Hello everyone, thank you for joining us and welcome to Natera's second quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star and then 1 to raise your hand. To withdraw your question, press star 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 third quarter of 2026. On the line, I'm joined by Steve Chapman, Solomon Moshkevich, and Al Seleshin. Today's conference call is being broadcast live via webcast. We will be referring to a slide presentation that has been posted to investor.neterra.com. A replay of the call will also be posted to our IR website as soon as it's available. Through the course of this conference call, we will make forward-looking statements regarding future events and our anticipated future performance, such as our operational and financial outlook and projections, our assumptions for that outlook, market size, partnerships, clinical studies, and expected results, opportunities, and strategies and expectations for various current and future products, including product capabilities, expected release dates, reimbursement coverage, and related effects on our financial and operating results. We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. Please refer to the documents we file from time to time with the SEC, including from our most recent Form 10-K or 10-Q and the Form 8-K filed with today's press release. Those documents identify important risks and other factors that may cause our actual results to differ materially from those contained in or suggested by the forward-looking statements. forward-looking statements made during the call are being made as of today, November 5th, 2026. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. This narrative claims 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 order 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?

Hi, everyone, and thanks for joining us this afternoon. As you may have seen by now in the press release, I am stepping down from the CEO role as now is an excellent time to transition to new leadership for Natera. We've had an incredible run during my time here since joining in 2010. My last almost eight years as CEO have been particularly meaningful to me, and I'm extremely proud of all we've accomplished in that time. Our revenues have increased by roughly tenfold during my tenure as CEO, creating great value for shareholders and having an extraordinary impact on the millions of patients we've served. We've achieved all of that by building an exceptional team who are now in an excellent position to keep executing our plan like we always have. I'm very pleased to be handing the keys over to my friend and colleague, Solomon. I hired Solomon in 2011, and we shared a small office in those early years of the company as we tried to get our foothold in women's health. Among other accomplishments, he was the key man behind our launch of Prospera for transplant monitoring, and he was the original strategic driver and general manager for oncology when we were just launching Signatera. Given his leadership of our oncology effort since exception, his breadth of experience across commercial and product-focused roles, and the deep relationships he has across our company, he's uniquely qualified to lead us in our next stage of growth. What's next for me? I'm going to remain engaged as a consultant here with the company and as an advisor to the board and will be actively involved in making sure Solomon and the team have everything they need to be successful. There's a lot to look forward to. In the near term, we are on track to launch Signature in Japan. We have several Moldy X submissions underway to expand access for more patients, and we're seeing incredible growth in both clinical and pharma product lines. Next year, we expect to unlock the next major driver for the company and deliver our FDA-enabling fine study results in early cancer detection. I'm looking forward to staying connected here as we achieve that. Okay, now I'm pleased to be the first person to introduce Solomon as the CEO of Natera to take us through the results of an outstanding third quarter. Solomon.

Steve, I accept the handoff with great honor and admiration for what we've accomplished together in the past 15 years under your superb leadership. When I first joined the company back in 2011, before the launch of Panorama, We were only about 45 people, and as Steve mentioned, he and I shared an office where we could hear each other making cold calls and solving problems for IVF centers around the world. How far we've come. Thank you for your mentorship, and I'm grateful to have your support over the months to come. To everyone, I'm honored to serve as Natera's third CEO. In Natera, we are building an enduring healthcare company, transforming the practice of medicine by enabling earlier, more targeted interventions for those who need it, and by reducing unnecessary treatment for those who do not. In the coming years, we will improve both treatment and prevention by generating more diagnostic insights from every blood and tissue specimen, developing novel technologies and applying them in entirely new patient populations, integrating more seamlessly at the point of care, and doing it globally.

