Natera, Inc. (NASDAQ:NTRA) Q3 2025 Earnings Call Transcript

Natera, Inc. (NASDAQ:NTRA) Q3 2025 Earnings Call Transcript November 6, 2025

Natera, Inc. misses on earnings expectations. Reported EPS is $-0.64 EPS, expectations were $-0.39.

Operator: Welcome to Natera’s 2025 Third Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded today, November 6, 2025. I’d now like to turn the conference call over to Michael Brophy, Chief Financial Officer. Please go ahead.

Mike Brophy: Thanks, operator. Good afternoon. Thank you for joining our conference call to discuss the results of our third quarter of 2025. On the line, I’m joined by Steve Chapman, our CEO; Solomon Moshkevich, President of 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 the 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 are contained in or suggested by the forward-looking statements. Forward-looking statements made during the call are being made as of today, November 6, 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?

Steve Chapman: Thanks, Mike. Let’s get to the highlights on the next slide. We had a fantastic quarter. We generated $592 million in revenue, which is up about 35% over Q3 of last year. We had an excellent volume quarter as well, which included strong growth across the product portfolio and another record for Signatera growth. We processed 202,000 clinical MRD tests in the quarter, which represents more than 21,500 units of growth compared to the second quarter. You’ll recall that we had a record of 20,000 Signatera growth units in Q2, so we’re very pleased to beat that record again in Q3. Gross margin took a big step up in Q3, coming in at 64.9%, which is almost 1.5 percentage points higher than we were just last quarter. Ex true-ups, gross margins grew over a full percentage point versus Q2 and almost 3 percentage points over Q3 of last year.

Given all that momentum, we are in a position to significantly increase the 2025 financial guide. We are raising the revenue guidance by $160 million at the midpoint and now expect revenues in the range of $2.18 billion to $2.26 billion, which is a full reset of the prior revenue range. We are raising the gross margin guide to 62% to 64% in recognition of the gross margin performance we saw in the first 3 quarters and ASP and COGS momentum continuing in the business. We are also modestly bumping OpEx guidance, which is largely from the onetime expenses that have accumulated over the course of the year that now total around $60 million. In addition to those onetime expenses, there’s a small increase in R&D to support MolDx coverage for the remaining Signatera indications.

Based on this effort, I’m excited to announce we are now in a position to submit 7 new MolDx submissions before the end of the year this year, which we said can be worth around $250 million to $300 million of gross profit based on our run rate. We’ve also invested to expand the market by increasing the number of definitive MRD trials and to support the FDA-enabling FIND study for early cancer detection. It’s important to note that our SG&A was flat to down between Q2 and Q3, which is aligned with what we said about pre-spending to build the commercial team in the first half of the year. We aren’t planning any big commercial expansions anytime soon, and we’ll talk a little bit more about that later in the call. Finally, on guidance, we are substantially raising our guide for free cash flow generation for the year, where we are now formally expecting to generate roughly $100 million in cash for the full year.

Of course, we were thrilled to see the Signatera data readout from the IMvigor011 trial in bladder cancer, and we appreciate Dr. Tom Powles for joining us on the special call we held a few weeks ago to review the results. We think the IMvigor trial results represent a fundamental new paradigm in cancer care enabled by Signatera, and that data has been published now in the New England Journal of Medicine. Finally, we touched on our last call that we were very excited to launch Fetal Focus, a new single-gene NIPT for inherited conditions that leverages our proprietary SNP-based method. We recently announced an expansion of the Fetal Focus product to cover over 20 genes planned for this quarter. The initial feedback from our August launch is positive, and we think this is a compelling expansion of the panel.

Okay. Let’s get into some of the business trends on the next slide. The first slide shows our Q3 volume progression versus prior years. We had solid sequential quarterly growth in women’s health, driven in part by interest in Fetal Focus that spurred a lot of new commercial activity for our team. Organ health was also very strong with both greenfield and competitive wins, and we will continue to keep our foot on the gas as we have several clinical trials ongoing that further demonstrate how much utility and cost savings these tests are delivering. Of course, Signatera posted another record quarter, which we’ll get into on the next slide. Overall, the volume momentum in Q3 was very strong across the products and that has continued into Q4 thus far.

The next slide shows our clinical MRD unit growth over time. We had another record growth of 21,500 additional units, which includes more than 21,000 Signatera growth units and a few hundred Latitude growth units. As a reminder, we offer Latitude as a reflex to Signatera when Signatera can’t be performed. This unit growth represents 56% year-on-year growth versus Q3 of last year, and this is the fastest year-on-year growth rate we’ve had in all of 2025. The drivers here are really the same as we covered on prior calls, groundbreaking clinical data combined with excellent customer experience. New patient starts were again strong as physicians continue to use the test for ongoing monitoring. We see adoption being fueled by the excellent data released earlier this year, including at ASCO, ASCO GI and ESMO.

We haven’t had time yet to see the effect of the recent ESMO data for the publication in the New England Journal of Medicine, but clearly, those are both very positive factors. We’ll talk more about the implication of these results later in the call. The mix of tumor types we are seeing continues to be broad-based as physicians really start to generalize the use of Signatera in their clinics. That broad adoption drives volume growth but also creates a large revenue opportunity as we broaden the range of tumor types that we can get reimbursed. The next slide shows revenue, which was another area of significant outperformance this quarter. We grew revenues 35% over last year, which is actually faster than Q2 despite the tough comparable. This was from strong volume performance combined with excellent progress on ASPs. Each of our major products had a sequential improvement in ASP in Q3 compared to Q2.

