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Date
Thursday, August 7, 2025 at 4:30 p.m. ET
Call participants
Chief Executive Officer — Steve Chapman
President, Clinical Diagnostics — Solomon Moshkevich
General Manager of Oncology and Chief Medical Officer — Alexey Aleshin
Chief Financial Officer — Michael Brophy
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Takeaways
Revenue-- $547 million in revenue, representing 32% year-over-year growth; excluding revenue true-ups, organic growth was 34% year over year.
Sequential revenue growth-- Overall revenues increased 9% sequentially, with organic revenue growth at 7% sequentially.
Signatera oncology testing volume-- 189,000 Signatera oncology tests processed, an increase of nearly 20,000 units sequentially, exceeding the previous company record.
Signatera new patient starts-- Number of new patient starts for Signatera doubled the previous quarterly high and were about three times higher than the company’s quarterly average.
Gross margin-- 63.4%, up from approximately 59% in Q2 2024, maintaining sequential consistency excluding revenue true-ups.
Revenue true-ups-- $45 million in revenue true-ups due to improved reimbursement for covered services.
ASP trends-- Signatera average selling price reached approximately $1,175, with steady ASPs for Panorama, Horizon, and improved Prospera ASPs.
Accounts receivable and DSOs-- Days sales outstanding declined to 57 days, marking a company record.
2025 revenue guidance-- Raised by $80 million at midpoint to a new revenue guidance range of $2.02 billion to $2.1 billion for the full year 2025, fully resetting prior guidance.
Gross margin guidance-- Increased gross margin guidance to 61%-64% for the full year 2025 based on first-half performance.
Operating expenses-- Held flat against previous guidance despite increased investment in growth and innovation.
Clinical trials-- Over 100 clinical trials underway, supporting expansion into additional tumor types and coverage initiatives.
Fetal Focus NIPT launch-- Newly introduced non-invasive prenatal test for inherited conditions, validated in the EXPAND study with approximately 1,300 participants and initial readout from the EXPAND clinical validation study showed 91% sensitivity in affected pregnancies at the first milestone of approximately 100 patients.
Prospera organ health data-- PEDAL study published, showing that transplant recipients with declining donor DNA had a 60-times higher chance of positive long-term outcomes at the twelve-month mark, based on the PEDAL study.
Signatera data in oncology-- Recent studies presented at ASCO and in leading journals demonstrated superior sensitivity and specificity in liver cancer, and were validated in breast and gastroesophageal cancers.
AI and operational efficiency-- AI initiatives are expected to provide approximately $200 million in potential savings over time, with operational leverage observed without a 1:1 increase in headcount.
Cash flow-- Added approximately $47 million in cash from operations to the balance sheet in the first half of 2025.
Stock-based compensation and nonrecurring charges-- Incurred approximately $30 million in noncash stock-based compensation and legal expense accruals; adjusted EPS loss per share would have been approximately 53¢ rather than 74¢.
Medicare coverage opportunity-- Management stated that expanding Medicare coverage to currently noncovered cancer types could yield approximately $253 million in annual revenue and gross profit in the next few years.
Sales force expansion-- Oncology sales force meaningfully increased, with new hires anticipated to contribute materially beginning late 2025 and into 2026.
Product launches-- Additional launches in MRD and genomics platforms indicated, including AI-based diagnostic biomarkers and user experience tools for clinicians and patients.
Summary
Natera(NTRA 2.14%) reported 32% revenue growth in the second quarter of 2025, driven by new high watermark volumes in oncology testing and improved reimbursement dynamics. Management raised both top-line and gross margin guidance for the full year 2025, holding operating expenses flat as new clinical hires and investment in artificial intelligence are expected to deliver future operating leverage. The company introduced new products in women's health and oncology, presented positive clinical data supporting broader adoption and expanded reimbursement, and identified substantial upside from impending Medicare coverage decisions and expanded AI deployment. Fiscal Q2 2025 refers to the period ended June 30, 2025.
“CFO Brophy said, 'and remain extremely well capitalized with a clean balance sheet.'”
The company exited its legacy paternity testing business, impacting historic volume metrics.
“CEO Chapman said, 'we're holding OpEx steady. Even as we raise top-line revenue guidance by $80 million for the fiscal year 2025. So we're getting scale even as we keep our foot on the gas with growth investments.'”
AI-driven digital twin simulations and biomarker prediction platforms have been implemented, leveraging proprietary datasets with more than 250,000 patients and over 1,000,000 longitudinal time points.
“President Moshkevich said, 'To date, we have 18 peer-reviewed publications, and, by our count, presented over 60 abstracts at top medical meetings.' emphasizing the company's dominant clinical pipeline and data position.”
Operational improvements in revenue cycle management have lowered DSOs and improved first-pass claim yield during 2025, supporting better cash conversion.
Upcoming clinical trial data readouts, including from the PRECIDE and INVIGOR 011 studies, are anticipated in 2025 and expected to inform product positioning and guideline inclusion in oncology.
The disclosed investment of over $150 million in breast cancer trials illustrates a scale of R&D commitment that competitors may find hard to match, as stated by Natera management in the Q2 2025 earnings call.
Industry glossary
ASP (Average Selling Price): The net average price received per diagnostic test, reflecting realized reimbursement and payer mix.
MRD (Minimal Residual Disease): Measurement of remaining cancer cells detectable in a patient after treatment, an important marker for recurrence and prognosis.
