Release Date: August 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Record-breaking test volumes with over 1,044,000 tests processed in Q2 2026, including a 56% year-over-year increase in clinical MRD units.
- Signatera achieved significant regulatory milestones, including FDA approval as a companion diagnostic and Japanese PMDA approval, enhancing its market position.
- Strong revenue growth of approximately 38% year-over-year, with revenue guidance raised by $100 million at the midpoint.
- Gross margins improved to approximately 65%, driven by ASP gains and operational efficiencies, with a long-term target of 70%+.
- Positive cash flow generation and reduced operating losses, supported by improved DSOs and effective revenue cycle management.
- Launch of enhanced Panorama test addresses low fetal fraction gap, leading to new account wins and strong women's health growth.
- Expansion of Medicare coverage for organ transplant surveillance, expected to drive Prospera ASP and volume improvements.
- Robust clinical evidence pipeline with over 70 prospective studies, positioning Natera for future guideline and reimbursement catalysts.
- NCCN Category 1 recommendation for Signatera in bladder cancer, driving adoption and commercial payer coverage.
- Early cancer detection program progressing on track with FIND study nearing full enrollment, presenting a significant future growth opportunity.
Negative Points
- Q2 Signatera volume growth was exaggerated by weather-related suppression in Q1, making sequential comparisons less reliable.
- Signatera ASPs remain below long-term targets, with meaningful improvement expected only in 2027 from MolDX coverage and guideline updates.
- COGS increased due to new product launches (Fetal Focus, LATITUDE, Signatera Genome) that are not yet optimized for cost efficiency.
- R&D spending is elevated, particularly for early cancer detection, which currently provides no top-line or margin benefits.
- SG&A expenses may exceed guidance due to noncash stock-based compensation and litigation costs.
- Revenue true-ups, while declining, still represent a significant portion of revenue and add volatility to financial results.
- Competition in the MRD market is increasing, though Natera believes its scale and evidence provide a competitive moat.
- The company does not expect to repeat the record sequential volume growth in Q3, indicating potential for slower growth.
- Japan launch is pending pricing and reimbursement determination, with commercial ramp expected only later this year.
- Gross margin improvement was modest sequentially, with new product mix offsetting ASP gains.
Q & A Highlights
Q: Can you elaborate on the key drivers behind the exceptional sequential growth in Signatera volumes, and how sustainable is this growth into 2027?
A: Steve Chapman (CEO) attributed the blowout quarter to a combination of factors: the halo effect from the FDA approval, the productivity of the expanded commercial team hitting its stride, and the culmination of years of investment in medical affairs and clinical trials. He emphasized that while the 34,000-unit sequential increase was a record, it was exaggerated by weather-related suppression in Q1. He expects future growth to be strong but more normalized, potentially outperforming the previous record of 25,000 sequential units, driven by a "tipping point" in physician adoption of MRD testing.
Q: Regarding Signatera ASPs, what is the potential impact of the pending MolDX coverage submissions, and what is the expected timeline for these to flow through?
A: Michael Brophy (CFO) estimated that the pending MolDX submissions for additional indications could add roughly $150 to $200 to the Signatera ASP, which is currently around $1,275. He expects these coverages to roll in over the next 12 to 18 months, acting as a major step-function improvement on the path to the long-term target of a $2,000 ASP. Steve Chapman added that the strict MolDX process acts as a competitive moat, as it requires the high-quality evidence Natera has generated.
Q: Can you provide more detail on the new SIGNAL-ER 101 study and the broader SIGNAL program? How should we think about its potential impact?
A: Alexey Aleshin (CMO) explained that SIGNAL-ER 101 is the first of a new portfolio of interventional, pharma-standard studies Natera is sponsoring and running itself. The study uses Signatera to guide the use of CDK4/6 inhibitors in early-stage HR+/HER2- breast cancer, potentially sparing MRD-negative patients from toxic and expensive therapy. He stated that if positive, the study would be practice-changing. Steve Chapman added that this is the first of a suite of studies across major histologies designed to be guideline-enabling, representing a major strategic investment.
Q: With the strong growth in women's health, are you seeing share gains from competitors, and what is driving this performance?
A: Steve Chapman (CEO) confirmed that Natera is definitely benefiting from share gains in women's health. He attributed this to recent product launches, particularly the enhanced Panorama test, which resolved the historical gap of high no-call rates at low fetal fractions, and the Fetal Focus product. He noted that Q2 is typically a soft quarter due to seasonality, but the company overcame this with strong interest in its enhanced product portfolio, putting the sales team in a very positive position.
Q: What is the outlook for the commercial launch of Signatera in Japan, and how quickly can the market adoption ramp?
A: Solomon Moshkevich (President, Clinical Diagnostics) stated that the launch is on track for the end of the year, pending pricing and reimbursement. He expects market adoption to meet or exceed the rates seen in the US when Signatera was first launched for colorectal cancer, due to the strong existing data and supportive society guidelines in Japan. He noted that reimbursement is the key unlock for ordering, and Natera is supplementing its distribution partner with a direct sales effort to drive awareness quickly.
Q: Can you unpack the drivers of the sequential ASP increase and the potential for further near-term upside?
A: Michael Brophy (CFO) explained that the current guidance assumes stable ASPs of $1,275 for Signatera. He noted that an upside case for the year could include another $25 sequential increase, driven by tactical wins like improving Medicare Advantage compliance and expanding coverage in biomarker states. However, he emphasized that the larger, more impactful drivers like MolDX coverage expansions and NCCN guideline benefits are expected to contribute more significantly in 2027.
Q: With the strong volume growth, why didn't gross margins increase more significantly, and when will the mix dynamics start to flip?
A: Michael Brophy (CFO) explained that the margin improvement was balanced out by a step-up in volumes from recently launched products like Fetal Focus, LATITUDE, and Signatera Genome, which are not yet optimized for COGS. He noted that this is a healthy development, as it sets up the company to generate returns from COGS reduction projects over the next 12 to 18 months, now that the demand for these products is confirmed.
Q: How should we think about the competitive landscape in MRD, given the growth of new entrants?
A: Steve Chapman (CEO) acknowledged that competition is a constant factor but noted that major competitors have been in the market for years without impacting Natera's growth. He attributed Natera's success to its investments in technology, clinical evidence, and commercial execution. He emphasized that the market is still in its early stages with mid-single-digit penetration, and Natera is best positioned to capture the upside, while closely monitoring competitors to close any potential gaps.
Q: Can you provide more color on the drivers of the strong new patient starts and the mix of tumor types?
A: Steve Chapman (CEO) stated that colorectal and breast remain the largest indications, but there is significant growth in the "long tail" of other histologies as new data is published. He noted that new patient starts were "way up," which foreshadows significant future growth in recurrence monitoring and surveillance. He also mentioned that there are seven MolDX submissions in flight for additional indications, which will drive further adoption.
Q: Regarding the SG&A guidance, where are the efficiencies coming from, and what is the path to profitability?
A: Michael Brophy (CFO) clarified that the step-down in SG&A in the second half is largely due to onetime expenses in Q1, such as noncash stock-based compensation accruals and litigation expenses, which are not expected to recur. He also highlighted that Natera is deploying AI across the business at a "frenetic pace," driving significant efficiencies in the lab and workflows, which is contributing to the longer-term path to profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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