Women’s health and organ health each had another standout quarter and Signatera ASPs are now at roughly $1,200. We had about $55 million in true-ups this quarter as cash collections continue to accelerate, and we posted another record for DSOs at 49 days compared to 57 days just in Q2. That trend has continued in Q4 as October was a clear new record for cash collections. All of this bodes well for future ASP growth, as Mike will describe later in the call. The next slide shows our gross margin traction over time, and we posted another strong gross margin quarter in Q3. Top line gross margins were a record as we got very close to that 65% level. Stripping out the revenue true-ups, we grew gross margins a full percentage point to 61.3% just compared to Q2.

We drove that with a combination of better ASPs as well as COGS, which were also very lean in the quarter across the board. In addition to COGS efficiencies, we spent some time on our last call talking about the other key margin expansion vectors we’re pursuing. Investing in revenue cycle operations has been a huge win for us over the last 2 years, and we are now at a level where we think we can hold that dollar spending steady as we continue to grow ASPs, which gives us leverage on the prior investments. I also mentioned the coverage expansion opportunity that was really across the board, but particularly in Signatera. In addition to getting more tumor types covered by Medicare, we are starting to see some green shoots in biomarker state reimbursement for commercial volumes.

We estimate the growth in Signatera ASP this quarter was driven primarily by the success we had in the spring and fall working with health plans in these states to cover Signatera for their patients. I think it’s going to be a pretty steady linear process for us over the next 2 years or so. Finally, all of the above can be accelerated with the deployment of AI. In addition to driving innovation, for example, with our foundation models, AI is already helping us scale these operations as volumes grow without forcing a commensurate increase in headcount. Okay. That’s a good segue to the next slide on OpEx. We went into some detail on the last call describing the investments we are making this year in both R&D and commercial operations to extend our leadership in MRD.

Looking at Q3, this R&D increase reflects the investments we made to support multiple new product launches as well as the expansion of our clinical trial and data generation efforts for both Signatera and early cancer detection. This year, we’ve launched Signatera Genome, Latitude tissue-free MRD, Fetal Focus single-gene NIPT, and we’re about to launch this expanded version of Fetal Focus. All of these things put us in a position to keep doing well in the market and to continue helping millions of patients per year. In clinical trials, as I mentioned, we’re doubling down on evidence generation and that investment we’ve been making has really paid off. We are now in a position to submit 7 new MolDx submissions by the end of the year. And as I mentioned earlier in the call, reimbursement for all the remaining indications could be worth around $250 million to $300 million of gross profit based on our run rate.

So this is well worth the investment. In addition, we are launching many interventional trials to continue advancing the field towards incorporating personalized MRD into the standard of care. In addition to Signatera, the advanced adenoma data we now have in hand gives us a lot of confidence to push as fast as we can to get a high-quality result in the FDA-enabling FIND trial, which is already enrolling. This is a big investment, but we think it’s worth it given the very attractive opportunity in ECD that includes a large market size, high gross margins and a very strong performance for our technology. We’ll get into more detail on that effort a little bit later today. Finally, as you can see here on the slide, our SG&A is slightly down sequentially from Q2 to Q3.

That largely reflects the fact that we are now in a very good spot with the commercial team and with our revenue cycle operations, which were big areas of SG&A investment in the past. We’re now in a position to drive significant scale from these prior investments. As we start to look out to next year, we expect there will be limited OpEx growth of roughly 10%, while revenues grow much faster, and margins continue to improve. The OpEx investment will be focused on executing definitive Signatera clinical trials to expand the market and completing the FDA-enabling [ FIND-ECD ] study, where we will be enrolling patients in 2026. As we said before, we think these are both very smart investments. Okay. With that, let me turn it over to Solomon to discuss more details.

Solomon?

Solomon Moshkevich: Thanks, Steve. Getting into some of our new data and announcements, I want to start with the expansion of our Fetal Focus test. We originally launched Fetal Focus in August with the panel covering 5 of the most common inherited conditions: CF, SMA, Fragile X, alpha-thalassemia and beta-hemoglobinopathies, including sickle cell anemia. The goal of the test is to offer a solution for pregnant mothers who are carriers of one of those inherited gene, but where the father is unavailable for screening to see if the baby might be at increased risk. In these cases, with a simple blood draw, our Fetal Focus test can directly assess the fetal DNA circulating in the mother’s blood to detect potential fetal inheritance from both mother and father.

This can be done with high sensitivity and specificity, and we believe it is the next best thing when Dad is not available for screening. So the news from last week is that we are expanding the panel to cover 20 of the most common genes and launching that before the end of this year. The validation of this expanded panel, like the original 5-gene panel, leverages prospectively collected samples from the EXPAND trial, which has enrolled over 1,700 high-risk pregnancies from a diverse multi-ethnic population. Where those pregnancies include those with dual inheritance from both parents, partial inheritance from one of the parents or 0 inheritance and confirmed fetal outcomes in all cases based on prenatal or postnatal diagnosis. Testing and confirming all negatives in particular, is critical for a robust estimate of test sensitivity.