NIPT (Non-Invasive Prenatal Testing): Screening method using maternal blood to detect fetal chromosomal or inherited genetic conditions.
ctDNA (Circulating Tumor DNA): Fragments of DNA from cancer cells found in the bloodstream, used in liquid biopsy tests for cancer detection and monitoring.
DSO (Days Sales Outstanding): A measure of the average number of days it takes a company to collect payment after a sale, used as an indicator of billing efficiency and cash flow.
TOMER (Treatment on Molecular Recurrence): Clinical strategy of initiating therapy based on molecular evidence of cancer recurrence before clinical or imaging confirmation.
AI foundation models: Large-scale artificial intelligence models trained on genomic and clinical data, used for biomarker discovery, treatment prediction, and digital patient simulation in diagnostics and therapeutics.
Full Conference Call Transcript
Michael Brophy: Operator. Good afternoon. Thank you for joining our conference call to discuss the results of our 2025. On the line, I'm joined by Steve Chapman, our CEO, Solomon Moshkevich, President, Clinical Diagnostics, and Alexey Aleshin, 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 that outlook, market size partnerships, clinical studies and expected results, opportunities and strategies and expectations for various current and future products, including product capabilities, expanded 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 the 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-Ks 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 made as of today, 08/07/2025. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. It's here to claim any obligation to update or 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 form. We will quote a number of numeric or growth changes 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?
Steve Chapman: Thanks, Mike. Let's get to the highlights on the next slide. We had a phenomenal quarter. We generated $547 million in revenue, which is 32% growth over Q2 of last year. And ex-revenue true-ups, our revenues grew 34% year on year. We had a very strong volume quarter as well, which included strong growth across the product portfolio and an all-time record for Signatera. We processed 189,000 oncology tests in the quarter, which represents nearly 20,000 units of growth compared to our first quarter of this year. 20,000 sequential growth units significantly beats our previous growth record and is a new milestone for the company.
Part of this growth acceleration was driven by a significant increase in new patient starts which was double our previous quarterly record. Gross margin ticked up again in Q2 at 63.4% compared to approximately 59% this time last year. Ex-true-ups, gross margins were consistent sequentially versus Q1 due to strong ASPs despite the fact that signature COGS actually went up meaningfully because we ran so many exomes for first-time patients. Which, of course, is very good news. Given all that momentum we're in a position to level up the financial guide for the year.
We are raising the revenue guidance by $80 million at the midpoint, and we now expect revenues in the range of $2.02 billion to $2.1 billion, which is a full reset of the prior revenue range. We are raising the gross margin guide to 61 to 64% in recognition of the gross margin performance we saw in the first half which still accounts for factors like growth in new patients in the second half. We are not increasing our operating expenses. Which are remaining flat versus the prior guide as we get scale in the business despite being in full investment mode for the future.
In addition to the financials, we have a full slate of new data and product updates to discuss today. We are particularly excited to launch Fetal Focus, a new NIPT for inherited conditions that leverages our proprietary SNP-based method for NIPT. We've never had better momentum in organ health and the Prospera data that we'll talk about today, I think, shows the path we're on to transforming care for organ transplant patients. In oncology, the data pipeline continues to grow we're gonna take some time on the call today to do a deeper dive on our strong and broad data across breast cancer and new data in GI cancers beyond CRC.
Finally, we've been working in the background on the next major wave of innovation at Natera. First, we'll go over the rapid progress we're making on early cancer detection. Where we're gearing up for a big readout of the prospective colonoscopy mass PRECIDE trial for advanced adenoma late this fall. Next, we will introduce Natera's AI-based foundation models which are being used to develop new diagnostic biomarkers, molecular therapeutics, and speed clinical trials. Okay. Let's get into some of the business trends on the next slide. The first slide just shows our Q2 volume progression over prior years.
This was another great quarter for us across the board we were able to grow significantly against the Q2 2024 comparable was elevated due to a sudden influx of Invitae units. Signatera was phenomenal, with growth records in both sequential growth and new patient starts. In Women's Health, we saw our second-best volume quarter ever coming off what was a blowout Q1 number. We saw the same Q2 seasonality trends that we always see given our large base of existing customers but we continue to blunt that impact by winning new accounts.
Our Organ Health products have been on a tear this year, with major new account wins driving growth on the back of some very strong clinical data there's more new data that we're gonna talk about today, which I think sets us up very well for the future in that space. We also recently exited our legacy paternity business which was contributing to our volume numbers historically. The next slide shows our Signatera clinical units over time. This quarter, we grew by 20,000 growth units versus our average over the prior four quarters of about 13,000 per quarter.
This overperformance was a result of a wave of new patient starts driven by the compelling data we generated in the last year. Growth in new patient starts was about three times higher than our quarterly average and about two times higher than the previous record quarter. As we said before, Signatera quarterly volumes could fluctuate so I don't think 20,000 growth units is a new normal. But, clearly, this strong growth is a great sign. Historically, a lot of our growth has come from colorectal cancer, breast cancer, and IO monitoring. And, again, we saw very strong growth in these areas.
In addition, we're now seeing broader adoption in many other tumor types as physicians really start to generalize the use of Signatera in their clinics which is helping drive volume growth but also creates a large revenue opportunity. We're in the process of seeking Medicare reimbursement for this longer tail of cancers. Based on our current growth trajectory, gaining Medicare coverage for these noncovered histologies over the next few years should be worth approximately $253 million in annual revenue and gross profit. Further contributing to the financial sustainability of our growth strategy and supporting our path to a $2,000 ASP.
