管理層發言
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 *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Michael Brophy, Chief Financial Officer. Michael, please go ahead.
Thanks, operator. Good afternoon. Thank you for joining our conference call to discuss the results of our second quarter of 2026. On the line, I am joined by Steven Leonard Chapman, our Chief Executive Officer; 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 is available. Starting on Slide 2. During the course of this conference call, we will make forward-looking statements regarding future events and our 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-Ks 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 6, 2026. If this call is replayed or reviewed after today, 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. Unless otherwise noted, each such reference represents a year-over-year comparison. And now I would like to turn the call over to Steven. Steven?
Great. Thanks, Mike. Let's get to the highlights on the next slide. We had an exceptional quarter. We processed approximately 1.044 million 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 thousand clinical MRD units, representing year-over-year growth of approximately 56% compared to Q2 of 2025. Clinical MRD volumes grew 34 thousand units over Q1, which is the largest sequential increase to date. Beyond volume growth, we met several crucial milestones in oncology. Signatera became the first MRD test to get U.S. FDA approval as a companion diagnostic and the first MRD test to get Japanese PMDA approval. In addition, the NCCN Guideline Committee issued a Category 1 recommendation for Signatera-guided adjuvant treatment in muscle invasive bladder cancer. We will 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. Excluding revenue true-ups, our revenues grew approximately 40% year-over-year. Gross margins were strong again at approximately 65%, driven by another quarter of sequential improvement in ASPs. We were also pleased to generate positive cash inflow again this quarter and trim operating losses while continuing to invest in growth initiatives in R&D. On the guide, we are in a position to completely reset the revenue range, raising it $100 million at the midpoint. Our new range is $2.85 billion to $2.91 billion in revenues, and we are holding OpEx steady. The guide implies 31% revenue growth this year excluding true-ups, and we feel very good about hitting this range. We are clearly on a roll. I am excited to review the progress since our call in May. Okay. Let's get into some of the business trends on the next slide. I think the growth of total tests over time is remarkable when you look at the longer term picture in the chart. In the quarter, women's health results were particularly strong on a seasonally adjusted basis with high-single-digit growth versus Q2 of last year. Q2 is typically our softest quarter for women's health due to seasonality, but we counteracted that effect this year with particularly strong new account wins, driven by Fetal Focus adoption and early returns on the launch of our newly enhanced Panorama test. We think this puts us in a strong position to continue executing in women's health for the rest of the year. We also had another strong organ health quarter as volume continued to ramp. And then, of course, we had our best quarter yet for Signatera. The next slide shows our clinical oncology units over time. As a reminder, that is primarily Signatera clinical units but also includes a small number of Latitude cases. Our sequential growth of 34 thousand units was well above our internal expectations, performance fueled by a few drivers. Let's first look at the change in units between Q1 and Q2. You will recall that on the Q1 call in May, we described weather-related events that suppressed Q1 MRD volumes by several thousand units, a lower Q1 number. We do not think we necessarily recovered those units in Q2, but the quarter-over-quarter change is exaggerated by that artificial reduction. 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 hires were 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 have seen an uptick in general for Signatera 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, both because it demonstrates broad adoption of Signatera in clinical practice, and 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 bode well in terms of future adoption. So we feel really good about where we are and the ongoing momentum. Moving to revenue on the next slide. Total revenues grew approximately 38% year-over-year as continued ASP execution accelerated growth on top of the volume performance. Maintaining this level of top-line growth given the size of our revenue base is pretty remarkable. We had about $52 million in revenue true-ups this quarter, which is trending down in both absolute terms and as a percent of revenue. Excluding true-ups, our revenues grew about 40% year-over-year. We had another good quarter in women's health and organ health ASPs, and we are pleased to see Signatera ASPs increase again. Signatera ASPs were up to roughly $12.75 as we continue to drive more consistent reimbursement from Medicare Advantage and commercial plans in biomarker states. We made a significant investment in revenue cycle management a few years ago to get more consistent reimbursement for covered services. While we have completed most of the major initiatives for women's health and organ health, we still think Signatera ASPs have the potential to grow substantially over time, both from operational initiatives as well as potential additional MolDX coverage decisions and broader guideline inclusion. We talked in the past that we think a mature Signatera ASP 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 excluding true-ups where we had a roughly 50-basis-point improvement over Q1. This was due to several factors, including ASP wins and returning to a more normalized ratio of reported to actual units compared to Q1. COGS increased slightly in Q2 as we saw an uptick in volumes from some of our recently launched products, particularly for Fetal Focus, Latitude, and Signatera Genome. When we launch these products, we leave a lot of room to achieve COGS improvements over time as volume scales, and we are already executing on that roadmap. Latitude and Fetal Focus also present ASP upside over time. For example, we have a Latitude submission 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%+ 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 was not strictly linear. We had periods of incremental progress and also step-function changes. I think we will have a similar trajectory in the future. Okay. With that, let me turn it over to Solomon to discuss some of the exciting clinical and product developments this quarter. Solomon?
