Natera Q1 Earnings Call Highlights

Key Points

• $697 million Q1 revenue (+39% YoY) and a first-time quarterly delivery of more than 1 million units were driven by strong volume in women’s health (Panorama/Horizon and a fast-growing Fetal Focus) and record oncology MRD growth (249k clinical oncology units, +55% YoY, >1M MRD tests run rate).
• Signatera clinical data are expanding its role beyond recurrence detection—supporting surgical de‑escalation and avoidance of costly adjuvant therapy in multiple tumor types—and Medicare coverage plus a planned PMDA approval in Japan (Q2 2026) could meaningfully expand its CRC market opportunity.
• Natera raised full‑year 2026 guidance (midpoint up ~$120M) and lifted gross margin guidance to ~65% as Signatera ASPs improve (expected exit ASP ≈ $1,275); management noted temporary cash/DSO effects from pricing updates and plans higher R&D to accelerate trials.

Natera NASDAQ: NTRA reported first-quarter 2026 revenue of $697 million, up 39% year over year, as the company delivered more than 1 million total units in a single quarter for the first time. Chief Executive Officer Steve Chapman said strong performance in women’s health and another record quarter in oncology drove the results, while Chief Financial Officer Michael Brophy highlighted continued improvement in realized pricing and reimbursement dynamics.

Volume growth led by women’s health and oncology

Chapman said the quarter was “headlined by excellent volume performance in women’s health and another record growth quarter for oncology.” He noted Q1 is typically seasonally strong, but said this quarter was “nearly the most unit growth we’ve seen” since he became CEO.

In women’s health, Chapman pointed to strength in the core business and progress from the company’s Fetal Focus launch. He said Fetal Focus is “exceeding expectations” and that Natera is “approaching a run rate of nearly 200,000 Fetal Focus orders” despite the product’s recent introduction. Chapman emphasized that much of that demand is not included in the company’s test processing figures due to how orders are counted when results are negative for the conditions assessed, saying the reported growth was driven primarily by core Panorama and Horizon testing rather than Fetal Focus.

In oncology, Chapman said Natera processed 249,000 “clinical oncology units” in the quarter, representing 55% growth over last year and an increase of roughly 24,000 units versus Q4. He described the sequential increase as “the biggest increase we’ve ever achieved,” adding that the company is now on a run rate of over 1 million MRD tests annually.

Chapman also acknowledged the company saw some winter storm disruption during the quarter. Responding to an analyst question, he said Natera “definitely” saw a “step down in units” around late January and was “not able to get the full recovery,” although the company still delivered record results.

Clinical and economic messaging expands for Signatera

Solomon Moshkevich, President of Clinical Diagnostics, used his remarks to highlight emerging evidence that Signatera can influence treatment decisions beyond early recurrence detection, including “de-escalation” of surgery in select MRD-negative patients.

• Bladder cancer: Moshkevich cited data presented at ASCO GU indicating that MRD-negative patients who avoided cystectomy had similar outcomes to those who had surgery, with investigators concluding “ctDNA negative patients may avoid immediate cystectomy.”
• Rectal cancer: He referenced a paper in Cancers reporting that MRD-negative patients who avoided surgery after neoadjuvant therapy had “excellent outcomes.”
• Breast cancer: Moshkevich cited a Clinical Cancer Research publication in which women over 70 with early-stage ER-positive disease who were MRD-negative at diagnosis “were able to forego surgery and remain progression-free,” with authors suggesting this could “facilitate surgical de-escalation.”

Moshkevich said Signatera is already covered by Medicare in those indications and argued that MRD testing can help reduce overtreatment and avoid costly therapies. He also discussed the IMvigor011 trial in bladder cancer, saying 47% of patients were persistently MRD-negative over the first year, avoided adjuvant systemic therapy, and achieved two-year overall survival of 97%. He estimated adjuvant immunotherapy can cost “around $196,000 per year” and said avoiding it in about half of bladder cancer patients could be economically significant.

On the biopharma side, Moshkevich highlighted interim data from Allogene Therapeutics’ ALPHA3 trial in large B-cell lymphoma. He said MRD clearance was 58% in the treatment arm versus 17% in observation, and noted median ctDNA levels decreased 98% from baseline in the treatment arm while increasing 27% in the observation arm.