We're in an excellent position to achieve this given significant amount of data we generated so far, and, of course, we have over 100 clinical trials underway, many of which support these types of initiatives. I mentioned we grew revenues 34% organically year over year, and you'll recall Q2 of last year was a very strong quarter for us so I'm pleased to see these strong growth numbers over some very tough 2024 comparables. We had about $45 million in revenue true-ups this quarter as we continue to improve reimbursement for covered services. Sequentially, over Q1, we grew revenues 9% overall and 7% organically.
We've already covered the very strong volume numbers driving this growth, but we also saw excellent ASPs across the board. The next slide shows our gross margin traction over time. And we posted another strong gross margin quarter in Q2. Stripping up the revenue true-ups, we were still able to generate gross margin steady with Q1 despite the big step up in excellent volumes this quarter. We drove that with better ASPs for Signatera, which is now roughly at 1,175 along with steady results in ASPs in Panorama, Horizon, and growth in the Prospera ASP. We were also very pleased to see continued revenue true-ups in the quarter, which means that cash collections exceeded our prior history.
I think the speed at which we're converting receivables into cash is one of the most promising business trends we're seeing. And DSOs are now down to fifty-seven days which is a record for the company by a wide margin. All of these trends allow us to generate cash while aggressively investing for future growth. Although this slide shows how much progress we've made over the last two years, I really think we are just scratching the surface of the margin improvements we can achieve. We think about margin expansion opportunities across four primary vectors, continued execution of revenue cycle operations, expanded coverage for products including Signatera, further COGS reductions, and AI-driven efficiencies.
First, we embarked on a major investment in our revenue cycle operations leadership systems, and staffing in the 2022. And that project has yielded significant returns for the company. Our team sees ample additional opportunities to continue to make improvements which could drive ASPs higher, and we've seen good results so far this year. One example is on appeals. Historically, it's very difficult to do an individualized appeal for each denial. But as our systems improve and we invest, we're building these types of capabilities that will allow us to get paid on a higher percent of cases. Second is expanding coverage for our products.
We mentioned on our last call that we think $2,000 is an achievable ASP for Signatera. I mentioned the new opportunity in front of us to drive reimbursement in a number of additional tumor types and I'll stress that this opportunity has gotten much larger over the last couple of quarters as our volumes in non-covered tumor types have grown. And we expect to have several additional coverage decisions for the next twelve months. We continue to see positive early signs in biomarker states, which is still at the very early stages. And we still have opportunity with Medicare Advantage execution.
Outside of oncology, we still have major opportunities for improved coverage with expanded carrier screen, 22 q, and broader coverage for our Organ Health products, which could all drive ASP improvements. The third area of improvement on margins by cutting costs. One of the constants for us over the last decade is our commitment to investing in r and d projects that reduce cost of goods sold for new tests that we launch. This tends to have a relatively lower technical risk compared to new product innovation and deliver high returns. We now have a full suite of COGS projects we're initiating and some that are getting close to launch.
Finally, we're gonna spend some time later on the call in the investments we're making in artificial intelligence. Well, there are some very exciting steps we're taking in AI-fueled innovation There's a whole range of areas in the business where AI is already having an impact and allowing us to scale our volumes without a one-for-one increase in headcount. Many of these opportunities hit COGS as well as OpEx, and we expect to see some significant savings from this over time. So in summary, we have several very concrete ways that we can increase the margin Now not all of these are under our direct control.
The path won't always be linear, But it's great that we have these opportunities that we're executing across. On the next slide, as I mentioned at the top of the call, we're holding OpEx steady. Even as we raise top-line revenue guidance by $80 million. So we're getting scale even as we keep our foot on the gas with growth investments. We think these growth and margin expansion opportunities clearly warrant the investment required to deliver them, and this slide gives some additional color on where the incremental investments in 2025 are going. To be clear, the vast majority of the OpEx increase in 2025 is not yet driving revenue.
Either because it's pointed at a longer-term project, like gaining reimbursement for uncovered services, or completing a major clinical trial or delivering on new product launches, or because our commercial hires are just coming on board and are not yet productive. I'll follow-up on that example of commercial hires. We've recently expanded our commercial footprint primarily in oncology. We added these additional oncology reps, and we expect to start seeing meaningful contributions from these new people late this year and early next year. As with a lot of these investments, there's a slingshot effect where they're hitting the expense line this year, but they don't start to impact revenue and volume growth until about six to twelve months later.
The strong growth we've seen thus far this year wasn't really driven by these new hires. In addition to the commercial team, we continue to invest in the success of the revenue cycle management. As we said earlier, investing in revenue cycle management is one of the primary opportunities we have for margin expansion, so this makes a lot of sense to pursue. Once this team is scaled up and the optimal tools and systems are in place, we can get significant scale on top of this infrastructure. We've been moving quickly here, which includes many manual processes that can be automated so we don't have to keep scaling at the same pace going forward.