Thanks, Steven. I'll talk through some of the catalysts that hit in the second quarter, and I want to start in women's health with our launch of the enhanced Panorama test because it addresses something that has been a gap in prenatal screening for a long time. Achieving reliable test performance at low fetal fraction has been a challenge. During pregnancy, fetal fraction is the proportion of placental DNA circulating in the mother's blood, and when that fraction is low, detecting chromosomal abnormalities becomes significantly more difficult. One prior study indicated sensitivity as low as 62% for trisomy 21 using a different technology. Despite this limitation, most other labs that 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 power of SNPs for fetal fraction measurement, triploidy detection, and twin zygosity, along with excellent performance at low fetal fractions. This brings 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, and we detected 100% of the trisomy 21 cases in that cohort. We launched this in May, and 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 multiyear run of innovative launches in prenatal health. Last year, we launched Fetal Focus, our next-gen single gene NIPT to detect inherited conditions like cystic fibrosis, and it has continued to exceed our expectations driven by the strength of the EXPAND trial. The year before, in 2024, we launched our fetal RHD test, addressing a significant unmet need given the nationwide RhD 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, and it represents a meaningful expansion over the initial CMS proposal. Now in year one after surgery, Medicare will cover six tests per year for patients with kidney transplant and 12 tests per year for patients with heart and lung transplants. Then in years two and three, Medicare will cover four tests per year across all three categories. This is significantly higher than the original proposal. This improvement reflects strong advocacy from the clinical community after the draft was originally published by Medicare in July 2025. Major transplant medical societies submitted letters to MolDX in support of expanded frequency, including 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, and the August 30 effective date on the policy means we will start to see the benefit of Medicare reimbursement in the second half of the year. We expect this to drive improvements in Prospera ASP and in Prospera volumes as physicians update 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 is an industry first for the field of MRD testing. Backed by the global Phase 3 INVIGOR01 trial, it validates the whole-tumor concept of 'treat on MRD' at the highest level. Then in June, the Japanese PMDA approved Signatera for patients with colorectal cancer, supported by the GALAXY study. We expect 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, 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 IVDD transition deadline in 2028. This also sets Natera up nicely to achieve future reimbursement in Europe, a key part of our long-term global vision. These regulatory wins are the culmination of a long road for Natera in developing our regulatory and quality capabilities. It is remarkable that these approvals have come in multiple different disease indications at the same time. These are also major proof points for our biopharma partners. We are building on this momentum with our newest submission to the Japanese PMDA for Signatera as a companion diagnostic in bladder cancer. With this submission, we are advancing in lockstep with Chugai, which markets atezolizumab in Japan. Japan reports approximately 34 thousand new cases of bladder cancer per year, of which around 20% to 25% will match the INVIGOR01 trial population, and notably, that trial had more than 20 participating clinical sites in Japan. 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 six weeks, and we expect regulatory approval later this year or early next year. Finally, we were very pleased to see the NCCN issue its Category 1 recommendation in support of Signatera testing in bladder cancer. Category 1 is NCCN's highest designation based on the most compelling randomized evidence. Furthermore, the NCCN specifically called for ctDNA testing using a personalized tumor-informed multiplex PCR NGS assay, which is language that uniquely describes Signatera. This is now the third NCCN guideline to positively recommend tumor-informed MRD testing, with prior recommendations 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, it is already resulting in new customer starts and more systematic use among existing customers who prefer to wait for NCCN recommendations prior to adoption into standard clinical use. It is 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 phase variant technology acquired late last year from Foresight Diagnostics. The NCCN guideline is also driving new positive coverage policies among commercial payers far beyond what we could achieve with just biomarker legislation alone. Some commercial plans already had blanket coverage policies in place for FDA-approved companion diagnostics or NCCN-recommended tests, but most commercial plans are publishing new coverage policies to cover Signatera. We expect this to drive meaningful ASP improvement. Finally, as more clinical evidence is published in support of MRD-guided precision medicine, we expect further progress with Medicare coverage, NCCN guidelines, and commercial payers. With that, I will hand it over to Alexey to discuss our clinical roadmap.