It is a worthy mission, and I,

I'm proud to be on it with our 6,500 employees. To all of Natera's employees, clients, partners, investors, and most importantly to our patients, thank you for your trust. Turning now to the highlights from the quarter, it was an exceptional quarter. We processed approximately 1.1 million tests in the third quarter, up more than 22% from about 894,000 a year ago. Clinical MRD units reached approximately 316,000 compared with 202,000 in the third quarter of last year for growth of 56%. That was up about 33,000 units over the second quarter, which makes this the second quarter in a row with more than 30,000 sequential units. And adjusted for the Q1 weather impact that inflated the Q2 number, I think this is the best quarter we've even had for MRD clinical growth. We generated $794 million in revenue, up approximately 34% over the $592 million that we reported in Q3 of last year. But excluding the true ups, revenues grew north of 40% year over year. Gross margin was approximately 65%, driven by strong organic improvements in both COGS and ASPs. True ups fell to about $32 million this quarter, down from $52 million in the second quarter. Gross margins held at 65%, but excluding the true-ups, gross margin was at 63.2%, which is up about 140 basis points just from the second quarter. We generated cash again in the quarter and narrowed our losses significantly, even as we continued to invest aggressively in our future growth. Given the strength of the results, we are raising the revenue guide by approximately $140 million at the midpoint, which means we expect to be above $3 billion for the year. Mike will take you through the specifics of this later in the call. Finally, I'm excited to set a bigger long-term goal for the company. We're setting the goal to double revenues in the next three years, reaching $6 billion in revenue in 2029. I look forward to spending more time on this call to discuss how we'll get there. Okay, on the next slide, we'll get into the business trends, starting with overall volumes. I think this chart tells the story well. In the third quarter of 2020, we processed about 262,000 tests. This quarter, it was about 1.09 million, more than four times that level, and it's a new company record. Obviously, Signatera continues to accelerate, and I'll cover that in a moment, but we were also pleased to see continued growth in Women's Health and Oregon Health, where Women's Health posted another strong quarter of mid to high single-digit growth, and organ health grew volumes almost 40% compared to this time last year. Driving that growth in women's health is the continued momentum from our product launches, Fetal Focus, late last year, together with the new integrated deep sequencing feature that delivers results at the lowest fetal fractions. In organ transplant monitoring, we're seeing growth coming from the Medicare coverage of surveillance, which was announced in July, and which took effect on August 30th. This has had a positive impact on both volumes and AFPs. On the oncology front, the next slide shows clinical MRV volumes in more detail. Approximately 316,000 units in the quarter, including both Signatera and Latitude MRV. As I mentioned earlier, this means we added about 33,000 units sequentially versus Q2. You'll recall that last year we made a big push to get the commercial team up to scale that's similar to other specialty diagnostic labs and those reps were fully onboarded and productive by Q2. Even the number of productive reps in the field was held basically flat. I'm particularly pleased to see the volumes continue to ramp. What's driving that growth is that we continue to see excellent increases in both new accounts and new patient starts, as well as continued performance and subsequent repeat testing. This acceleration is happening across tumor types. Colorectal and breast cancers remain our largest indications, but I continue to be really encouraged by the contributions from the new indications because it demonstrates broader adoption of Signatera in clinical practice and also because it increases revenue opportunity as we expand coverage to additional tumor types. On the next slide, we show year-on-year unit growth in MRD. meaning how many more clinical MRD units we process in each quarter versus the same quarter a year earlier. I like this view because it corrects for a lot of the noise that creeps into a quarter-to-quarter comparison. Seasonality can be an obvious one, but then there's also weather like the January storms this year that held back Q1 and inflated the Q2 sequential number. So when you compare against the same quarter last year, those variables tend to wash out. and I think what's left is a very clear picture of the underlying trend, which shows that Q3, where we grew 113,000 units year over year, represents real acceleration over growth in prior quarters. Okay, let's turn to revenue on the next slide. This shows that our total revenue progression over time. Gap revenues of $794 million were up about 34% year over year and up 42% excluding true ups. This growth compares favorably to prior years, despite a larger revenue base, which is really impressive when we think about the continued pace of expansion, growing across three businesses, hitting roughly 65% gross margin, generating cash, and investing in a deep pipeline of new products at the same time. Growth at this scale that's so diversified and pays for itself is rare. Driving this revenue growth in Q3 has been the ASP improvements as well as volume. Singatera ASPs stepped up again to approximately $1,290, up from $1,271 in the second quarter. And we continue to see a long-term path to $2,000 ASP and beyond, as MRD is adopted increasingly into the practice guidelines and as insurance coverage further expands, like we saw with the new Medicare coverage in liver cancer. Turning to the next slide, where we show gross margin fraction. reported gross margin was approximately 65%, up about 20 basis points sequentially. Excluding true-ups, gross margin was 63.2%, which is up about 140 basis points from the second quarter. So that's a very positive underlying execution. There are a few drivers here. We continue to see a sequential step-up in Signatera ASPs, as I just mentioned, but also the lab continues to deliver leverage as we scale volumes. on some of our recent product launches as we pick up efficiencies and as we renegotiate with some of our large suppliers. We've got a lot more work to do here going into 2027, and Mike will describe some of those efforts in a few minutes. Moving to the next slide, Medicare has granted coverage for serial use of Signatera in patients with early-stage hepatocellular carcinoma, or HCC, in a surveillance setting. This is a disease that affects nearly 40,000 new patients per year in the U.S., of which approximately three-quarters are diagnosed as early stage one through three, making this a meaningful population that's about the same or slightly larger than muscle-invasive bladder cancer. The coverage was granted based on the strength of our published data from a multi-institutional study in JCO Precision Oncology, which showed that Signatera significantly outperformed standard of care imaging, as well as the serum biomarker AFP. HCC is generally treated by GI oncologists and GI surgeons. Naturally, our sales and medical affairs teams are already well established within the GI community, so that means we are well positioned. It's worth noting also that this is the first new indication covered by MoldyX since we announced the lung cancer coverage in early 2025. We've been working with MoldyX on this indication since the fall of 2025, approximately a year ago. and we expect many more to come, which are currently in progress. We're pleased that the new Moldiac scheme is appreciating the strength and the validity of our real world evidence. But looking ahead, the next big reimbursement event that we expect will likely be in Japan, not in the US. In Japan, we are on track with the launch of colorectal cancer and muscle invasive bladder cancer, as you can see on the next slide. We were pleased to announce regulatory approval of bladder in the third quarter. Now we're working with the health ministry to finalize reimbursement and pricing, where we expect to have an update at the JPMorgan conference, if not sooner. The colorectal and bladder indications have now been consolidated into one pricing discussion with the ministry, which we think is a positive development, and we expect the number of covered time points per patient to differ by indications. Our commercial team partners in Japan, as well as the medical community itself, are poised and ready once we have a green light to start offering the test to clinics. Moving to the next slide, over the last nine months, we've seen a real surge in biopharma demand for our MRD technology in clinical trials. After several years of relatively flat pharma revenue, the first three quarters of this year are already up roughly 70% over all of 2025. with a strong Q4 expected as well. Invigor 011 trial really helped open the floodgates. Readout last year and the companion diagnostic approval this year proved that MRD-guided trials are feasible and that Natera can deliver on the regulatory front. We've since announced a string of phase one, two, and three pharma studies with more that are not yet public. many of which are recruiting directly from our commercially tested patient population. We're also seeing real momentum in matching patients to clinical trials, as well as data licensing and trial design services that are built on our real-world data asset. And we think the time will come when FDA adopts Signatera MRD status as a primary endpoint or even a surrogate endpoint, which can be worth billions to a drug developer and can be lifesaving for patients. I expect pharma and data licensing partnerships to increase meaningfully in 2027 and beyond. So our investments in the tech, the team, and the capacity that our pharma clients need has been a key driver for us adding OPEX through the course of this year compared to our initial plan. Furthermore, we think the debate over Signatera's technical leadership and analytical performance is largely settled now after the launch of Signatera Genome with phased and structural variants. which has certainly helped in biopharma as well. Before I hand it over to Alex, I would like to expand a bit on the goal that we set out at the top of the call to double our revenue to $6 billion by 2029. As you know, it's not our typical practice to set out these longer-term financial targets. The last time we did this, we set a line in the sand back in 2022 that we would reach cash flow break even in 2024, and we hit that goal. We didn't achieve that by making miracles happen. We simply executed on the plan that we had in place, and we remained focused on delivering world-class products, clinical validation data, and commercial execution. That's the same approach that we intend to use to hit 6 billion by 2029. When I look at the core growth drivers, the volume and ASP potential in our core oncology portfolio, the expansion into global markets, including Japan, and momentum in pharma and data licensing. Slightly more modest growth from our non-oncology portfolio. I think this is a highly achievable target, even with minimal contribution from our emerging cancer screening business. Furthermore, if we execute on this plan, we expect to achieve profitability as well, growing our way into it just like we did with the cash flow break-even target that I mentioned before. And with that, I'm going to turn it over to Alex Aleshin.