The forecast also includes a meaningful addition of AI-focused technical staff that we think is very promising. We've also shored up our ability to scale with more lab footprint and additional basic company infrastructure to accommodate our growth. The r and d incremental investment in 2025 is really driven by both the oncology clinical trial expansion and investing into new MRD products. We think this is important because there's so much opportunity in MRD so we're continuing to expand our already vast set of meaningful clinical trials and effort to change guidelines accelerate adoption, and gain coverage where we don't yet have it. Our pace of new product launches has also increased this year.
Earlier this year, we launched Signatera Genome, we have many other MRD-related opportunities working on that will be announced in the future. In addition, we're excited today to have announced another innovation within the prenatal product line with single gene NIPT. Finally, we're continuing to make rapid progress on early cancer detection, which we now think has the potential to be a major opportunity for Natera. We've executed well on the PROCEED trial, which now has about three and a half thousand patients enrolled and we tend to read out in the late fall. We have also launched the FDA enabling FIND trial.
We think ECD is a very significant opportunity for Natera especially given the high ASPs that are now being established and the existing distribution footprint we can leverage. Finally, we're investing in AI and AI-enabled technology which we will outline on the call today, which we think could revolutionize care and make a big impact. We plan to stay nimble on our investment strategy throughout the rest of the year if we see a clear opportunity to deploy capital we're gonna do that while maintaining our commitment to generating cash later this year. Having said that, I think we're reasonably well positioned to hold OpEx in the current range as we continue to grow.
With that, I'm very pleased to hand it over to Solomon. Solomon?
Solomon Moshkevich: Hey, Steve. Let's start with the news from women's health. Where we had an exciting launch of our new fetal focus NIPT for inherited conditions. Let me walk you through some of the background first on the clinical unmet need that we're addressing with this new test. How the test works, and the exceptional performance that we're seeing from our clinical validation study called EXPAND. Today, when a pregnant mother is identified as a carrier of a recessive gene, like cystic fibrosis, for example, medical guidelines recommend testing the biological father, to assess the baby's risk of inheriting the affected gene from both parents. In some cases, the father is not available for testing.
So with the launch of this new test, if a pregnant mother has screened positive, on Natera's Horizon carrier screen, one of the five most commonly tested genes The fetal focus test can directly assess the baby's risk of inheriting the genetic condition just from a maternal blood sample. The test is validated to analyze five key genes. As you can see outlined on the slide. And it's backed by data from the EXPAND trial. A large prospective clinical trial that we've been running for nearly two years. I wanna tell you more about the EXPAND trial.
So far, the study has enrolled about 1,300 participants from a diverse multiethnic population, including patients from leading academic centers, and NFM clinics, as well as a decentralized trial arm that leverages Natera's nationwide base of over 1,000,000 Horizon patients per year. Because of this, Natera is uniquely positioned to enroll quickly into the trial. We see EXPAND, as similar to the SMART study. In that it's designed to be the definitive trial this test category with all positive and negative outcomes confirmed by diagnostic genetic testing either prenatally or after birth.
In the first milestone readout of about a hundred patients from EXPAND, the fetal focus test demonstrated ninety-one percent sensitivity, affected pregnancies where the baby actually inherited the recessive genes from both parents. And the test successfully identified all five affected cases with homozygous variants, which are particularly challenging to detect in cell-free DNA. GenoFocus uses Natera's proprietary linked SNP technology. Which enhances detection of these challenging cases across diverse ethnic populations. These early results not only highlight the clinical accuracy of fetal focus, they underscore the real-world value of Matera's proprietary technology. Together, the product launch and the clinical data strengthen Matera's leadership in women's health.
And it reinforces our commitment to being a trusted partner to OBGYNs, MFM specialists, and patients across the country. Turning now to Organ Health. This quarter, we announced the publication of the PEDAL study in the American Journal Transplantation. AJT is the highest impact transplant journal. Which speaks to the importance and the rigor behind this study. PEDL is a first of its kind prospective multicenter trial evaluating how donor-derived cell-free DNA can help predict long-term outcomes after a rejection of a kidney transplant. Think about this as similar to immunotherapy monitoring in oncology. Because it answers the question of whether the treatment is working or not. After someone has been diagnosed with rejection.
The PEDL study enrolled four hundred and eighty-eight kidney transplant recipients from 28 participating US and international transplant centers over four years. Ninety-six of those patients had biopsy-proven acute rejection, and were monitored with Prospera during treatment every two weeks for eight weeks. And sixty-six of those patients had clinical outcomes recorded at the twelve-month mark. So the findings showed that transplant patients whose donor DNA levels remained high during and after treatment did poorly. With ninety-seven and a half percent having negative outcomes at the twelve-month mark. By contrast, the patients where Prospera levels dropped and stayed low were sixty times more likely to experience positive long-term outcomes.
This is the first clinical evidence showing that serial monitoring with can inform patient management during treatment for acute rejection. Potentially enabling earlier interventions and more tailored care. We've gotten incredible feedback on the data and the study quality. Doctors were really eager for this type of readout, It took a long time to run the trial, and we're very pleased with the results. And this new use case for Prospera complements the existing utility in detecting rejection and surveillance. As you know, Medicare has recently released a draft LCD updating its coverage policy for surveillance, which we also believe is positive news. Turning now to oncology. We had several important events for Signatera in the past few months.
