Natera, Inc. Q3 FY2024 earnings call

• Q3 2024 was a transformational quarter with $439.8M revenue, 64% y-o-y growth, 24% volume growth, and 62% gross margins.
• GALAXY data in Nature Medicine showed prospective overall survival data for Signatera in CRC, a major milestone.
• Completed CALGB/SWOG 80702 trial study with Signatera, results to be presented at ASCO GI 2025.
• Launched Fetal RhD test in women's health with strong demand, addressing a critical need in the prenatal community.
• Oregon Health had strong volume growth with over 45 peer-reviewed papers, including the largest prospective study in the field.

Natera generated $439.8 million in revenue in Q3 2024, a 64% year-over-year increase, marking a record quarter for revenue growth. Volumes grew 24% year-over-year. Oncology tests saw a 54% year-over-year increase, with Signatera Clinical Units posting 11.4 thousand units sequentially and 48.4 thousand units year-over-year. Gross margins were 62%, a record. In women's health, growth was seen from the direct channel augmented by Invitae volume, and a strong launch of the Fetal RhD test. Oregon Health had strong volume growth with over 45 peer-reviewed papers, contributing to its growth.

• Raised 2024 revenue guidance to $1.61B-$1.64B, implying 50% full-year growth.
• Full-year gross margins expected to be 58%-61%.
• 2024 cash generation guidance revised to $50M-$75M.
• 2025 baseline goal is similar volume growth to 2024, with considerations for women's health unit influx from Invitae not repeating and Signatera ASP potential improvement via Medicare advantage and state biomarker laws.

• Reimbursement fluctuations from quarter to quarter.
• Uncertainty in timing and impact of state biomarker laws and Medicare coverage for additional Signatera indications.
• Modest weather impact on Q3 results noted.

Q: Elaborate on ASP pickup across products, especially Signatera's growth.

A: Signatera ASP grew from mid-800s to ~$1,050, with potential from Medicare advantage and state biomarker laws. Other products have upside from coverage expansion in areas like 22q, RH testing, and additional oncology indications.

Q: Breakdown of Signatera volume growth source.

A: Mix of academic and community settings, with data from GALAXY study driving adoption among oncologists, and underpenetrated market (40% of oncologists using Signatera today) providing room for growth.

Q: Impact of weather on Q3 results.

A: Modest impact from hurricanes in Q3, with cautious approach in guiding due to uncertainty in weather's precise effect.

Q: SG&A spend and 2025 OpEx.

A: Invest in clinical trials, innovation, customer service, marketing, and sales; 2025 OpEx expected to be mid-single to high single-digit growth, focusing on serving Signatera patients and reinvesting in growth.

Q: Invitae contribution and community penetration.

A: Invitae contributed to women's health growth, with community penetration still in low single digits and room for growth in both academic and community settings.