We use our proprietary LinkedSNP technology to improve detection of challenging homozygous cases, which is where both parents are carrying the exact same mutation in a given gene. This happens with regularity in certain conditions like the classic Delta F508 mutation, which causes cystic fibrosis, if inherited from both parents. LinkedSNP uses information about neighboring DNA loci to work out likely inheritance patterns. We are pleased with the response from the medical community after our initial launch in August, and we know folks are looking forward to this panel expansion so that our Horizon customers can interrogate the cell-free DNA for a broader set of potential inherited conditions. Turning now to oncology, where we had a strong quarter of clinical adoption and new evidence generation.

At the ESMO conference, we had 14 abstracts, including 6 orals with a blockbuster readout in muscle invasive bladder cancer across 2 different studies, IMvigor011 and CheckMate 274, both of which also had concurrent publications in the New England Journal of Medicine and Annals of Oncology, respectively. Many of you tuned in after the conference for our special call with Professor Tom Powles, Director of the Barts Cancer Center in London and Chief Principal Investigator of the IMvigor011 trial, who reviewed the significance and the novelty of this data. For those who could not join that call, the link is on our Investor Relations page. But the summary is that we have generated Level 1A evidence to support the role of Signatera in directing treatment after radical cystectomy.

As the discussant said during the Congress, this is the strongest evidence to date for intervening with adjuvant systemic therapy on the basis of detecting plasma ctDNA. There are 3 more things to note. Number one, the IMvigor011 protocol called for Signatera monitoring every 6 weeks after surgery. This is a serial surveillance protocol, not simply a onetime test. Number two, patients who tested positive with Signatera at any time in that first year after surgery, derived significant benefit from immunotherapy, improving overall survival by 41%, while patients who remain negative derived no treatment benefit and had excellent outcomes with no treatment at all, achieving 97% overall survival at 24 months. Number three, the result was consistent across cohorts, IMvigor011 with atezolizumab and CheckMate 274 with nivolumab.

And Signatera is expected to have a role in postsurgical care regardless of the neoadjuvant treatment regimen. As perioperative care is expected to grow in popularity, which is treatment both before and after surgery, questions will always remain about which patients benefit the most from additional systemic therapy after surgery, which can often be hard for patients to tolerate. As a reminder, the median age of diagnosis in the U.S. for muscle invasive bladder cancer is 73 years old. Ultimately, each doctor and patient will have to make their own informed decisions, and now they can look to Signatera MRD status for additional guidance. We expect this data to fuel adoption of Signatera among GU oncologists and to have a positive halo effect on the overall field and further to differentiate Signatera.

Among the other readouts at ESMO, the colorectal data was also notable. Data from the INTERCEPT study and the NICHE study were presented. Both showed that Signatera dynamics and particularly MRD clearance during or after therapy were reliable markers of therapy response. In the INTERCEPT study, they followed ctDNA patterns from over 1,300 colorectal cancer patients, showing the rates of clearance after adjuvant therapy and what it meant. In this cohort, adjuvant therapy achieved MRD clearance in approximately 1/4 of the patients who had tested positive after surgery. And it was very rare for a clearance to occur spontaneously without treatment only 2% to 4% of the time. This makes Signatera extremely reliable for evaluating response to adjuvant therapy.

In the NICHE study published concurrently in the journal Nature, the investigators conducted an in-depth analysis of response to neoadjuvant immunotherapy in patients with MMR proficient colon cancer. While they identified novel predictive signatures based on TP53 status, immune cell proliferation and whole genome duplication, the study also showed the power of Signatera dynamics to predict response. Out of the 6 patients who achieved response based on pathologist review of their resected tumor, 5 out of 6 had cleared their ctDNA prior to surgery. And out of the 20 patients who failed to achieve pathological response, 19 out of 20 were still ctDNA positive prior to surgery. This all points towards the clinical utility of using Signatera in the neoadjuvant setting to inform the surgical and adjuvant treatment plan.

Both of these studies together with similar evidence in other cancer types, all tell a growing story of Signatera supporting a new type of surrogate endpoint to hopefully accelerate future drug approvals as well. While Signatera had a successful showing at ESMO, there were other ctDNA-guided trials using other assays that did not hit their endpoints, for example, in colorectal cancer and lung cancer. We believe this underscores the differences between ctDNA assays and technologies as well as differences in trial designs. As several presenters noted explicitly during the ESMO conference, study results are not necessarily transferable between ctDNA assays. The field is coming to appreciate that there can be significant differences in performance between different technologies.

It is not enough to measure simply analytical assay performance using controlled mixture experiments in a research lab. It is critical that assays be rigorously evaluated in well-designed prospective clinical studies, especially when they’re going to inform life and death treatment decisions. As a reminder, Signatera is unique in that we use a patented multiplex PCR amplification technique followed by next-gen sequencing, which identifies a targeted set of clonal mutations with the lowest background error rates and sequencing the plasma at extreme depths with over 100,000 reads per target. By contrast, other labs may use hybrid capture techniques that are broad and shallow, tracking hundreds or even thousands of mutations, but sequencing them at shallow depth.

