is focused on expanding clinical utility and innovating to help more patients, particularly in oncology and women's health [13][17] - The company plans to continue funding high return on invested capital (ROIC) investments in commercial operations, clinical trials, and product improvements [17][30] - The company aims to achieve gross margins above 70% over time, with ongoing improvements in average selling prices (ASPs) and cost of goods sold (COGS) [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of revenue growth, driven by strong clinical utility and data generated from studies [41][42] - The company is optimistic about upcoming data presentations at major conferences, which are expected to enhance market presence and drive future growth [43][44] - Management highlighted the importance of maintaining cash flow breakeven while investing in growth opportunities, particularly in oncology [30][34] Other Important Information - The company raised its revenue guidance for 2025 to a range of $1.94 billion to $2.02 billion, reflecting a $70 million increase from previous guidance [7][31] - The company is preparing for significant data presentations at ASCO and ESMO conferences, with nearly 30 abstracts planned [25][26] - The company is also pursuing expansion into new histologies, including sarcoma, which presents a significant clinical unmet need [24][25] Q&A Session Summary Question: What drove the sequential volume growth in Signatera? - Management noted that strong clinical utility and a large commercial presence contributed to the record sequential growth, with expectations for continued utilization [40][41] Question: Which clinical studies should be focused on for potential volume growth? - Management highlighted the I SPY two trial and the DARE study as significant upcoming studies that could impact volumes positively [42][43] Question: Did weather or calendar dynamics affect Q1 performance? - Management acknowledged that weather challenges existed but did not significantly impact volumes, as patients still sought necessary tests [54][56] Question: What is the outlook for ASPs and reimbursement? - Management indicated stable ASPs in women's health and organ health, with modest improvements expected in Signatera due to increased reimbursement rates [71][75] Question: What is the status of the colorectal screening study? - Management confirmed that the PRESIDE study has met its enrollment goals and results are expected by the end of the year [67][68]

Financial Data and Key Metrics Changes - Revenues for Q4 2024 were $476 million, representing a 53% year-on-year increase and exceeding the pre-announcement of $472 million by $4 million [10] - Volumes increased by 26% compared to Q4 of the previous year, with gross margins improving to 63% from 51% a year ago [10][19] - Cash flow generated in Q4 was approximately $46 million, contributing to a total of about $86 million for the full year [11][21] Business Line Data and Key Metrics Changes - Women's health saw strong organic growth, bolstered by new features and datasets, while organ health volumes rose nearly 50% year-on-year [14] - Signatera clinical volumes surged approximately 60% compared to Q4 2023, with nearly 15,000 units growth over Q3 2024 [15] - Average selling prices (ASPs) for Signatera improved to roughly $1,100 in Q4, with steady progress noted for Panorama and Horizon ASPs [16] Market Data and Key Metrics Changes - The company reported significant advancements in reimbursement coverage, including a strong increase in the Medicare ADLT rate and new coverage policies from commercial health plans [24][26] - The NCCN guidelines have strengthened the position of cell-free DNA testing across various tumor types, enhancing the accessibility of Signatera [13][45] Company Strategy and Development Direction - The company aims to reinvest generated cash flows into the business to enhance growth profiles in 2026 and beyond, focusing on expanding payer coverage and leveraging data insights [22][23] - Natera is deploying AI tools to optimize claims processing and improve operational efficiency, which is expected to enhance customer experience and product performance [29][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing momentum into 2025, with expectations for continued volume growth and stable ASPs across business lines [70] - The guidance for 2025 anticipates revenues between $1.87 billion and $1.95 billion, based on positive trends observed in recent quarters [69] Other Important Information - The company retired convertible notes early in Q4, leaving it with nearly $1 billion in cash and effectively no debt aside from a line of credit [68] - Significant clinical trial results are anticipated in 2025, which could further drive adoption and revenue growth [52] Q&A Session Summary Question: Potential for Signatera ASPs to reach around $2,000 - Management indicated that as more coverage policies are established, revenue per test could effectively double, aligning with the potential for higher ASPs over time [87] Question: Volume growth expectations for Signatera in 2025 - Management noted that while the guidance is set above the previous target of 8,000 to 10,000 units per quarter, they expect to see strong volume growth, potentially reaching levels seen in 2024 [100][102] Question: True-ups and their impact on future guidance - Management explained that true-ups are expected to moderate over time as cash collections improve, but they do not guide on true-ups due to their unpredictable nature [108][109] Question: Feedback on genome-based products from the oncology community - Positive feedback has been received from both the academic and pharmaceutical communities regarding the new genome-based products, which are seen as valuable for clinical research [118]