Thanks, Solomon. Moving to the next slide. This quarter, we're completing the most significant upgrade to the Signatera products since launch, and I want to spend a moment on why it matters. When we integrated phased variants into Signatera, the question was whether we could take the most clinically validated MRD tests in the field and push its sensitivity to a level that hadn't been achieved before. The answer is yes. Signatera genome with phase and structural variance has an LOD 95 sub one part per million, and we're detecting ctDNA well below that, less than one tumor fragment in 10 million. Not long ago, most of the field considered that out of reach for a clinical assay. More importantly, the clinical data is now arriving, and it's exceptional. You'll see this assay behind several of the ESMO readouts on the next slide, performing across cancer types, and the cadence will accelerate because we've embedded it across sponsored studies as well as pharma partnerships. Pharma interest has also been broad and immediate. It has already been selected for several global phase three programs, including the AFT70 Navigate study. So the launch is on track and we're building the next generation of Signatera evidence on the most sensitive platform in the field. Moving to ESMO on the next slide, this was one of the strongest meetings we've had. Twenty five abstracts featuring the Terra technology, nine oral presentations, including the presidential symposium and simultaneous publications in Nature Medicine and ESMO Open. The theme across the data is consistent. Signatera is no longer just prognostic. It is changing treatment decisions. In Sagittarius, an ongoing phase 3 trial of a ctDNA-guided adjuvant strategy in high-risk stage 2 and stage 3 colon cancer patients, we saw an early look at the physician's choice arm. Among the first 205 patients, one in three had their adjuvant plan changed after a negative Signatera result, and 87% of those changes were de-escalations, including nearly a quarter of patients being moved off Axalaplan entirely. The primary readout is still a few years away, but the behavioral signal is already clear. Signatera is changing how CRC is managed. In Volga, an AstraZeneca-funded Phase III trial in bladder cancer, an exploratory retrospective analysis on the Signatera genome with phase and structural variance product showed that patients who were Signatera negative before cystectomy had a 24-month event-free survival of 91%, identifying an ultra-low-risk population that in the future may benefit from de-escalation, including bladder preservation. This is now the third phase three trial in muscle invasive bladder cancer alongside Invigor 11 and Keynote B15 to show consistent results with Cygneterans as cancer type. Professor Tom Powles of Barts Cancer Institute, one of the leading voices in bladder cancer and the presenting author of Volga, said that ctDNA is becoming an increasingly important tool in our armory in bladder cancer. and that role only grows as the field moves toward bladder sparing approaches. And across 10 tumor types, a signatory guided reflex strategy to liquid comprehensive genomic profiling delivered actual biomarker findings at the moment of molecular recurrence. We believe this will open up a new indication in MRD-guided patient management, namely identifying resistance mutations ahead of clinical recurrence when patients are potentially most likely to benefit from early therapeutic intervention. Turning now to breast cancer, where we continue to step our investment as shown on the next slide. Last quarter, I introduced Signal ER101, the first interventional trial Natera is running end-to-end. Today, I'm pleased to add AFT70 Navigate in partnership with Genentech and the Alliance Foundation for Cancer Trials to that list. Here's the clinical problem. In stage two and three, ER-positive HER2-negative breast cancer High-risk patients receive a CDK4-6 inhibitor on top of endocrine therapy after definitive treatment. These are difficult, expensive drugs, and many of the patients receiving them were already cured. Navigate asks whether Signatera can identify who may be able to step down from this type of treatment. Navigate is a natural complement to the Signal ER-101 study, which holds back the CDK4-6 inhibitor and adds it only when Signatera turns positive. Navigate tests the same principle in a slightly different patient population with randomization and with the next generation oral SIRD juridestrin as the endocrine backbone. Together, the two studies approach the same question from both sides. The response from key opinion leaders around the world has been tremendous, and it is a testament to the level of evidence we're committed to generating. Navigate is one of the many potentially practice changing studies we're investing in. Our sponsored study portfolio is expanding into endometrial, immune therapy optimization, lung and renal cell cancers, with several slated to open over the next few quarters. We'll announce each as it opens. From a business standpoint, breast is our second largest indication. and the path to broader guideline inclusion and commercial coverage runs directly through trials like these. On the next slide, we highlight progress in our next year of cancer indications because after years of investment in these histologies, the data is finally maturing and is generating real excitement in the clinic In head and neck cancer, three recent peer-reviewed publications showed excellent performance across both HPV-positive and HPV-negative disease types with 100% specificity, and this data builds on the prospective Phase II synergy trial presented last February. This is especially important given that some other labs are limited to monitoring only HPV-positive head and neck cancer subtypes, a minority of the population. While with Signatera, we're seeing comparable performance regardless of viral status. In lymphoma, a new blood neoplasia publication covered 144 patients across 14 subtypes and showed 100% positive predictive value for treatment response monitoring versus 62% for PET CT scans, as well as detecting recurrence months ahead of imaging. Why does this matter? Colorectal and breast get the most attention because they're the biggest indications. But head and neck and lymphoma each add tens of thousands of new U.S. patients a year. And in both indications, recurrence is hard to catch with standard surveillance techniques. This is exactly where their highly specific tumor-informed test adds the most value. Finally, two milestones in early cancer detection as outlined on the next slide. First, the FIND study. We said in May and August that we would complete enrollment in the third quarter, and we did. The study is fully enrolled with 30,000 patients in the PMA cohort, the population we needed for a definitive colorectal cancer readout, which we're progressing towards in 2027. Second, in October, the FDA granted breakthrough device designation to our multi-cancer early detection assay. We're pleased to see the agency recognize the data behind the program, and the designation gives us a more collaborative, expedited path forward. Both programs are on plan and positioned to support FDA submissions. We'll have more to share as the data matures. With that, let me hand it over to Mike to walk us through the financials. Mike?