Test performance is based on more than the number of targets. We see this over and over again. It depends on the chemistry, the variant selection and the calling algorithms. All of this helps solidify Signatera’s role in cancer care. It will also give rise to a new wave of clinical trials, treating patients only on molecular recurrence and using Signatera dynamics to evaluate treatment response. With that, I want to turn it over to Alex to discuss our exciting road map in early cancer detection. Alex?

Alexey Aleshin: Thanks, Solomon. Colorectal cancer is both common and highly preventable when detected early before or right as the cancer develops. Traditional screening works, but participation is uneven. That’s why there’s intense interest in accurate, convenient blood-based screening options. We have leveraged our experience at over 250,000 early-stage tumor sequence to date to drive deep discovery in order to find a proprietary set of markers that differentiate colorectal cancer and precancerous advanced adenoma lesions from healthy controls. We estimate that the vast majority of these markers are currently not discoverable if only publicly available data sets are utilized. Furthermore, we have embraced an advanced adenoma first approach, focusing our discovery and algorithm development in order to prioritize performance in the difficult-to-detect advanced adenoma lesions.

Lastly, we have invested considerable resources to optimize our methylation technology platform to maximize molecular recovery and prevent signal degradation. Taken together, this allows us to detect signals significantly below 0.01% VAF, a range that is required to improve advanced adenoma sensitivity. PROCEED-CRC is a U.S. prospective study of approximately 5,000 average-risk asymptomatic screening participants who provided blood pre-colonoscopy. In the most recent analysis focused on advanced adenomas that was derived from 1,400 sequential participants with clinical outcomes, we reported a 22.5% sensitivity and a 91.5% specificity. Furthermore, when adjusting performance for histological subtype prevalence in recent FDA-enabling trials, sensitivity remained in the approximate 22% to 24% range.

This is a step-up from earlier 2025 pilot data readout, which showed an 18% sensitivity at a 91% specificity after technological and algorithm refinements. We have heard some questions about if this sample set is representative of the FDA-enabling study. We want to reiterate that these samples were collected in the same fashion and from the same funnel as the FDA-enabling FIND study. Furthermore, we know that sample processing occurred in a blinded fashion and the size distribution was potentially more challenging than what we expect in a larger cohort. Before we dive into the data, it’s important to understand the types of advanced adenomas that are precursors to colorectal cancer and why their detection is clinically challenging. Advanced adenomas are precancerous polyps that can vary significantly in size, structure and cellular composition.

These include 4 main subtypes: number one, the rated adenomas, which are flat and often more difficult to detect visually. Number two, tubular adenomas, the most common but typically smaller and less aggressive subtype. Number three, villous or tubulovillous adenomas, which have a high malignant potential due to greater percentage of villous architecture. And lastly, number four, advanced adenomas with high-grade dysplasia, which represent the highest risk of transformation to colorectal cancer. When looking at adenoma subtype, 78% of lesions in our cohort were serrated or tubular, consistent with the 74% to 78% range observed in other large studies. This alignment indicates that our cohort is representative of real-world advanced adenoma biology, further validating that our results are representative and not driven by an unusually favorable distribution.

In addition to histological subtype, detection rates can also vary by lesion size as smaller or flatter lesions are notably more challenging for blood-based screening methods to detect. In our PROCEED-CRC study, the mean AA size was 13.7 millimeters, notably smaller than the greater than 15-millimeter average reported size in other FDA-enabling studies. Despite the smaller lesion size, which is typically associated with lower detection rates, our results demonstrate promising sensitivity. In summary, the PROCEED readout underscores Natera’s commitment to advancing early detection through a data-driven approach, [ a showing ] promising detection rates even under very stringent clinical conditions, laying the groundwork for improved colorectal cancer prevention outcomes.

To move from promising readouts to potential screening tests, Natera has launched FIND-CRC, an FDA-grade validation study targeting approximately 25,000 average-risk adults who provide blood before colonoscopy, targeting approximately 70 screen-detected CRC cases. Primary aims are CRC sensitivity and specificity in people without advanced precancerous lesions. Secondary aims include performance for advanced precancerous lesions for advanced adenoma. The study is designed to generate regulatory-grade evidence that complements and builds upon PROCEED-CRC development data set. The study has enrolled its first patient in May 2025, and we expect enrollment targets to be met over a cumulative 18-month time frame. With that, let me turn it over to Mike to review the financials.

Mike?

Mike Brophy: Great. Thanks, Alex. The next page is just a summary of the financials compared to last year. We’ve clearly ramped volumes and revenues while also continuing to transform the gross margin profile of the business. We said a few years ago that long-term gross margins can exceed 70%. And I think the progress we’ve made this year should give you confidence that we can get there, particularly as oncology overtakes women’s health as the largest part of the business over the next few years. We’ve also clearly ramped OpEx, but very little of the OpEx increase translates to revenue in the same calendar year. These are not Super Bowl ads meant to drive short-term volume growth. These are primarily investments that are designed to deliver growth in 2026 and beyond, along with the roughly $60 million in accruals that don’t repeat every quarter, as Steve described.

As a result, we are really pleased to be showing leverage in the business with respect to free cash flow generation, and we are significantly bumping up our expectations for cash flow generation for the full year. The balance sheet remains pristine with no permanent debt on the books and the cash flows from operations pushing our cash balance above $1 billion currently. Okay. Let’s get to the guide update on the next slide. For the third time this year, we are completely resetting the revenue guide, now ranging from $2.18 billion to $2.26 billion on the strength of the revenues and the volumes we’ve seen so far this year. The gross margin guide, we are once again bumping up the bottom end of the range 100 basis points to account for the good results we’ve generated so far this year.