Continuing to fuel the adoption of this amazing technology. At ASCO, we presented interim results from the DARE trial. Which has accrued over four hundred early-stage breast cancer patients, with HR-positive HER2-negative disease. This trial is what we call a TOMER trial or treatment on molecular recurrence. TOMER has the potential to become the new frontline of metastatic treatment. Where the recurrence is detected first by Signatera even though the scans are still negative. The DARE study has been recruiting and randomizing patients since 2021. To either receive CDK four six inhibition at time of Signatera positive positivity versus continuing standard of care observation. There are three key takeaways from this readout at ASCO.
First, patients who test serially negative have extremely good outcomes with over ninety-nine percent remaining recurrence-free. This reflects excellent test sensitivity. Second, the test was so sensitive that seventy-three percent of the recurrences detected were purely molecular. With the reflex scans showing no evidence of disease. And ninety-three percent of those patients were then successfully randomized. So this is a major sign that the TOMER strategy isn't viable. Unlike prior attempts that resulted in lower patient randomization rates. As a reminder, the other twenty-seven percent of patients HIM disease is detected on a scan, also stand to benefit from early detection and treatment metastatic disease. Third, we saw a twofold higher ctDNA clearance rate in one of the trial arms.
Providing a promising signal that early treatment intervention make a difference at this stage. So we look forward to further readouts from the DARE trial and to doubling down on the TOMER strategy with our partners from biopharma and academia. In breast cancer and other cancer types. Turning now to the neoadjuvant setting of breast cancer. Where we have several important announcements. Earlier in the quarter, we presented new data from the iSPY two trial. Which showed again that patients who tested Signatera negative at baseline or at diagnosis had extremely good outcomes after treatment. And Tara's multiyear collaboration with the iSpice two team has yielded many important insights and peer-reviewed publications.
Systematically studying hundreds of early-stage breast cancer patients and correlating Signatera dynamics with treatment response and long-term outcomes. So this insight about the great prognosis when the baseline sample is negative has triggered many doctors to ask whether those patients might safely avoid chemotherapy, and perhaps they can be treated just with endocrine therapy instead. Which is much less toxic. So this approach is now being formally investigated in a new clinical trial led by a b c s g. Which is the Austrian Breast and Colorectal Study Group. The trial is called TIODAR, and it randomizes patients who were signature negative at baseline to just receive endocrine therapy versus chemotherapy. Prior to surgery.
The trial is open at 15 sites in Austria, and it aims to recruit two hundred and patients. This is a great example of how strong biobank data generated over many years can lead to a randomized clinical trial that ultimately has a chance to be practice changing. Our plan is to replicate this strategy as much as possible. We've built up a significant clinical pipeline in breast cancer. Which we believe is hard to replicate. To date, we have 18 peer-reviewed publications, and, by our count, presented over 60 abstracts at top medical meetings. We have broad Medicare coverage across the neoadjuvant, adjuvant, and surveillance settings. All of this sets the foundation for the next wave of randomized trials.
Many of which are currently underway, and others still to be announced. To ultimately solidify Signatera and ctDNA monitoring as the new standard of care across all settings of this disease. Invested heavily into the data generation strategy in breast cancer, having spent and budgeted over a $150 million on breast trials alone. It's gonna be hard for others to replicate given the extent of the capital investment required. Turning to gastrointestinal cancers. The adoption of Signatera has obviously been strong, especially in colorectal cancer. But it's now growing quickly in other GI malignancies, including pancreatic liver, and gastroesophageal. We had two strong peer-reviewed publications in GI over the past three months.
In gastroesophageal, the Plagast study was published in Nature Communications. Validating Signatera in the neoadjuvant and adjuvant settings. This study followed sixty-two patients with locally advanced gastric and GE junction cancers and showed that patients who failed clear their ctDNA during neoadjuvant therapy had very poor outcomes. Study concluded that those patients would likely benefit from a change in therapy after surgery instead of just continuing the same treatment which is a common strategy today with perioperative chemo or immunotherapy. Signaparil also detected recurrence with a median lead time of six months ahead of imaging. Gastroesophageal cancer is a deadly disease. With no good biomarkers. Signatera has the potential to really improve patient management and outcomes.
In liver cancer, also known as hepatocellular carcinoma or HCC, We published a great paper in JCO Precision Oncology that followed a hundred and twenty-five patients. Early-stage liver cancer can be treated with either surgical resection or with a liver transplant. And this study saw about half and half contribution contrary to esophageal cancer, there is a guideline recommended biomarker called AFP or alpha fetoprotein. It simply does not work very well. In this study, we showed that Signatera significantly outperformed AFP in detecting a recurrence. With approximately two times longitudinal sensitivity and 100% longitudinal specificity. And with diagnostic lead times of up to sixteen and a half months.
So we're getting positive feedback about the study and growing interest to use Signatera for recurrence monitoring in both resected and transplanted patients. Finally, looking forward, Q3 will be another important quarter for Signatera. As we expect data readouts from the INVIGOR o one trial in bladder cancer and other studies. Now I'd like to turn it over to Alex to discuss our road map in early cancer detection and some of the exciting foundation models that we're building to fuel the next wave of AI-based innovation. Alex?
Alexey Aleshin: Thanks, Solomon. We continue to make steady progress on our ECD program. We have now consented over 3,500 patients for our proceed CRC study, is a perspective, average risk colonoscopy matched trial. This study is being conducted in a manner to closely mirror our FDA enabling FIND study, to minimize the risk of performance degradation. We plan for the next readout from the study in the 2025, which will assess assay performance in over 100 advanced adenoma samples. And 500 normal controls. Additionally, we're excited to announce the DEFINE study has now started enrollment and is on track to prospectively accrue the necessary patients to enable our FDA readout in 2027. We continue to phase gate the program.