Great. Thanks, Alex. The next slide is a summary of the financial results for the quarter. Solomon touched on the revenue growth, which was north of 40%, once again, this quarter, ex-true ups. I was pleased to see the true ups come down meaningfully in the quarter, as this shows we've been able to incorporate some of the recent ASP outperformance into our quarterly revenue accruals. Gross margins tell the same story, where ex-true ups would make significant progress on the underlying organic gross margins, as we described. I was pleased to see our losses continue to narrow, even as we aggressively invested in future growth. You can see our loss has narrowed substantially compared to Q2 and even more so compared to our third quarter of 2025. I think that gives you some sense of the future potential of this business to scale. The next slide is a breakdown of where the spend is focused in both R&D and SG&A. What sticks out to me in the SG&A stack is a lot of our investments are now much closer to being fully scaled in terms of our commercial build out for oncology which we paired this year with a step up in our investments in the team to respond to all the pharma and data demands Solomon described. Within SG&A, we also have a number of cash and non-cash adjustments related to items that I would argue don't have a big impact on operations going forward and won't necessarily repeat each year. On the R&D stack, what strikes me about this chart is how forward-looking a lot of this investment really is. We could scale this back by 70% or more, and it wouldn't really harm the business for the next two years. Given the speed with which we are growing gross profit dollars in Signatera, we have the ability to invest in longer duration, truly practice changing clinical trials that will further cement Signatera as the gold standard for many years to come. Of course, the largest single example of our future ambitions is the spend for early cancer detection. We think the FIND study can be the anchor that establishes an entirely new growth vector for the company, and the guide describes how we now have breakthrough device designation in a range of populations that will once again massively expand the size of our addressable markets. At the moment, of course, it's more than $100 million in spend that generates zero revenue. So investments like this tend to hide the success we're already having in achieving scale just for the time being. Let's get to the guide on the next slide. Given the strength of the third quarter, we are raising our full year 2026 revenue guidance to a range of $3.5 billion to $3.35 billion, up from the $2.85 billion to $2.91 billion on our last call. That's an increase of $140 million at the midpoint, now clearly in the $3 billion range for the full year, which is an exciting milestone for the company. The guide takes our usual cautious approach. We are assuming steady ASPs and continued volume growth, and as usual, the guide does not include any true-ups. I think we will continue to have some contribution from true-ups in Q4, but we'll continue to leave them out of the guide for simplicity. On gross margins, we are continuing to hold steady centering at 64 to 66%. I think there's some scope for continuing progress on the cost components we described earlier, and that's balanced by leaving true-ups out of the model for the guide. On OPEX, In addition to the ramp of our clinical business, the team showed you the initial results of this enormous influx of pharma and data business demand we've seen this year, catalyzed in part by the readout of Invigor and its subsequent publication in the New England Journal of Medicine. This is great news for all the reasons we described. And in order to support this demand, we've accelerated a lot of investments in our pharma-specific offerings, commercial team, and operations that drive both CapEx and operating expenses higher this year even compared to the ambitious plans we had in place earlier in 2026. We are going to bump the top end of the range of R&D by 25 million, and I remain biased toward the top end. That bump reflects the expanded effort in pharma and data services The timing of enrollment of a number of MRD clinical trials that we have been able to accelerate and costs associated with the fine trial. On SG&A, we're going to bump from $1.225 billion to $1.3 billion at the top end. We've had some one-time expenses related to legal spend that since they are now actuals, I want to incorporate in the guide at this point. along with additional investments we've made in the pharma commercial teams and some new commercial initiatives for Signatera Clinical that we think can pay dividends as we move into 2027. Overall, I think we have some room for outperformance on the top line given the strong start we have had in Q4 for Signatera volumes. If we can continue to make progress on margins, I think it will be possible for us to continue to deliver another quarter of positive free cash flow and improving EBITDA in Q4. Given the momentum we are seeing now, I expect 2027 to be another growth year across the board. For preliminary planning purposes, I'd stick with our standard approach to revenue. Presume we can grow the same number of units we grew this year and hold ASP relatively steady. I'm more optimistic than that specifically for Signatera ASPs. For example, I think the win we announced this week in liver cancer bodes very well for several of our other Moldex submissions. But at this point in the forecasting cycle, it's prudent to recognize that diagnostics can be a tough business, and there's no rule that ASPs always have to improve in a linear way, despite our success in recent years. On gross margins, for now, I would pencil in the same range as we are guiding for 2026. In a middle-of-the-road scenario, I expect a few puts and takes on gross margins. I already mentioned ASPs, which have the potential to outperform, particularly on Signatera. On COGS, I think we are well positioned to continue to make progress along the same types of work streams we've described with this Q3 result, balanced with the potential that demand for some of our newer products like Fetal Focus and Signatera Genome come in ahead of schedule as we continue to experience higher COGS on those new products in the immediate term. It's important to understand that we would be willing to weather some short-term pressure on COGS because we have development efforts already in flight to reduce the COGS for these new products over the next 18 to 24 months, and we have ample room to significantly grow ASPs over that same time horizon. I've got a very modest assumption for true-ups in this base case 2027 scenario. I expect we will continue our efforts to sunset those true-ups. On OPEX, we are going to keep our foot on the gas. We discussed the huge inflow of demand we are seeing for our pharma and data service offerings, and we've accelerated a bunch of these high ROAC investments there to meet our customers' needs. We've got a big year scheduled for MRD and early cancer detection trials. In addition to the development work, readout, and FDA submission work for FIND, Solomon and Alex mentioned the breakthrough device designation we've now secured in a broader range of populations for early cancer detection. On the commercial side, We will selectively add to our oncology effort and largely hold our Oregon Health and Women's Health team steady. I think the net impact of all these initiatives imply OPEX growth in the 10 to 12% range next year, which should allow us to continue to be cash flow generative while deepening our competitive advantages in each of these business areas. Finally, I feel great about the $6 billion revenue target Solomon described. When we look at the multiple near-term catalyst for Signatera, The volume and ASP potential in our core oncology portfolio, together with more modest growth from our non-oncology portfolio, plus significant momentum in pharma and data licensing, I think this is a highly achievable target, even with minimal contribution from our emerging cancer screening business. So with that, let me pause there and then hand it over to the operator for questions. Operator?