To keep modeling simple, we’ve forecasted Q4 without true-ups in the revenue or the gross margins as has been our previous practice, although the record cash collections in October position us well for more true-ups when we close the books in Q4. Looking into next year, I think a preliminary way to think about volume growth for women’s health and organ health is to post a similar number of growth units as we delivered this year, given the teams are relatively stable in size. And for Signatera units, we continue to think about the last 4 quarters rolling average as a good goal for unit growth over the course of the year. So of course, there may be some variation quarter-to-quarter. That implies some very healthy quarters for Signatera next year, but we think that’s justified given the strength of the team we now have in place and the drumbeat of prospective outcomes data we’ve continued to deliver.

On ASPs, I think a reasonable initial forecast would be to hold women’s health and organ health ASPs stable with some modest growth built in for Signatera and perhaps the $50 range through the course of the year. Our internal teams are, of course, focused on much better results than that across the board. But even this approach yields some big revenue numbers when paired with the volume scale we are expecting. On both the SG&A and R&D lines, we are making the bumps that Steve described in his section. Steve pointed out that SG&A was flat to down sequentially in Q3 compared to Q2 and R&D was up on all the additional launch efforts and clinical trial work we took on. We’ll remain opportunistic on additional OpEx investments, particularly in R&D and clinical trials, but we think the commercial operations are well scaled now to support continued rapid growth in the coming years.

Accordingly, I’d expect OpEx growth to grow something more like in the 10% range next year with a bias toward the R&D line. We are in the midst of our budgeting process now, and we’ll plan to give another update on 2026 when available early next year. I mentioned cash flow generation as a huge bright spot in our results this year, and we expect to sustainably generate cash again next year as we continue to get scale with top line growth and improving margins. Okay. With that, let me open it up to questions. Operator?

Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Tycho Peterson with Jefferies.

Noah Kava: This is Noah on for Tycho. I wanted to start by asking on prenatal. So you guys announced a new Fetal Focus test last week. I guess why is now the right time? What were you hearing feedback-wise on the 5-gene panel? And then looking at the 20-gene panel, how are you thinking about reimbursement there?

Steve Chapman: Yes. Thanks. It’s a good question. So of course, we launched the 5-gene panel earlier this summer, I think August, something in that time frame. That’s gone really well. We’ve gotten great feedback from customers. And now R&D has gotten to the point where we’re in a position where we can launch the broader panel, which was always part of our plan. So we’re excited about that. We’re also excited about the EXPAND clinical trial. This is something that we started several years ago, if you go back and you take a look. This type of trial is really the gold standard where we’re prospectively collecting blood tubes and then collecting diagnostic outcomes on both positive and negative samples effectively on all the pregnant patients that enroll into the study. And that’s really the gold standard way to run these types of trials. So we’re excited for that to read out over time as well. We think that will really be the defining trial in the space.

Noah Kava: Got it. And then for my follow-up, switching to MRD here coming out of ESMO and the IMvigor readout. How are you thinking about the path to NCC guidelines with some of the clinical utility data you put out and then subsequently, the broader commercial payer adoption?

Steve Chapman: Yes. So obviously, we’re really excited about the data from ESMO, particularly around IMvigor that’s been received very well. Alex, do you want to comment on guidelines for a moment and maybe Solomon, if you want to comment as well?

Alexey Aleshin: Yes. Thanks, Steve. So we do want to know that the IMvigor011 data is what we call Level 1A clinical data and has been obviously submitted for FDA approval, both for the compound as well as for Signatera as well. If you look at past precedents, typically, if something does go through the FDA process, it is included into the NCCN guidelines. So while we can’t really speculate on how [ CTA ] will be described NCCN guidelines, we do expect that Signatera and atezo kind of guided by Signatera in this setting will eventually make it into the NCCN guidelines.

Solomon Moshkevich: Yes. This is Solomon. I would add, given that the New England Journal paper has already come out, assuming that all the FDA processes are on track, we would expect to see a guideline update at some point mid or late next year.

Steve Chapman: Yes. And just on the final point on this on commercial payers, which I think you also asked on. We’re definitely starting to see some traction, as Mike mentioned, from commercial payers because of the biomarker bills. But obviously, generating this level of evidence and just the quantity of data that we’re generating, we think, puts us in a good spot longer term to have coverage from commercial payers.

Operator: Our next question comes from the line of Doug Schenkel with Wolfe Research.

Douglas Schenkel: I’m going to keep it to one topic, early cancer detection. First thing is regarding the PROCEED-CRC, advanced adenoma sensitivity, specificity performance, I’m just wondering how important that was to shaping your willingness to invest more in this program? And kind of related to that, generally speaking, are you using the same standards you applied in advancing your NIPT and then MRD programs, 2 areas where you clearly made the right call to move forward. So that’s the first part. Second, how much would you expect to invest in 2026? I’m guessing something like $50 million incremental in that program. And then lastly, I’m curious if you’d be willing to share minimum performance — minimum viable performance you would consider to move forward with this product from a commercial viability standpoint.