And remain disciplined in our investment. We wanna highlight that our investment in our ECD program is already baked in into our operating expenses. On the next slide, I wanna highlight one of the most exciting areas this quarter as we continue our investment in our AI initiative. Which we're deploying across the entire company to scale our operations improve user experience, and drive scientific innovation. On the operations side, for the entire history of the company, many roles have had to scale linearly with commercial volume. For the first time, we have an opportunity to change that relationship.
With AI allowing us to scale more efficiently and open up additional operating leverage worth approximately $200 million in savings over time. On the UX side, we're also building a whole new suite of AI-enabled user experience tools. Which are intended to change the way we interact with physicians and patients. Finally, we are leveraging AI to develop new algorithms that will power the next generation of diagnostics and clinical insights. On this front, today, we're announcing our AI-based discovery to care platform. That is designed to support various stages of therapeutic development from early target discovery to clinical decision support. This consists of three components.
The first is the genomic and clinical data foundation layer on which our models are trained. The second is the core model layer that powers discovery. And the third is the application layer that supports clinical decision making as well as providing genomic insights. The foundation for this effort is built on a rapidly growing set of de-identified data from over 250,000 patients and over 1,000,000 longitudinal time points. Along with abstracted clinical data and information on drug treatment and outcomes. Taken together, this comprises one of the largest multimodal longitudinal oncology datasets. That has ever been created. With over 1,000,000,000 parameters.
Utilizing this dataset, we train a multimodal foundational model on our de-identified Signatera and Ultera data to power our core AI platform. This supports several key use cases. The first Metaira can create digital twins that can virtually simulate patients for treatment optimization as well as outcome prediction. This can help make therapy recommendations such as suggesting the next line of therapy. And opportunities for treatment de-escalation. It can also better predict outcomes and can run virtual in silico clinical trials in order to optimize study design and reduce clinical development risk. One recent pilot demonstrated that our can accurately recommend immune therapy based on real-world EHR data.
While another pilot showed that it outperformed both TMD and stand-alone pathology-based metrics. In predicting immunotherapy response. Next, Natera's real-time clinical trial match in software. Leverages molecular and clinical data to improve patients' and researchers' ability to match individuals to appropriate clinical trials. This capability uses LLMs to interpret eligibility criteria in a structured clinical records which holds the potential to improve enrollment efficiency reduce screen failures, and accelerate trial timelines. Finally, Natera has developed an immune therapy response prediction algorithm. And a molecular therapeutics design model, which we'll review on the next slide. NEO Predict and NEO Select are the first of many algorithms that Matera has developed to predict immune therapy response.
And identify potential new antigenic mutations, respectively. This historically has been one of the most challenging computational problem and if Tara developed these algorithms by utilizing our foundational genomic large language model trained on our longitudinal genomic data set. And has allowed us to demonstrate market leadership in this space. The Tumor Neoantigen Selection Alliance or the Tesla database is a reference dataset for benchmarking neoantigen production tools. We ran our NEO Select algorithm against the Tesla database and our algorithm outperformed 25 established models and beat the second place model by around a factor of two. When identifying highly prioritized neoantigens.
While we continue to optimize our prediction and selection algorithms, we believe that these capabilities have very exciting potential in many areas that could improve patient care. We look forward to providing future updates on this program at both academic conferences and in publications. Additionally, Netera has created the NeoPredict algorithm to identify patients, who are likely either responsive or resistant to immune therapy treatment. NeoPredict leverages the neoantigen prediction capabilities we just described to identify patients who are most likely to benefit from immune therapy. Shown on the right of the slide, NEO Predict significantly outperformed tumor mutational burden in the terrorist perspective bespoke, IO clinical study. There's been increasing interest in these capabilities.
From KOLs, hospital systems, and pharma companies and we look forward to providing additional updates in the future. Now let me hand it over to Mike to cover the financials. Mike?
Michael Brophy: Great. Thanks, Alex. The next page is just a summary of the financials compared to last year. We've already spent a lot of time on the revenue and OpEx trends, so I won't repeat those. A couple of the stats that's been up to me are, first, the top-line revenue growth over Q2 last year where we had the big influx from the Invitae acquisition, as Steve mentioned. I was pleased to see us grow very rapidly over and above that very tough comp from last year. Second is the major ramp we've seen in gross margin jumps out. That's driven by the ASP progress we've delivered over the last year.
He talked about several near-term drivers to ASPs, and I'm cautiously optimistic that we'll be able to make more progress in the second half. Particularly related to Signatera ASPs. For example, we previously set a goal to get some ASP traction from biomarker states by Q3 2025. And I'm pleased to see some notable progress on specific payers in several states. So I feel confident that our Signatera accrual in Q3 will have some biomarker state benefit. On the quarterly trajectory of gross margins, I'm very happy to see some COGS headwinds in Signatera when that is driven by an influx of first-time patients. Which is what we saw in Q2 as Steve described.
Finally, I was pleased that we have continued to generate cash even as we double down on the growth investments Steve described for this year. Obviously, that's driven by the revenues and the margins, but also the rapid improvements in the cash conversion dynamics that we talked about earlier in the call. This is really part of the revenue cycle operations that in improve ASP, but also allow us to get reimbursed for coverage services in a much more timely manner. By optimizing the initial claim submission to payers with all the documentation they need to pay the claim on the first pass.