ASCO slate, early cancer detection timelines, and Japan launch preparations

In remarks delivered during the call, Natera previewed a large presence at ASCO, including 35 abstracts spanning treatment-on-molecular-recurrence (TOMR), pan-cancer MRD, phased variant technology, real-world evidence, and trials in progress. The company highlighted a pan-cancer MRD meta-analysis across 18 published studies, more than 3,000 patients, and 15 solid tumor types, stating ctDNA positivity was strongly associated with recurrence risk in both MRD and surveillance settings.

On early cancer detection, the company discussed FIND-CRC, its FDA-enabling colorectal cancer screening study targeting roughly 25,000 to 40,000 average-risk adults. Natera said enrollment is progressing ahead of plan and it is on pace to complete enrollment for PMA submission in Q3 2026, supporting an FDA PMA readout in 2027. Chapman later reiterated to an analyst that “ECD data will be read out from the definitive trial in 2027.”

Natera also discussed Japan as a “near-term growth opportunity” for Signatera. The company said PMDA approval remains on track for Q2 2026, with preparations underway for a broad commercial launch shortly thereafter. Management said Japan has a similar absolute number of colorectal cancer diagnoses as the U.S., and suggested a launch could “effectively double Signatera’s annual CRC volume TAM.” Moshkevich said adoption could be meaningful given MRD is recommended in Japanese medical society guidelines, but added it was “hard to say exactly right now” what unit volumes will look like until models are refined. He also said pricing discussions would occur after regulatory approval, and the company plans to update investors as it gains clarity later in the year.

Margins, pricing, and updated guidance

Natera reported gross margin of just under 65% in Q1, above the company’s prior midpoint expectation of 64% for full-year 2026. Chapman said rapid volume growth created a roughly 2 percentage point headwind because of elevated work-in-process at quarter-end that reduced the received-versus-reported ratio.

Brophy elaborated that the company recognized revenue on about 92% of cases received during the quarter, compared with a typical 95% to 96%, which pressured margins because costs are incurred as cases are processed but revenue is not recognized until reported. He said this dynamic is “not at all unusual” for Q1 following a high ratio in Q4, and he expects normalization in subsequent quarters.

Pricing was another theme. Chapman said average selling prices increased across the portfolio and that Signatera ASP reached “roughly $1,250.” Brophy said Signatera ASP increased by about $25 versus Q4, driven by improved alignment with Medicare Advantage plans, more consistent reimbursement for covered services, and the impact of updated bundled pricing from CMS that more than offset a modest decline in ADLT rates previously discussed. He also said the pricing update temporarily delayed Signatera cash collections as systems were updated, which contributed to higher DSOs in Q1, but that delayed cash arrived in April.

For full-year 2026, Brophy said Natera is “completely resetting the revenue guide” upward by $120 million at the midpoint and raising gross margin guidance to 65% at the midpoint. He added the updated revenue outlook implies the company expects to exit 2026 with Signatera ASP around $1,275, while noting potential upside from additional Medicare coverage decisions and private payer progress. Brophy also said the company does not include revenue true-ups in guidance, meaning any future true-ups would be incremental to the outlook.

On expenses, Brophy said SG&A guidance is being held steady, citing opportunities for efficiency and scale. Addressing Q1 SG&A as a percentage of revenue, he said Q1 is often elevated for sales and marketing and included non-recurring items, including what he described as “true one-timers” related to balance sheet adjustments and non-cash charges that he estimated at roughly $25 million in the quarter. He also said the company increased R&D expectations to support faster-than-expected enrollment in FIND studies and to pull forward additional Signatera trials, consistent with Chapman’s earlier comment that R&D would rise by about $50 million to accelerate oncology clinical trials, including interventional MRD trials and the FIND-ECD study.

About Natera NASDAQ: NTRA

Natera is a global diagnostics company that develops and commercializes cell-free DNA and other genetic testing technologies for clinical applications. The company focuses on three principal areas: reproductive health (including non-invasive prenatal testing and carrier screening), oncology (tumor-informed assays for minimal residual disease and recurrence monitoring), and organ transplantation (cell-free DNA tests to detect allograft injury). Natera combines laboratory testing, proprietary bioinformatics, and clinical reporting to deliver personalized genetic information to clinicians and patients.

Key product offerings include Panorama, a non-invasive prenatal test that screens for fetal chromosomal abnormalities and select single-gene conditions; Horizon carrier screening for inherited conditions; Signatera, a personalized, tumor-informed assay used for detecting minimal residual disease and monitoring treatment response in cancer patients; and Prospera, a donor-derived cell-free DNA test used to assess the risk of organ rejection.

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