Steve Chapman: Yes. Thanks, Doug. Yes, all good questions. So I would certainly say the performance that we’ve achieved definitely shaped our willingness to invest into the program coming out of the JPMorgan conference in the beginning of ’25 and then with our initial pilot readout on advanced adenoma. Just — based on that, we made the decision to initiate the initial stages of the FIND study because we were feeling very positive about the road map of improvements that Alex mentioned on advanced adenoma. But we didn’t fully pull the trigger until we saw this most recent readout from the PROCEED study, which was, I think, a big milestone that we’re waiting for. And now based off this and our own internal views of the performance and all the, I think, things that Alex outlined just a few moments ago, we’re really full steam ahead on the FIND study.

And we’re excited about it. We’ve set everything up the right way. We’ve gotten a jump start by running the PROCEED study and then having all the ducks in a row to start collecting patients. And we think we can enroll the trial in 2026 and hopefully be one of the major players in this early cancer detection space, which we think is a really good opportunity. I think from an investment standpoint, I think you’re kind of directionally right, just kind of building off what we spent this year I think that kind of makes sense. And from a minimal viable standpoint, we’ve always said we think we have to have really strong performance to make it worthwhile. And that’s what we’re seeing right now, very strong performance. We know where our competitors are.

And I think that’s something we’re, of course, keeping in mind. But again, it’s a huge market. We’ve done well in very competitive environments. So we’re going to keep our eye on just where we need to be and be pushing as hard as we can to make sure we’re setting up for success.

Operator: Our next question comes from the line of Daniel Brennan with TD Cowen.

Daniel Brennan: Great. Maybe just on Signatera. You’ve kind of taken up the guide for giving us some color on next year in terms of kind of an 18,000 plus or minus trend line. Maybe can you just unpack a little bit, nice little bump up again this quarter above what you guys were expecting. Just any color? I know you gave some drivers in the prepared remarks, but just can you dig in a little bit specifically, anything unique really stand out? And if you do hit that kind of 18,000 sequential run rate, which would be a step-up from the prior guide, it is still a decel from what we’ve seen in the last 2 quarters. So is there anything in the last 2 quarters that was unusual that would cause the deceleration? Or is it just general conservatism?

Steve Chapman: Yes, good question. I mean, look, I think the growth at this point is really just coming across the board. I mean, we’re seeing a lot of new customers coming on using Signatera for the first time. We’re seeing existing accounts and doctors extend their usage. We’re seeing new histologies come on. And I think what’s really remarkable is just, I think, the very low penetration that we’re in right now. I think despite all of our success, I mean, we’re still kind of in these very low single digits when you look at overall penetration, including recurrence monitoring. So there’s a long way to go. And as long as we keep putting out high-quality data, I think we’re going to be in a great position. In the last couple of quarters, we’ve seen really strong numbers on new patients coming in, which I think has been, I think, significantly more than what we’ve seen historically.

And any time you see like a very sharp uptick, it’s something that you always have to kind of think, okay, well, that may normalize over time. But I’ll tell you just as we started Q4, I mean, obviously, Mike mentioned this as well in the prepared remarks, I mean, we’re seeing that same strong trend on new patients continue. So there seems to be a lot of interest but just having been — having all been in the space for a long time, we know it’s not always a straight line up. And I think kind of the way that Mike put the framework in place is the right framework to think about, but we hope to exceed that as we have been doing thus far.

Daniel Brennan: That was super helpful. And maybe just kind of staying on Signatera, if you don’t mind. Just you talked about the biomarker bills as Mike gave the $50 kind of price increase over the course of the year through the end of ’26 is like a decent starting point. And you talked about early progress and you guys have been signaling that for a little bit. Can you just spend a little more time on it? I guess our thinking was when and if biomarker bills begin to have an impact, it could be a bit of a domino effect. Would be tough for a payer to cover something in Texas and not in the adjacent states. So just any more color on specifically what you’re seeing? And is that still a potential in ’26? Or do you think it’s going to take longer for biomarker bills to really kick in?

Steve Chapman: Yes. Mike, do you want to take that?

Mike Brophy: I think that there’s going to be — look, I think that you’ll have a continued drumbeat from biomarker state reimbursement over the course of ’26. I mean I mentioned in my prepared remarks that we’ve seen the growth that we — that I’d hope to see in the ASPs from — for the biomarker states, and that was really based on wins that we had kind of in the spring and in the summer. There is something to the idea that, hey, like when you have like these big national plans and they’ve got to get it set up to cover Signatera in one area, but then not the other and the clinical utility and the cost savings is so obviously there, does that add to the incentive structure for them just to cover the test more broadly. When we end up kind of getting to steady state and we are kind of broadly covered in a pan-cancer setting, which I think is inevitable, I think we’ll look back and see this as one of the drivers, but it’s — you won’t be able to tease that out versus all of the excellent prospective outcomes data that we’ve been publishing and that we’re going to have in the future.

But yes, I think it’s a factor.

Operator: Our next question comes from the line of Subbu Nambi with Guggenheim.

Subhalaxmi Nambi: Solomon, your prepared remarks described the advanced adenoma samples in PROCEED trial. Help us understand why you believe the study is designed in a way to be more predictive as we head into the FIND study readout. That said, what I’m still missing or not understanding is why is your assay different and better able to address what has been an issue for others, low signal abundance and really just the biological limits in ctDNA. What is so unique about your assay?