As you can see from the bottom row, we've added approximately $47 million in cash from operations to the balance sheet this year, and remain extremely well capitalized with a clean balance sheet. One other comment on the bottom line. We took an accrual of approximately 30 million in noncash stock-based comp and legal expense accruals. In the quarter, which I view as nonrecurring. Without that charge, we estimate EPS loss per share would have been roughly 53¢ instead of the 74¢ we showed in the press release. Okay. Let's get to the guide update on the next slide.
We are completely resetting the revenue guide to a new range, as Steve just described, now ranging from $2.02 billion to $2.1 billion on the strength of the revenues and the volumes we've seen so far this year. The gross margin, we are bumping the bottom into the range a 100 basis points to account for the good results we've generated so far this year. This guide implies that ASP trends will continue to improve while also building in expectations for continued increased adoption in first-time Signatera patients through the rest of the year, So the net impact of those drivers should be that organic gross margin will continue to tick up modestly in the second half.
For both revenues and gross margins, I will stress that we do not include revenue true-ups in the guide. Because they can be lumpy and challenging to forecast. I do expect some true-up revenue through the course of the year, as the most recent reimbursement trends have been outpacing our historical results as you see in Here in Q2. On both the SG and A and r and D lines, we're holding that guide flat. As the guide we set in May. I'll just reiterate the point that Steve made on the slingshot effect with respect to these investments. Very little of the 2025 growth in OpEx is driving revenues this year.
But we do expect those to drive growth in 2026 and beyond. We are going to remain opportunistic as it relates to OpEx. If we see a chance to fund an important clinical trial or expand a territory beyond the current plan, we're gonna do that because we are seeing such steady returns come in reliably on these investments. Finally, just reiterating our cash guide to be cash flow positive this year. Cash flows can be very lumpy, and it's certainly possible for variables like DSOs to bounce around. But our first-half performance puts us in great position for the full year. And I'm biased toward the business generating cash again in the second half here in 2025. Okay.
With that, let me open it up to questions. Operator?
Operator: Thank you. If you would like to withdraw your question, simply press 1 again. Please ensure that your phone is not on mute when called upon. Thank you. Your first question comes from Daniel Brennan with TD Cowen. Your line is open.
Daniel Brennan: Thank you. Thanks for the question. Obviously, congrats on the quarter. Maybe just starting off with Signatera volumes given the 20,000 sequential and it was a record. Maybe you can just give us some more color on kinda what drove it. Could you speak a little bit about maybe, like, existing docs and new docs? I think you talked about new patient starts versus maybe surveillance. I know, Steve, you also talked about new indications. So maybe you could just kinda give us some more flavor what drove it and guess the question would be, I know you wanna keep things conservative, but is it unrealistic to think something in the high teens or 20 could continue?
Steve Chapman: Yeah. Thanks, Dan. So, you know, I'd say first, if you look at the broad amount of data that we've been putting out over the last year and particularly the, you know, the beginning part of this year, we had some really strong data at ASCO GI with the 07/2002 study around the sulcus abuse you know, I think that, you know, I think has filtered its way in. And, you know, doctors are really starting to kind of take hold of that.
We saw excellent growth in colorectal excellent growth in breast cancer, in immunotherapy monitoring, and then as we said on the call, you know, when doctors start using our product, then they wanna kind of expand and start to use it for other tumors. So, you know, it's a little bit of everything when it when it comes, you know, to the histologies. We also saw an incredible record in new patients.
And, you know, that's really one of the I think one of the most important metrics to look at is, you know, are the doctors continuing to order you know, not just on patients that they ordered, you know, a year ago, but when a patient walks in the door, you know, are they choosing our tool to make a decision, or are they choosing, you know, a competitor tool, or are they not using MRD at all? And, I mean, we saw just absolute blowout record you know, twice higher growth than we've ever seen before in new patients. So we think that's a very good sign.
And, of course, it's a mix of new customers that are coming in for the first time. And then customers that have you know, started using us and are now, you know, starting to I think, broaden their use either to more patients or to more use cases.
Daniel Brennan: Terrific. Maybe just as a follow-up, for Solomon or Perceiver, anyone on the team here. Just in terms of the clinical readouts, you know, you went through a lot of the studies that are ongoing in breast. You talked about the, know, treatment on molecular response. Could you just give us a sense over the next, say, twelve or eighteen months mentioned the Vigor o one, which I think could be guideline inclusive. So we have that one coming up.
What are some of the other ones that you would point to across the next eighteen months or two years I'm sure they're all important, but are there any more that have important than not that could actually be either guideline inclusive or really drive some meaningful change of practice? Thank you.
Steve Chapman: Yeah. No. That's a great question. I mean, I'll just make, make a couple of comments, and then maybe Solomon or Alex if you guys wanna come in. And I think first, InVigor, o one, I mean, that's obviously a big one. You know, FDA enabling trial, you know, this it we believe the results will be released in the future. You know, we're super excited about that, and a very good indication, muscle invasive bladder cancer. You know, hopefully, we'll we'll have also some new data read out at ESMO. This year, which I think will be good. We talked about the gastroesophageal and liver papers. Those have actually just been published, which is which is super exciting.