We will now begin the question and answer session. If you would like to ask a question, please press star to raise your hand. To withdraw your question, please press star one again. We ask if 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 Dan Brennan of TD Cohen. Your line is now open.

Great. Thank you. Steven Solomon, congratulations on your respective news today. Maybe, Solomon, what would you say your top priorities are to ensure Natera's continued success and any ways that we might see your leadership or strategy take a different tact and seat?

Hey, Dan, thanks for the question. I've been here for 15 years, so all the strategy and the decisions over that time, I've been involved with most of those, if not all. So you're not going to see any big radical change. We want to stick to the formula that's worked for us, which is to continue to provide great service for our customers, generate practice-changing data, and make sure that our products are the best they can be and the test results are the most trusted. So I think if we just execute on what's in front of us and, you know, keep our keep our eyes focused on that, we're going to be really successful.

OK, thank you for that. And maybe just on the big picture, the six billion dollar opportunity, it's like a 25 percent CAGR. And I think you mentioned the CRC screening is really not included or Not much in there. Any more color? Kind of what's assumed for, say, a signature volume target out there in ASP? And, you know, Wall Street's gotten intoxicated with, you know, Natera coming through with material beats every quarter. So to speak to any of the conservatism that might be baked into that $6 billion guide, what would be some of the levers? Thanks.