Steve Chapman: Yes. Good question. Alex, why don’t you take that?

Alexey Aleshin: Yes. Thank you for the question. I think it’s a multitude of factors and also just the dedication of our research team. This has been a multiyear process, and we’ve really approached this, I would say, from first principles. First of all, it’s finding the best biomarkers, prioritizing advanced adenoma as something that we really focused on and not necessarily just CRC by itself. I think the technology has also advanced in the last few years that has allowed for increased molecular recovery, lower sample loss and also techniques that help differentiate methylated regions that otherwise might have been difficult to pick up. And then I think lastly, it’s using the right samples. I think we’ve benefited tremendously from having access to one of the largest repository of early-stage colon cancer cases with known VAFs from Signatera.

So when we’re training and designing our assay, we’re able to really focus on the cancers that matter and that are traditionally difficult to detect. And I think that’s what’s given us a lot of confidence now over multiple readouts that we are on the right track. And I think this study in itself furthermore kind of underscores that, collected in exactly the same fashion, prospective asymptomatic patients, distribution of the advanced adenomas is representative, if not a little bit tougher than you would expect in a much larger study. And we’re seeing performance that gives us strong confidence that this is likely to hold up in a larger prospective FDA-enabling study.

Subhalaxmi Nambi: Very helpful. Quick unrelated follow-up. When should we expect the VEGA trial to read out, the deescalation arm of the GALAXY study?

Steve Chapman: Alex, why don’t you jump on that one, too?

Alexey Aleshin: Yes. So it’s difficult for us to predict exactly when the study is going to read out. It is an event-based readout. I will say that all patients on the VEGA study have been randomized. So we’re just waiting for enough events. I think it is safe to say that the readout is likely to occur in 2027. But as we get closer to that, we’ll refine that guidance.

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

Casey Woodring: I have a couple of quick ones on Signatera. I was hoping that you guys could split out contribution from new patient starts in the quarter and whether that increased from last quarter? I know you called out strength there last quarter as well. And then today, you’ve noted an acceleration across multiple tumor types in Signatera. Just curious if you can clarify which tumor types, you’re seeing the most strength and if you’re seeing any early traction from new data readouts like IMvigor?

Steve Chapman: Yes, it’s a great question. So yes, I mean, we had — I think in Q2, we had sort of said that the growth in new patients was an all-time record, and I think it was something like maybe 2x greater than anything we’ve ever seen before. And what’s incredible is in Q3, we basically saw something similar where we kind of had almost to those same levels of new patients coming in — new patient starts coming in. Of course, it was I mean — we had more new patients coming in, but the growth quarter-over-quarter was almost to this record level of growth that we had seen previously. Sorry, I just had to clarify. But yes, so I do think we’re seeing a lot of continued interest with new patients coming in. With regards to where we’re seeing interest, it’s really broad across the board.

Where we generate a lot of data, there’s a lot of interest. And of course, coming out of the IMvigor announcement, there’s been just a ton of interest in bladder. We’re getting a lot of inbounds, both interest from pharma companies as well as physicians that are now looking at how they can implement this in either trials or in their practice.

Casey Woodring: Got it. That’s helpful. And then just my quick follow-up here. I appreciate the top line and OpEx color on ’26, but can you just talk about gross margins? How should we think about those, especially as Signatera becomes a larger part of the mix? Would you expect those to step up at a similar rate as they did here in ’25? Would that be a good benchmark?

Steve Chapman: Yes. Mike, do you want to take that?

Mike Brophy: Yes. I think on the gross margins, I think, first, as I mentioned in the prepared remarks, I think it’s just — it’s easier to model if you strip out the true-ups and so you start with kind of the pre-true-up number and anchor to that. And then I think that we can have a reasonably meaningful kind of sequential improvement over the course of next year in gross margin as we continue to grind higher. Obviously, it’s hard to repeat the same exact rate that we had this year. I think we’re up some 4 percentage points or something like that year-on-year. It’s a pretty meaningful change. But I do think that the target remains clear to us. I mean I think we can be in that 70% range over time. And I think even inclusive of the true-ups, I think that 64.9% number that we put up this quarter, that gives you a glimpse of what we’re capable of. So I’m feeling very encouraged on gross margins. I do expect improvement next year.

Operator: Our next question comes from the line of Puneet Souda with Leerink Partners.

Puneet Souda: Congrats on a strong print here. First question is more on the Signatera side. Just trying to understand what the ASP increase or — is that the assumptions for next year, is that just on biomarker bills? Or are you baking in additional indications that you talked about? So can you — maybe could you clarify on that point? And then on the clinical side, it would be great if Alex could provide more on — when we look at the PEGASUS and DYNAMIC-III trials out there, given what we’ve seen with some of the struggle around the escalation, how do you — how are you thinking about VEGA there? And then I have a follow-up.

Steve Chapman: Mike, do you want to take ASP call?

Mike Brophy: Yes. So on the ASPs, I mean, honestly, on Signatera if we get — if we do the things that we think internally we can do on both biomarker states and given all the MolDX submissions that we have in flight, I think we can do better than the $50 I mentioned in the prepared remarks. One thing to note is that again, we will have another kind of reset on ADLT, which would be a modest headwind for us going into next year. So I just want you to be factoring that in. So the $50 represents what I hope will end up being kind of a conservative cast of achieving some fraction of all these opportunities we have ahead of us. Steve kind of talked about this, but we’ve all been in the space and been together for a long time. And unfortunately, it doesn’t always go up into the right.

