Natera, Inc.

Welcome to Natera's 2035 Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a question-and-answer session. To ask a question at that time, please press star followed by one on your touchtone phone. If anyone has difficulty hearing the conference, please press star zero for operator assistance. As a reminder, this conference call is being recorded today, November 6, 2035. I would now like to turn the conference call over to Michael Brophy, Chief Financial Officer. Please go ahead.

Thanks, operator. Good afternoon. Thank you for joining our conference call to discuss the results of our third quarter of 2025. On the line, I'm joined by Steve Chapman, our CEO, Solomon Moskovich, President of Clinical Diagnostics, and Alex Oleshin, General Manager of Oncology and our Chief Medical Officer. Today's conference call is being broadcast live via webcast. We will be referring to a slide presentation that has been posted to investor.natera.com. A replay of the call will also be posted to our IR site as soon as it's available. Starting on slide two, during the course of this conference call, we will make forward-looking statements regarding future events and our anticipated future performance, such as our operational and financial outlook and projections, our assumptions for the outlook, market size, partnerships, clinical studies, and expected results, opportunities, and strategies. and expectations for various current and future products, including product capabilities, expected release dates, reimbursement coverage, and related effects on our financial and operating results. We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. Please refer to the documents we file from time to time with the SEC, including our most recent Form 10-K or 10-Q and the Form 8-K files with today's press release. Those documents identify important risks and other factors that may cause our actual results to differ materially from those are contained in or suggested by the forward-looking statements. Forward-looking statements made during the call are being made as of today, November 6th, 2025. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. The Territory 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 quarter unless we do so in a public forum. We will quote a number of numeric or growth changes as we discuss our financial performance, and unless otherwise noted, each such reference represents a year-in-year comparison. And now, I'd like to turn the call over to Steve. Steve?