Thanks, Solomon. I want to spend a couple of minutes on the depth of the clinical evidence engine we have built behind Signatera and why we think it is 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, efficient, and let you establish prognostic performance across many tumor types quickly. But retrospective data on its own only takes you so far. What actually moves guidelines and then drives 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 years to generate. We made the decision to invest in that harder path early. We have been designing and initiating prospective studies since 2019, and we have been building this flywheel quietly in the background for more than seven years. Today, as the chart shows, we have 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 is 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 am excited to introduce SIGNAL-ER101, 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 is a big one. In early-stage HR-positive, HER2-negative breast cancer, the most common form of breast cancer, the vast majority of patients today may be overtreated. When a patient is considered high risk, the standard is to add a CDK4/6 inhibitor on top of endocrine therapy, but these are difficult drugs to take: more than 60% of patients experience serious adverse events, and a full course of therapy can carry a U.S. retail cost north of $400,000. The reality is that many of these patients were likely already cured by standard perioperative therapy alone. SIGNAL-ER101 asks a simple but powerful question: can we use Signatera to identify patients who actually need that escalation? In the study, patients are surveilled with Signatera after surgery, and treatment is escalated to a CDK4/6 inhibitor only when we detect molecular residual disease. MRD-negative patients are spared a toxic and expensive therapy they may never have needed. This is exactly the kind of high-value clinical question MRD is uniquely positioned to answer, and the addressable population is large, representing a meaningful share of the more than 200,000 women diagnosed each year in the U.S. with HR-positive, HER2-negative breast cancer, the majority of them early-stage. I want to be clear about why this matters strategically. SIGNAL-ER101 is the first of a broader interventional portfolio: the SIGNAL program. 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 and can be viewed as equivalent to Phase 2 or Phase 3 trials with the same implications if they succeed: the potential to change practice and help define a new standard of care. Critically, we have 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 91.5% specificity for advanced adenomas, a notoriously difficult target and a strong signal for the underlying technology. Additionally, 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 are on track to complete enrollment in the third quarter of this year, with roughly 24,000 average-risk adults enrolled today. Our conversations with the FDA have been productive and are ongoing. We plan to read out the FIND cohort in 2027, and we will provide additional color on the path from there at that time. Stepping back, we remain very excited about this opportunity. We believe we are 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?
Great. Thanks, Alexey. The next page is just a summary of the financials compared to last year. I will not belabor all the points that Steven 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 Q2 2025 itself was a strong quarter where we put up 20 thousand sequential Signatera growth units for the first time. Obviously, the 34 thousand-unit growth number this quarter shows you we moved yet again into new territory. You can see positive gross margin trends here year-over-year and organically excluding true-ups sequentially versus Q1 despite our rapid cadence of launching new products this year that are not yet optimized for COGS. 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 DSO 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 would 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 that investment is paying off really well this year. We did have some expenses in the first half on SG&A that are not budgeted to recur in the second half. To the extent we exceed the SG&A guide range this year, I expect the majority of the overage would come from noncash expenses like stock-based compensation charges related to the business hitting long-term incentive targets and litigation expenses. In R&D, we are remaining very ambitious in our core areas of MRD, organ health, and women's health. You can easily measure our productivity over time just by reviewing the speed and breadth of the new products we have launched and the clinical trials we have 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 is 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 does not 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 to fund the FIND trial. I think that ECD has enormous future potential once launched, and we expect a growth wave from zero currently to millions of tests per year. So we expect the scaling benefits to arrive for that fourth area of the business relatively soon. Okay. Great. Let's wrap up with the guide for the rest of the year on the next slide. We are going to significantly bump the revenue guide now to $2.85 billion to $2.91 billion, which implies roughly 31% annual growth excluding 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 in women's health. For Signatera volume growth assumptions, keep in mind Q2 sequential volume was exaggerated by several thousand units due to weather negatively impacting us in Q1 as Steven described. So while we had another very strong month in July, we do not 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 have 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 have made a bunch of progress with biomarker state and Medicare Advantage coverage. To drive ASPs meaningfully higher, I think we are going to need to expand MolDX indication coverage, get some benefit from the bladder NCCN guideline, and eventually get guidelines in additional indications. Our approach this entire year has been that those drivers are going to help us in 2027, and so we will continue to keep them out of the guide. For 2026, the rest of the guide, we are going to hold steady. Gross margins, we bumped 100 basis points last quarter, and what you have seen this quarter is the benefit from ASP improvement and a normalizing reported-to-actual unit ratio that was balanced out by a step-up in volumes in the new products, which, as Steven 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 will keep the same mindset: keep our foot on the gas and invest in future growth. If additional high-return projects come our way, we are going to make the investments and update you on the quarterly calls. Finally, we are in good shape to generate cash for the year again, which is a priority for us even as we are in growth mode. Okay. With that, let's turn it over to the operator for questions. Operator?