You don’t always get 100% of these opportunities to flow in at the time that you want them. But if you break down MolDX submissions, we have a long track record of being successful with those and then driving ASP improvements off of those. I think the biomarker state is a driver that we started to really show some traction there as well. And then, yes, there’s some other opportunities related to potential guideline inclusion with bladder and beyond that could be very exciting as upside. But I think just as an initial kind of preliminary kind of glimpse into ’26, I think that’s the right starting point.

Alexey Aleshin: Great. And Puneet, thanks for the question regarding VEGA. It’s hard for us to comment on other readouts. But I will say that, obviously, assay performance is important, study design is important. I think when VEGA was designed, a lot of thought went into the right approach. I will flag that in VEGA, there was serial testing patients could cross over and get delayed treatment as part of the ALTAIR study. So that’s one factor to consider. I think the other thing I want to point out is we do benefit a little bit from the fact that GALAXY actually was the basis for enrolling patients into VEGA, and we have been able to see now over a period of multiple years, how the assay has performed in the non-randomized GALAXY patients, which does increase our confidence.

And I think lastly, it is a larger study, close to 1,000, if not more patients were randomized. And it’s hard for me to obviously predict exactly the outcome, but we remain confident and excited to see the data when it’s unblinded in 2027.

Puneet Souda: Okay. That’s helpful. And then just a follow-up. On the women’s health side, we’ve seen growth from a competitor in the market, mother-only assay that has gained traction. So obviously, you have Fetal Focus product now. Could you talk about the positioning of the product if the sales force is fully trained on it? How can you sort of go into market and capture share. You obviously have a strong commercial position here. So maybe talk about what — how should we think about that piece of the market and your positioning and growth there?

Steve Chapman: Yes, it’s a good question. So yes, I mean, we’ve been doing carrier screening for a long time, right? I think we made one of the largest providers of next-gen sequencing-based carrier screening in the U.S. And when you screen the mother, if the mother is positive, then the standard of care is to go screen the father. Now one of the challenges is that the father is not always available to get tested or maybe not willing to get tested. And so there’s — in those cases, there’s a clinical need to be able to directly assess the genetic status of the fetus. And what’s great with Fetal Focus now is that we can do that. We launched the 5-gene panel in, I think, August that was received very well. Now we’re sort of expanding to the 20-gene offering.

And of course, this is something we can roll out through our entire customer base. We can roll this out broadly through our existing sales team. And then there’s a lot of, I think, competitors that maybe don’t have this capability where this gives us another advantage where we have something unique compared to them. And then for the groups that do have it, we think we’re positioned very well, both with our technology and with the clinical trials that we’ve been doing. So as I said, there’s kind of always been competitors in the space, and we’ve done really well. We’re very pleased with our growth in the women’s health space. I mean, we can kind of see sort of where others are growing and how we’re growing, and we think we’re doing very well there.

And we think this can actually increase that as we move forward.

Operator: Next question comes from the line of Catherine Schulte with Baird.

Catherine Ramsey: I’ll just go ahead and ask both my questions now. First on early detection, we’ve seen some players start in lung cancer and then move on to multi-cancer applications, and you’ve expressed interest there as well. Obviously, you want to figure out CRC first, but any updates on your long-term strategy in screening and maybe when we could hear updates on the multi-cancer side? And then second, on Signatera 2026 volume growth, just to confirm, was your comment to look at the rolling average of the last 4 quarters in terms of sequential unit volume growth, so 18,000 or so? And does that level hold up for the fourth quarter as well?

Steve Chapman: Yes. Thanks. So I’ll just comment on the first one. I mean, I think the — our focus right now has been getting the CRC product completed through the clinical trial process and approved on the market. But of course, in the background, we’ve got a lot of activity going on. And we have an excellent team. And so [ MSA ] is something that, of course, we think we would be in a good position to do and to perform well on. So just kind of stay tuned there. But in the near term, we think there’s a big opportunity in CRC, and we think we’re going to be one of the major players in this space, and it’s an attractive opportunity when you look at ASPs, gross margins and just the clinical need and the total market size. Mike, do you want to take the second?

Mike Brophy: Yes.

Steve Chapman: Do you want to take the second question on just kind of what we’re thinking from a forecast standpoint on Signatera?

Mike Brophy: Yes. Catherine, the way you said that, I think, is right. I mean what I had in mind there is kind of the rolling for the growth — rolling 4 quarters average for the growth units. And I just stress it’s not — every quarter is not — it cannot always be up into the right. You don’t always exceed that rolling 4 every quarter, even though we have up to this point. But I think it’s — you got to have some kind of benchmark, I think, for modeling. And I think that’s a very healthy one that requires very good execution from our team. And I think if you’re able to look at it over the year, like looking back on it, I think we’ll be able to hit that bar.

Operator: Okay. Ladies and gentlemen, that is all the time we have for questions. This concludes the question-and-answer session and today’s conference call. We would like to thank you for your participation. You may now disconnect your lines. Have a pleasant day, everyone.