Thanks, Mike. Let's get to the highlights on the next slide. We had a fantastic quarter. We generated $592 million in revenue, which is up about 35% over Q3 of last year. We had an excellent volume quarter as well, which included strong growth across the product portfolio and another record for signatory growth. We processed 202,000 clinical MRD tests in the quarter, which represents more than 21,500 units of growth compared to the second quarter. You'll recall that we had a record of 20,000 signature growth units in Q2, so we're very pleased to beat that record again in Q3. Growth margin took a big step up in Q3, coming in at 64.9%, which is almost 1.5 percentage points higher than we were just last quarter. X true-ups, gross margins grew over a full percentage point versus Q2, and almost three percentage points over Q3 of last year. Given all that momentum, we are in a position to significantly increase the 2025 financial guide. We are raising the revenue guidance by $160 million at the midpoint and now expect revenues in the range of $2.18 billion to $2.26 billion, which is a full reset of the prior revenue range. We are raising the gross margin guide to 62% to 64% in recognition of the gross margin performance we saw in the first three quarters and AFP and COGS momentum continuing in the business. We are also modestly bumping OPEX guidance, which is largely from the one-time expenses that have accumulated over the course of the year that now total around $60 million. In addition to those one-time expenses, there's a small increase in R&D to support mold DX coverage for the remaining signature indications. Based on this effort, I'm excited to announce we are now in a position to submit seven new mold DX submissions before the end of the year this year, which we've said can be worth around $250 to $300 million of gross profit based on our run rate. We've also invested to expand the market by increasing the number of definitive MRD trials and to support the FDA-enabling fine study for early cancer detection. It's important to note that our SG&A was flat to down between Q2 and Q3, which is aligned with what we said about pre-spending to build the commercial team in the first half of the year. We aren't planning any big commercial expansions anytime soon, and we'll talk a little bit more about that later in the call. Finally, on guidance, we are substantially raising our guide for free cash flow generation for the year, where we are now formally expecting to generate roughly $100 million in cash for the full year. Of course, we were thrilled to see the signature data readout from the InVigor 011 trial in bladder cancer, and we appreciate Dr. Tom Polz for joining us on the special call we held a few weeks ago to review the results. We think the InVigor trial results represent a fundamental new paradigm in cancer care enabled by Signatera, and that data has been published now in the New England Journal of Medicine. Finally, we touched on our last call that we were very excited to launch Fetal Focus, a new single-gene NIPT for inherited conditions that leverages our proprietary SNP-based method. We recently announced an expansion of the fetal focus product to cover over 20 genes planned for this quarter. The initial feedback from our August launch is positive, and we think this is a compelling expansion of the panel. Okay, let's get into some of the business trends on the next slide. The first slide shows our Q3 volume progression versus prior years. We had solid sequential quarterly growth in women's health driven in part by interest in fetal focus that spurred a lot of new commercial activity for our team. Oregon Health was also very strong with both greenfield and competitive wins, and we will continue to keep our foot on the gas as we have several clinical trials ongoing that further demonstrate how much utility and cost savings these tests are delivering. Of course, Signatera posted another record quarter, which we'll get into on the next slide. Overall, the volume momentum in Q3 was very strong across the products and then has continued into Q4 thus far. The next slide shows our clinical MRD unit growth over time. We had another record growth of 21,500 additional units, which includes more than 21,000 Signatera growth units and a few hundred latitude growth units. As a reminder, we offer latitude as a reflex to Signaterra when Signaterra can't be performed. This unit growth represents 56% year-on-year growth versus Q3 of last year, and this is the fastest year-on-year growth rate we've had in all of 2025. The drivers here are really the same as we covered on prior calls, groundbreaking clinical data combined with excellent customer experience. New patient starts were again strong as physicians continue to use the test for ongoing monitoring. We see adoption being fueled by the excellent data released earlier this year, including at ASCO, ASCO-GI, and ESMO. We haven't had time yet to see the effect of the recent ESMO data or the publication in the New England Journal of Medicine, but clearly those are both very positive factors. We'll talk more about the implication of these results later in the call. The mix of tumor types we're seeing continues to be broad-based as physicians really start to generalize the use of Signatara in their clinics. That broad adoption drives volume growth, but also creates a large revenue opportunity as we broaden the range of tumor types that we can get reimbursed. The next slide shows revenue, which was another area of significant outperformance this quarter. We grew revenues 35% over last year, which is actually faster than Q2, despite the tough comparable. This was from strong volume performance combined with excellent progress on ASPs. Each of our major products had a sequential improvement in ASP and Q3 compared to Q2. Women's health and organ health each had another standout quarter and signatory ASPs are now at roughly $1,200. We had about $55 million in true-ups this quarter as cash collections continued to accelerate, and we posted another record for DSOs at 49 days, compared to 57 days just in Q2. That trend is continuing in Q4, as October was a clear new record for cash collections. All of this bodes well for future AST growth, as Mike will describe later in the call. The next slide shows our gross margin traction over time, and we posted another strong gross margin quarter in Q3. Top line gross margins were record as we got very close to that 65% level. Stripping out the revenue true ups, we grew gross margins a full percentage point to 61.3% just compared to Q2. We drove that with a combination of better ASPs as well as COGS, which were also very lean in the quarter across the board. In addition to COGS efficiencies, we spent some time on our last call talking about the other key margin expansion vectors we're pursuing. Investing in revenue cycle operations has been a huge win for us over the last two years, and we are now at a level where we think we can hold that dollar spending steady as we continue to grow ASPs, which gives us leverage on the prior investments. I also mentioned the coverage expansion opportunity that was really across the board, but particularly in Signatera. In addition to getting more tumor types covered by Medicare, we are starting to see some green shoots in biomarker state reimbursement for commercial volumes. We estimate the growth in Signatera ASP this quarter was driven primarily by the success we had in the spring and fall working with Health Plan in these states to cover Signatera for their patients. I think it's going to be a pretty steady linear process for us over the next two years or so. Finally, all of the above can be accelerated with the deployment of AI. In addition to driving innovation, for example, with our foundation models, AI is already helping us scale these operations as volumes grow without forcing a commensurate increase in headcount. Okay, that's a good segue to the next slide on OpEx. We went into some detail on the last call describing the investments we are making this year in both R&D and commercial operations to extend our leadership in MRD. Looking at Q3, this R&D increase reflects the investments we made to support multiple new product launches, as well as the expansion of our clinical trial and data generation efforts for both signatera and early cancer detection. This year, we launched signatera genome, latitude tissue-free MRD, fetal focus single gene NIPT, and we're about to launch this expanded version of fetal focus. All of these things put us in a position to keep doing well in the market and to continue helping millions of patients per year. In clinical trials, as I mentioned, we're doubling down on evidence generation, and that investment we've been making has really paid off. We are now in a position to submit seven new multi-act submissions by the end of the year. And as I mentioned earlier in the call, reimbursement for all the remaining indications could be worth around $250 to $300 million of gross profit based on our run rate. So this is well worth the investment. In addition, we're launching many interventional trials to continue advancing the field towards incorporating personalized MRD into the standard of care. In addition to Signatera, The advanced adenoma data we now have in hand gives us a lot of confidence to push as fast as we can to get a high-quality result in the FDA-enabling FINE trial, which is already enrolling. This is a big investment, but we think it's worth it given the very attractive opportunity at ECD that includes a large market size, high gross margins, and a very strong performance for our technology. We'll get into more detail on that effort a little bit later today. Finally, as you can see here on the slide, our SG&A is slightly down sequentially from Q2 to Q3. That largely reflects the fact that we're now in a very good spot with a commercial team and with our revenue cycle operations, which were big areas of SG&A investment in the past. We're now in a position to drive significant scale from these prior investments. As we start to look out to next year, we expect there will be limited OPEX growth of roughly 10%, while revenues grow much faster and margins continue to improve. The OPEX investment will be focused on executing definitive signature clinical trials to expand the market and completing the FDA-enabling FIND ETD study, where we will be enrolling patients in 2026. As we said before, we think these are both very smart investments. Okay, with that, let me turn it over to Solomon to discuss more details. Solomon?