Natera, Inc. (NASDAQ:NTRA) Q1 2024 Earnings Call Transcript

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Catherine Schulte: All right, great. And then on the Signatera volume outperformance in the quarter, are there any particular indications that are driving that strength, or is it pretty broad based?

Steve Chapman: Yes. Solomon, you want to talk about that?

Solomon Moshkevich: Yes. Great. First of all, it was really broad based. I mean, we’re seeing great continued adoption and growth in our core areas of colorectal cancer and breast cancer and IO monitoring. We did see pretty strong bumps in bladder cancer and in ovarian cancer. In ovarian cancer, we just recently got the coverage from Medicare. So it’s great to see that kind of reaction from the marketplace and from physicians in bladder cancer. There’s just a lot of opportunity there, and I think that’s a pretty underpenetrated space. But both of those together in terms of overall absolute numbers, are not as big as the colorectal and breast and IO monitoring. So any other thing I’ll say is just generally the drivers are, which I think Mike or Steve mentioned earlier, just the number of new physicians ordering the test was very strong in Q1, which led to the outperformance.

Catherine Schulte: Great. Thank you.

Operator: All right. Thank you, Catherine. And our final question today comes from the line of Matt Sykes with Goldman Sachs. Matt, please go ahead.

Matt Sykes: Hi. Good afternoon. Thanks for taking my questions. Congrats on the quarter. Just, Steve, for you, this is more of a longer term question on women’s health. Just given the step up you saw in Q1, I realized its one quarter, but it was a pretty impressive quarter given the level of market share and penetration and assuming Invitae revenues kind of fold in this year. What’s now? Have you changed your long term expectation for when women’s health as a segment would start to normalize growth? Just given the, I guess, relative maturity of that category and just your penetration in market share? Any thoughts on how you’re thinking about it long term in terms of growth?

Steve Chapman: Yes, so that’s a good question. I mean, obviously we had an incredible Q1 and what we normally see, and this has always been the case that when women’s health businesses, a lot of the growth for the year comes in Q1, and then there’s a little bit of a dip in Q2 due to seasonality. And then we start to see kind of things grow again in the second half of the year. And that’s really kind of been the trend for a long period of time. We think we have somewhere around like 50% share and the markets slightly over 50% penetrated. So there’s still a long way to go. We’re actually seeing opportunities, you know, both competitive wins, for some of the more established players, but, but also still, new conversions were where people are moving from serum screening over to NIPT or on carrier screening where they’re going from, looking at just testing a single gene to maybe a series of genes or sort of a, broader panel.

So we, we think there’s a lot of opportunity ahead of us. And I think obviously at some point you start to get more further penetrated in the NFT space. But we’re always innovating and we always have new things coming out. For example, with Rh launch and these create opportunity for us. And we said before we’ve got a lot of new stuff coming out, both on the MRD side where we said we have product enhancements and new products coming, but also on the women’s health side where we have new products and product enhancements coming. So we’re still very excited about the opportunity to help more patients. And then keep in mind, it’s not just about volume growth. It’s also about ASP and revenue growth. And there’s still a lot of tests that we’re doing today where we’re not getting coverage, where we think there’s upside opportunity particularly.

I think we mentioned 22 Q where we have a very high attachment rate and those are generally not reimbursed. I think there’s some opportunities there now. Obviously guidelines come in, but there’s still a lot of room to improve ASPs by increasing coverage for things like carrier screening or even still some of the base Panorama testing. So lots of opportunity ahead and we feel good about it.

Matt Sykes: Great. Thanks for that. And then Mike, just a modeling question. I understand that true ups are not embedded in the guide, but just given your focus on cash collections, like how should we think about true ups over the course of the year? I’m sure there’s some unpredictability about it, but just wanted to get your sense for how you should be thinking about this true ups Q2 through Q4.

Mike Brophy: Yes, it’s a good question. I mean, the reason why we typically don’t include it in the guide is that it’s not our intention when we set the accrual. We’re trying to set it exactly 100%. But of course you’d rather collect at 101% than at 95%, for example. That’s on my mind when we set the accrual. I think in terms of the guide, I don’t have a way to tell you, hey, there’s going to be x amount in Q2 versus Q4. My goal is just to have the approvals hit 100% and let’s see where we land.

Matt Sykes: Got it. Thanks very much, guys.

Operator: All right. Thank you, Matt. And ladies and gentlemen, that is our time today. That today’s call. Thank you all for joining and you may now disconnect. Have a great day everyone.

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