Yeah, thank you. I think we mentioned on the prepared remarks that, you know, you don't have to imagine any big miracles to hit the $6 billion. We have to continue executing on the commercial plan. Certain studies, I think, are poised to read out. We have catalysts coming from that. In terms of ASP, we mentioned that we can hit that $6 billion really without getting much beyond $14.50 ASP. So Mike and I and the team think that there's upside to that as well. But I really think that we're set up for success here. And Mike, if there's anything you want to add to that, please go ahead.

Thanks for the question. As I mentioned in my prepared remarks, I feel like it's an aggressive goal. It's a goal that we've set out to galvanize the company around. It's also meant to just communicate that we're on a great roll. Solomon mentioned the ASPs. If you think about current ASPs around 1290, with the flow of news that we can have over the next few years, I feel like 1450 is eminently achievable. Starting with Moldex, broader coverage in biomarker states. And of course, over that time horizon, I'll be disappointed if we cannot get into a few larger clinical practice guideline areas. Thank you so much for joining us. Great, thank you.

Your next question comes from the line of Puneet Sudha of the Rankin Partners. Your line is now open.

Yeah, hi. Solomon, congrats on the role. And maybe just following up on the $6 billion target, I mean, just wondering, how are you thinking about, you know, pacing of the trials and, I mean, over the next, what I'm trying to get to is cadence over the next Should we think about 2028 and 2029 stepping up with revenues from screening or do you just continue to expect MRD sort of carrying majority of the growth even into 2029? Just trying to understand how are you thinking about products that you have? Obviously, you have a great franchise with MRD. and also, you know, very well established position with Women's Health. So just trying to understand from a product perspective, how should we think about the growth over the next three years within this construct of this way?

Yeah, thank you for the question. On how we get to that target, there are several clinical trials in the near term that we expect to read out. In fact, there's probably dozens, but a few that might really move the needle. But a lot of the big trials that we've been talking about recently, the SIGNAL trial we talked about last quarter, AFT70 that we just discussed here, many of the pharma studies that are just starting to take off now, those are not going to read out for several years. So those are not required in order to hit Those are trials that set us up for continued long-term growth well beyond. And that's something that we think is super important. Terra is investing heavily to change practice, and we think that's the right thing to do. Now, a similar story on the product side, because as everybody knows, we're investing heavily and we're optimistic about early cancer screening. But given the timeline there with our plan to read something out from the FIND trial late next year and then go through the process with FDA and then commercialize, realistically, that's going to be a relatively small contributor in 28 and 29 relative to the overall target. So we do think just staying focused on the existing businesses significant growth opportunity, not only in the U.S., but ex-U.S., increasing ASP, driving volume, improving customer service, and I think that's the way that we get there.

Got it. And then, look, I'm getting a number of questions just given the change here in management, so just if you could bear with me. In terms of This decision, if you could talk about, maybe Mike can comment on this, how this decision came about, timing of this, and any color or context you can provide around that. I think it's important. Really, it's exciting to have Solomon. I think he has a great understanding of the business, so I'm excited about that, but I'm getting a number of inbounds on that. and lastly, Mike, anything on 2027 as an investment year? Should we expect OPEX to step up again for 2027 versus the guides that you're providing? Thanks for taking my questions, guys.

Yeah, thanks, Puneet. So as we discussed before, because the company is so well positioned right now, thanks to the past multiple years of great leadership from Steve, Steve and the board, in dialogue together agreed that the time is right for a leadership transition from a position of strength. So I think that answers the first question. Mike, do you want to take the second one?

Yeah, sure. So for 2027, I made quick reference to it in the prepared remarks. As it stands right now, I'm expecting OpEx kind of in that 10% to 12% growth range. in 27 off of 2026. And I do view that as us keeping our foot on the gas. We've got some significant investments to make in ECD and MRD clinical trials that I think would be the single largest drivers of that OPEX growth. And I think SG&A's growth, I expect to be relatively steady compared to the R&D growth.

Okay. All right. Thanks, guys.

Your next question comes from the line of Daniel Markowitz of Evercore ISI. Your line is now open.

Hey, guys. Good evening, and thanks for taking my question. Firstly, congrats, Solomon and Steve, on a great run. I wanted to ask first on the HCC coverage decision this week, could you update us on the remaining MOL-DX submissions and the aggregate potential revenue contribution to 27 and 28? I think it was initially sized at about a $250, $300 million opportunity, but I imagine the volumes in those cancers have grown significantly since then. So how would you size that opportunity today and how should we think about the phasing of recognizing that opportunity?

Daniel, thanks for your question. We're really excited about the coverage decision in HCC. Significant cancer type, a lot of unmet need, difficult to detect. Recurrences often with traditional tools. And this is a process that we've been in with MoldeX now, as I mentioned, for about a year. So when I look at the data behind that submission relative to the data behind many of our other submissions, I'm feeling pretty good about what to expect over the coming months. Now, in terms of solidifying the timing, Which one would come in what order? That's just not something that we really know. And we've just got to keep doing our best, working with Moldy X, responding to questions, and strengthening the evidence wherever necessary, or the interpretation of the evidence. So in terms of contribution over time, Mike, is that something you want to pick?