分析師問答
We will now begin the question-and-answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are 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.
Hi, guys. Thanks for taking the questions here and congrats on a really impressive quarter for Signatera. First, Steven, you talked a bit about the drivers, but if you could double-click on that: how should we think about sustainability into 2027? Maybe any color you can provide into what is powering this growth? Is it the salesforce, the commercial execution, the data readouts, NCCN guideline updates? Which is the principal component that is driving this and keeps the quarter-over-quarter growth sustainable?
Thanks for the question. A few things happened this quarter that we think were very beneficial. The FDA approval certainly created some halo effect, which was received very positively after the INVIGOR01 readout. Over the last couple of years, we made big investments in the commercial team and medical affairs, and we invested in large-scale clinical trials and data readouts. Those investments have put us in a position to execute and outperform. We focus on a few core areas across all of our businesses. One is an extreme focus on technology and being at the cutting edge. The second is backing everything with a significant amount of peer-reviewed evidence. The third is focusing extensively on user experience: we have implemented changes to reduce tissue issues, accept more samples, expanded mobile phlebotomy, and more. The fourth is the team: we have an excellent commercial team. The 34 thousand quarter-over-quarter increase is a record compared to our prior results. I would not say we will necessarily repeat that immediately, but our previous record was around 25 thousand quarter-over-quarter, and I think we can outperform that as we move forward. Q3 is off to a very good start, so I would expect us to be somewhere in the middle of those outcomes.
And a follow-up on Slide 13: this lays out prospective studies and the readouts through 2027 and 2028. Are there specific readouts you would point to? Alexey, can you dial into SIGNAL-ER101 again: is that a practice-changing study? How should we think about its impact?
Thanks, Puneet. Slide 13 shows only the prospective portion of our studies; on top of this we still continue to invest in and read out biobank studies as well, so we expect a large bolus of readouts in the next few years. There are definitely a few studies we are monitoring very closely; VEGA is one we have discussed in the past. Many of these prospective studies are interventional and randomized, and their readouts can have significant impact on care, guidelines, and reimbursement. Timing for each readout can be variable, especially for collaborator-run studies, but as we approach 2027 we will provide more guidance on the studies we consider most important and their expected timing. Regarding SIGNAL-ER101 and the broader SIGNAL portfolio: we will be announcing additional studies as they come online. The main point is these studies are designed to a high standard, pharma-level, and many are randomized. SIGNAL-ER101 is not randomized because the design is focused on performance and identifying MRD-positive patients who need escalation. For the MRD-negative arm, the bar is very high. If the study is positive, we do believe it will be practice-changing. That is the mentality for every SIGNAL study we have designed and plan to initiate in the next few months.
Great. Thanks, guys.
Let me add that we went across every histology that could make a major impact on the business and designed practice-changing, potentially guideline-enabling studies, then committed to funding those trials. SIGNAL breast is the first one we announced, but there will be a suite across different histologies. It is a big part of our strategy going forward.
Your next question comes from the line of Daniel Brennan with TD Cowen. Your line is open. Please go ahead.
Great. Thank you. Congrats on a strong quarter. Maybe I could start on Signatera volumes again: given how strong it was this quarter and that a couple of thousand tests were due to weather recapture, that is 32 thousand of underlying growth. You talked about salesforce expansion productivity just beginning to hit. How should we think about go-forward pace? Could we see another couple of quarters of significant quarter-to-quarter volume growth as new salespeople ramp?