Yeah, I mean, I think in terms of the absolute contribution, I'm in a similar place. You know, these are in aggregate. These volumes will end up representing a large chunk of our of our significant volume. So I think the TAM, I feel better than ever. Daniel Rabinowitz, John Fesko, Jonathan Sheena, Michael Brophy, Rishi Kacker, Solomon Moshkevich, Daniel Rabinowitz, 9, 10 additional submissions currently in flight with Molde X. And I think that can be an important driver for upside to Signatera ASPs compared to anything else we've talked about so far on the call today.

That's helpful. And then just one follow up. Can you help us think about the gross margin trajectory into 27, 28? I guess now 29 is on limits too. But as ASPs improve, you have the Moldex cancer reimbursements pulling through, which should be at nice incremental gross margins. How should we think about balancing that versus the newer gross margin dilutive products hitting the market, such as Signetera Genome and Fetal Focus, and the overall trajectory of the gross margins over the next few years?

Mike, do you want to take that?

Yeah, great. Thanks. I'll take that. Yeah, no, I think that's the right setup. I mean, I feel better than ever about reaching the ultimate goal of kind of getting to 70% plus gross margins. And that's really informed by the stability of our contracted rates and our ability to move forward, just getting reimbursed an ever greater percentage of the time for Signatera as we move through these multi-ex coverage decisions and then ultimately as we get in guidelines. So I think that ASP trajectory of kind of $2,000 long-term for Signatera and 70% gross margins, I think that will ultimately end up looking conservative, particularly as it relates to Signatera ASPs. In the immediate term, you're right, there are some potential All of these are trade-offs that we'd be willing to weather around the incremental COGS impact of some of these newer products. The reason why we'd be willing to weather it is that these are ultimately very solvable COGS impacts. Over an 18 to 24 month timeframe, we feel very good about the projects we have in flight to reduce the cost of goods sold even for these newer products. And over that same time horizon, You're going to get the ASP benefits that more than swamp the incremental COGS required to deliver the test. So it may very well be that the timing kind of lines up, the ASP improvements come in and the COGS improvements also kind of flow in in line with kind of a linear kind of increase in demand for the new products. But it also may be the case that we just get more demand earlier in this time horizon. Then kind of a linear forecast would suggest. And that's okay. We're going to weather that. We're going to do the right thing for the customers and the patients. And that's why those are kind of puts and takes just in the immediate term for 2027. Beyond 2027, I think that you will kind of have a trajectory kind of toward that 70% gross margin target as I described it.

Great, thank you.

Your next question comes from the line of Casey Woodring of JP Morgan. Your line is now open.

Revenue is included in that $6 billion target in 29. Maybe just share kind of what you're expecting from a growth rate from now until then. And then, you know, Mike, you talked about raising OPEX in the quarter, partly related to data and the 11 to 12 percent increase in OPEX next year includes, you know, building out the data business, I guess. Can you just elaborate on where that investment's being allocated and what that kind of operational lift looks like in order to build that business out more?

Hey, Casey, thanks. I think I heard the first part of your question, at least on my end, got cut off. But I think I understood you kind of want just the components of like what contributes to the growth to the 2029 target. I think this basically requires business as usual good execution across the board. So it's going to require us to do continued steady growth in the women's health and organ health areas of the business. It does not require significant additional ASP expansion in either area of the company. And then Signatera, I mean, I think we've kind of covered the components of ASP and volumes. Again, kind of very good execution will be bolstered by the fact that we have an increasing base of repeat customers that will help us get there along with, you know, all the data sets that we have in flight that will, I think, can support us getting into selected additional clinical practice guidelines, which would help both volumes and ASPs. Given that we're at kind of 1290 right now, I don't think that 1450 is, you know, I think that, again, that kind of gives you a sense. It's a good but achievable a bit of execution from us over that time horizon. Ask your second question again. I think it was on OPEX, but again, your line broke a little bit.

Yeah, sorry. No, I was asking about data, just like what's included in pharma and data in the $6 billion target. And then in OPEX, just maybe talk a little bit about what you need to do to build that business out further and how much investment is needed there. Sorry about that.

Yeah. Solomon, do you want to comment first? Sure.

Yeah. Yeah, I'd be happy to. So as we were saying on the call, we see a lot of opportunity and momentum right now in the pharma and data business. So for 2029, I would say that would have to be several hundred million dollars of contribution in 2029. So I think we're well on our way to that with the right team and with just the incredible inbound interest as the field moves towards a totally new understanding of how to stage patients, how to consider treatment dynamics, I think that's an inevitable trend that's going to hit drug development and how people measure the success of treatments in different populations and also how you set up the trials. What is driving the interest in the data asset? First of all, Matera has an incredibly unique and valuable data asset. We've tested now over half a million patients. We have multiple time points per patient for many of them. We have associated clinical data for all of them. We have either tumor or excuse me, either genome or exome sequencing on the tumors as well as the normal DNA. And so that is just a very unique view at disease dynamics in response to different treatments over time. And that information is super valuable for A drug developer who's trying to design a trial, who's trying to determine what is the right population for my trial, how many patients do I need, what time points do I test, and what percent do I expect to be positive or negative. And so all that information is sitting in our data asset and is developing over time as well. So the type of investments that we need there are several. I think more data abstraction and I think that was thorough. Got it. Thanks, guys.