I think that is right. We have sales reps that have just come online, we expanded medical affairs, and we see momentum from trial readouts and the halo effect of FDA approval. Also, protocols like INVIGOR moving to an every-six-week cadence can increase frequency of draws where historical practice was quarterly or semiannually. There's a lot of momentum. I do not think we will do 34 thousand again this quarter; we have outperformed our own expectations. Prior records were around 25 thousand, and I think we can outperform that as we move forward. We are crossing a tipping point where doctors are starting to integrate MRD into practice and we are the major beneficiary given our data, commercial reach, and operations.
Then on price: the $0.25K sequential increase was ahead of expectations. You and Mike commented on step-function improvements from specific catalysts. Solomon mentioned several commercial payers adding Signatera to their plans and the NCCN recommendations. Is there a path for price to take off in the next few quarters, or is a modest sequential increase still the right way to think about it?
Dan, our guide presumes a stable Signatera ASP of $12.75 through the balance of the year. If you're looking for upside beyond the guide, which we normally set as something achievable but conservative, an upside case could be another $25 of ASP through the balance of the year. The immediate-term ASP upside tends to come from tactical things we are already getting paid on or that impact revenue recognition timing, such as improved Medicare Advantage reimbursement for covered services and expanding coverage within biomarker states. The longer-term drivers—MolDX coverage, guideline benefits from bladder NCCN recommendations, and additional indications—will have a bigger impact but are likely to play out more materially in 2027. I feel better about the long-term path to $2,000 ASP than we ever have, but tactically, another ~$25 of upside in the near term would be reasonable to model as an upside case.
Your next question comes from the line of David Westenberg with Piper Sandler. Your line is open. Please go ahead.
Thanks for taking the question, and congrats on the MRD numbers. We see good growth across several MRD competitors and new entrants, yet that does not seem to have impacted your 50%-plus growth rate. How should we think about competition entering the market? Is there room for multiple players, or will there be significant crossover? Are competitors largely taking their own customers, or is there meaningful share competition?
There will always be competition. Over the past several years other major oncology competitors have had MRD tests approved by MolDX, so this dynamic is not new. We have done well in the face of competition because we keep investing in technology, clinical studies, and addressing market needs. The market is very large and penetration remains early—mid-single digits—so competition currently does not materially impact our long-term growth opportunity. We will continue to monitor competitors' moves and focus on closing any gaps, but we believe we are well-positioned to capture a large share of the market.
Thanks. You mentioned new patient starts were extremely high. Can you provide any flavor on tissue types or mix? Are you seeing more new patient starts in covered versus uncovered indications, and are certain histologies contributing more to the growth? Any insight on what might be coming in 2027?
We have many histologies covered by MolDX and a handful where coverage is pending. We have seven submissions at various stages and are optimistic about getting those through. We continue to grow colorectal and breast, our two largest histologies, and we're also seeing uplift across the longer tail as we publish data. This broad adoption supports continued growth across those major categories and the long tail into 2027 and beyond.
Your next question comes from the line of Daniel Markowitz with Evercore. Your line is open. Please go ahead.
Congrats on the results and thanks for taking my questions. On Signatera ASP: you mentioned step-function improvements from catalysts such as MolDX submissions. The seven indications submitted—should we think about this rolling through in 2027, with coverage coming online in the first half and then taking a few quarters to realize the full benefit? If fully ramped, could this be on the order of $150 to $200 of ASP contribution on the path to $2,000? Are there incremental costs associated with that shift?
Timing is always hard to predict, but generally, when you submit to MolDX with strong peer-reviewed data, there is back-and-forth and typically a couple of rounds before achieving coverage. A reasonable timeline is approvals rolling over the next 12 months into the first half of 2027. The strictness of MolDX has benefited us because our data depth forms a competitive moat; it takes time and high-quality evidence to get the same outcomes. This opportunity is meaningful on the path to $2,000 ASP.
Daniel, if you sum up the indications where we have submissions in flight or plan to submit to MolDX, I would estimate that is worth something like $150 to $200 to the ASP, so your estimate is in the right range. That would be transformational. Timing-wise, rolling coverages over the next 12 to 18 months is a reasonable way to think about it. It's hard to forecast with precision, but we are optimistic about the pace.
Thanks. And on biomarker states progress: are we seeing an inflection flow through? Should we expect outsized true-ups in quarters and years to come based on biomarker states going into effect?