Your next question comes from the line of Suvo Nambi of Guggenheim. Your line is now open.

Hey, guys. Thank you for taking my question. Solomon, congratulations on the new role. What are some of your formative experiences that you've had that could inform how you operate as CEO?

Thank you so much for your question and your kind words. I have to draw on all the experiences that I have at Natera and previously. My number one principle is to have integrity and honesty and accountability for myself and for our teams. I think we have incredible people at Natera who work really well together. But as the company evolves over time and changes, we need new ways of working together. We need new processes. And I've been a part or leader for developing those processes over time as we went from 40 people when I joined to 6,500 people now. And doing that and being able to work through problems together and overcoming challenges, oftentimes I've found that the hardest times are the ones that reveal the true character of a team. And that's where Natera has come through many, many things together and I think we're so well set up for success going forward. Thank you for your question.

I'm excited for that, Solomon. Thank you for that. A business question. There has been some consolidation announced in prenatal market, and now a larger infrastructure competitor, LabCorp, will have a fetal recessive testing assay with cell-first gene. Does this change anything for you in terms of competitive landscape for prenatal business at all?

Yeah, thanks for your question. Certainly, it's a change in the market, but it doesn't really change anything significant for us. We've been competing with Myriad and LabCorp for years. For us, this is a continuation of that, but with a different flavor. Certainly, there's some potential change in dislocation in the market right now, which is Your next question comes from the line of Tycho Peterson.

Jeffries, your line is now open.

Hey, thanks. I'll let Mike congrats on the transition. Maybe Japan, you know, ahead of the launch here, can you just help us frame what you think successful launch looks like and how you think about the reimbursement pathway?

Sure. Thanks, Taiko. We are very excited about the launch coming in Japan. There's multiple reasons for that. The population, especially in colorectal cancer, is unusually high. They have a high incidence of colorectal cancer, about 150,000 cases per year, which is like equivalent to what we see in the U.S. The Galaxy trial was run in Japan, as well as having sites in the Invigor 011 trial on the bladder side. So these are clinicians who understand the technology well, many of whom have used it if they were in the trial. Over 100 sites when you look across both of those studies were in the trial. And the guidelines in the Japanese medical society is already strong for colorectal cancer and really already looking towards a pan-cancer adoption of MRD testing. So I think when we think about the dynamics early in launching in Japan, there's a lot that makes us think this is going to be at least as effective as fast adoption as we saw in the United States, if not faster, given all the things that are already in place that we didn't have when we started in the U.S. On the reimbursement side, we're also feeling optimistic. I would say that we don't know yet, so obviously there's nothing to report today, but relative to our ASP in the United States, where we've We think we're going to be able to get pricing that's accretive to what the ASP is. We see in the U.S. historically Japanese ministry pays pretty well, like, you know, comparable to what you'd see from U.S. Medicare. We'll see what comes in, but certainly we're expecting something that's going to be accretive to ASP. Mike, is there anything you want to add to that?

No, I think, again, that was that was that was thorough.

Okay, and then follow up on signatera. Yeah, I know we've had a number of questions here, but I guess where are we from a mixed perspective, CRC in breast versus new indications? How do you think about head and neck and lymphoma, you know, in terms of mixed perspective? Does genome with faith and structural variants add costs when you kind of roll that out? And then lastly, just competitive dynamics. You have obviously a number of competitors coming in, including tumor informed for the first time. Just talk a little bit about how you think about the competitive landscape here over the next year.

Great, thanks. Why don't I start and then Mike and Alex, you could add as well. On the mix, colorectal cancer and breast cancer continue to be very strong growth areas and number one and number two contributors. But we do see an increasing share from other cancer types. Some of the ones we mentioned on the call today, lung cancer, immunotherapy monitoring, bladder cancer, you know, these are These are areas that we've already had coverage and continue to grow well. So there's just so much opportunity. And one of the things that we've been talking about now for years with the broader community is that once a community oncologist experiences Signatera in a particular cancer type in their practice, if they have that aha moment, which most physicians eventually do, They understand how to apply that technology to other cancer types. And that organic flywheel just continues, which is excellent. And as I mentioned in my prepared remarks, it sets us up well as we get expanded coverage in the new cancer types. On the Signatura genome side, as Mike said, we do expect increasing adoption of the genome I think that's something that, as Mike said, we're prepared to weather. I actually think that's been a little bit slower adoption than we had expected until now and has been fine for gross margins. I think that could change as we head into the early months of the launch with phased and structural variants because there's a lot of excitement in the community, but that's all kind of baked in. We're ready to plan, and especially as new patients slowly but surely become a lower mix, a lower percentage of the overall mix of tests relative to subsequent tests, that also kind of dilutes the effect. And then on competition, again, competition is something that we welcome into space. We've been competing. in the market against other laboratories providing MRD testing for years. So we don't see any big change right now. Right now, we are remaining focused on our core principles, which is make sure that the tests work as well as they possibly can, make sure that the clinical data is being generated and it's solid, and then make sure that our commercial teams and our support and infrastructure make it as easy as possible to order. So thank you for those questions. Mike, anything you want to add there?

Nope. Once again, I thought that was thorough. Thanks for the question. Thank you.

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