I am not expecting a lump-sum of true-ups specifically from biomarker states. The process is linear and iterative: a biomarker state law leads to payer interactions in that state, which is often a multistep process that can feel like unit-by-unit work. That contributes to a drip of continued true-ups rather than a bolus. More generally, our ambition is to see true-ups gradually come down, and you have seen that happen both in absolute dollars and as a percent of revenue.
Your next question comes from the line of Noah Kava on behalf of Tycho Peterson with Jefferies. Your line is open. Please go ahead.
Thanks for taking the questions and congrats on the quarter. First on Women's Health: the high-single-digit growth was better than expected. What are you seeing from underlying market growth and are you taking share? Some competitors have flagged share loss—have you been a beneficiary?
We are benefiting from share gains. Over the last couple of years we invested behind technology development, launching Fetal Focus and now the enhanced Panorama that addressed a major gap. We started the year in a stronger competitive position and began seeing the impact in Q2. Typically Q2 is softer seasonally, and we were able to overcome that with product enhancements and strong execution by the sales team.
Thanks. For my follow-up, on SG&A guidance it looks like you're expecting a step-down in the second half versus prior dollars. Where are these efficiencies coming from? There was mention of AI initiatives—any progress? How are you thinking about the longer-term path to profitability?
There were a couple of one-time items in Q1 that are not forecasted to repeat in the second half, including noncash accruals for stock-based compensation and some litigation expenses. More generally, we are getting more efficient and deploying AI across the business at a rapid pace, which is generating operational efficiencies. In a large operation like ours, there are many opportunities to automate workflows and move employees up the value chain. We continue to see progress in these areas.
Your next question comes from the line of Kallum Titchmarsh with Morgan Stanley. Your line is open. Please go ahead.
Regarding the Japan launch, could you help us understand how the ramp could look in 2027? How quickly can reps get into accounts there, and how confident are you in securing coverage for more frequent testing based on the regional studies?
On coverage, our initial focus is adjuvant coverage, and we expect surveillance coverage to follow. We believe surveillance coverage will come after adjuvant coverage and that there is substantial opportunity in Japan given the number of CRC patients and now bladder as well. Solomon will comment on commercial penetration.
With the CRC launch in Japan expected at the end of the year, we think market adoption could meet or exceed the rates we saw in the U.S. when we introduced Signatera for colorectal cancer. We are starting further along with significant published data and medical societies already strengthening guidelines. Reimbursement will be the unlock, since physicians need reimbursement to order tests routinely. We have a strong partner in Japan and will supplement their distribution with direct sales and marketing, so we feel confident we can build awareness quickly. Given the Japanese thought leadership with the GALAXY study, there is already appreciation for the technology; it will be about user experience and ease of ordering and results.
Mike, one for you: outside of ASP uptick, you highlighted internal work to drive down COGS. What are those actions and when will they flow through the P&L?
This is our standard playbook. We launch new products frequently; when launched they are not yet optimized for COGS. As volume scales you get natural efficiencies in lab workflows. Once demand is confirmed, we deploy resources to optimize workflows for COGS. These projects are easy to model because you see demand and can calculate savings per unit; they have generated high returns historically. Given the pace of new product launches over the past year, we are positioned to deliver another wave of cost-reduction projects over the next 12 to 18 months.
Your next question comes from the line of Subhalaxmi Nambi with Guggenheim. Your line is open. Please go ahead.
Thanks for taking the questions. Two topics: first, R&D — it looks like you increased the budget for the early cancer detection program. Are you accelerating timelines and what is driving that investment? Second, on margins — in a huge revenue quarter, gross margins did not increase much sequentially. Is that due to a jump in new Signatera starts and growth in Latitude? When do these mixed dynamics start to flip and improve margins later this year?
On ECD, we are tracking along where we expected on the FIND study. We expect to finish recruitment this quarter as outlined. We are doing development work to get the assay ready to run the FIND study and prepare for FDA submission once samples are collected. These are short-term expenses necessary to position us for regulatory submission. We believe this is a huge market opportunity and we aim to be one of the key players.
On margins: we did have a large number of new Signatera starts consistent with the volume blowout, and promising growth in newly launched products whose COGS are not yet optimized. As we scale those products, we will tighten COGS and optimize workflows. We expect these COGS reduction projects to hit over the next 12 to 18 months.
I will reiterate that new patient starts for Signatera were significantly higher this quarter, indicating strong clinical momentum. That typically foreshadows future growth in recurrence monitoring and surveillance.
Thank you so much, guys.
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