You know, that's one of the important steps to you know, kind of putting yourself in a position to get coverage. Is, you know, having that peer-reviewed publication. Solomon, do you wanna walk through a couple of the other or maybe Alex I know we talked a little bit about DARE. You know, when the next read off of that may be. Anything else you wanna you wanna highlight?
Solomon Moshkevich: I think the other one that we've talked about before are the NRG sponsored colorectal trial to circulate US, and there's a few other circulate trials globally. That are likely to have either an interim or a primary readout over the next eighteen to twenty-four months. And that includes hopefully, the de-escalation arm Vega from the Japan circulated trial. So I would just highlight those two in CRC that could definitely make a difference. For guidelines and beyond. And we'll keep you everyone up to date.
Operator: The next question comes from Puneet Souda with Leerink Partners. Your line is open.
Puneet Souda: Yeah. Hi, Steve. And team. Thanks for taking my questions. So first one, Signatera, again congrats on the quarter and the guide raised here at Signatera. Signatera volumes quarter to quarter really strong. Can you talk a little bit about was there any contribution from post ASCO pickup There was a newfound appreciation for MRD at ASCO. Obviously, that crowd has known MRD for years, but, it appeared it lifted more. And then I would love to get your view and maybe, from Mike as well, in terms of, how should we be thinking about and how should think about the penetration of Signatera today and the continued room for expansion?
How you're thinking about how do you calculate the penetration and in various indications?
Steve Chapman: Yeah. That's a good question. So, yeah, I mean, obviously, ASCO this year had, you know, enormous amount of oral presentations, posters, on Signatera, and there was a just a huge buzz at the conference around MRD. I mean, everywhere you went, you were talking about MRD. So you know, a lot of excitement coming out of that. I think we did see you know, a lot of a lot of strong momentum in the kind of last month of the quarter coming out of there. You know, after a lot of the presentations. You know? So that's a great sign, I think, going forward. And, you know, that I think that buzz is continuing.
From a penetration standpoint, we think this is very underpenetrated. I mean, low single-digit penetration when you look broadly And, you know, what we're really starting to see is that this opportunity is you know, is very, very broad when you when you look at, you know, doctors especially community practice. They start using for colorectal. Know, then they kinda start with gastroesophageal. Then they may order for lung, maybe order for bladder. I mean, they really start to kind of go and expand throughout the practice. So know, as we move through those stages with the physicians, we're we're just realizing you know, how underpenetrated the opportunity is but how we have a presence in all of these offices.
So we're you know, we now have this sort of very broad footprint that is set up significant amount of data. We've built all this infrastructure We have a lot of coverage in place. We have all of these studies underway. And we're in a great position to now you know, increase volume over time based on all the infrastructure that we've put in place.
Puneet Souda: Got it. And then on the proceed and find trials, I just wanted to understand your strategy, the timing, This is clearly a hard problem to crack. We saw a trial failure. Sure. It was you know, it meet the primary endpoint, but it was below the NCD. And though that company subsequently licensed that technology from another company, but just, could you talk about the technology and the performance sensitivity, the AAs? What are you shooting for? When do you think you can you know, when can we see the data? When can we, see an FDA approval? Reimbursement and then launch?
Obviously, this market is there's a product on the market, and looks like you know, now there is a entrant that's that's getting more of a boost I just wanna understand the timing and how you're thinking about this market.
Steve Chapman: Yeah. Let me make a couple comments and then maybe, you know, hand it over to Solomon, or excuse me, to, to Alex to talk further. You know? But I'll I'll just say first, you know, we have a long history of doing in-house r and d, and, you know, developing products, you know, developing products ourselves, entering into new markets successfully. And also competing very well in highly competitive markets. So, you know, we think we're in a good position long term to make this a very significant you know, component of Matera's overall business. From a from a timing standpoint, the first the next major readout is going to be the proceed trial.
And proceed, if you remember, was collected exactly how you would collect samples in the FDA protocol. So, you know, the it's not you know, some other type of protocol. It's effectively you know, drawing the blood, and then the patient goes and gets, you know, colonoscopy. It's it's a screening protocol that exactly aligns to what you would see in an FDA trial. So when the results from that readout we've already enrolled 3,000 patients. We have all the samples You know, they're being run. It's gonna be read out. I think we said, you know, kind of late fall.
You know, from there, you're gonna get a very, very good sense of how the test performs, you know, particularly in I think that the focus is gonna be in advanced adenomas. And also, you know, on the, on the specificity. So I think that's that's gonna put us in a great position to really have you know, much more of an acute sense of what the performance is going to be in the FDA enabling study. And I think that's a little bit different you know, maybe than, you know, the approach that some others have taken historically.
And then if you look back to the CRC data that we read out you know, earlier this year, I think kind of shortly after JPMorgan or maybe kind of right around that time frame. If you remember, we had a lot of screening identified asymptomatic colorectal cancer patients in those cohorts. So again, a little bit different from the strategy some others have taken previously where you know, they don't really have kind of these screening detected asymptomatic patients included in the cohort, and we think that reduces the likelihood of drop off as you move forward. So, look, stay tuned for the readout. Super exciting. Refined, that trial is already up and running.
You know, we've already enrolled patients, and, you know, we think that can be, you know, complete enrollment you know, potentially kind of late twenty-six. And we can be in a position to, you know, read out the results and submit to the FDA in 2027. Alex, you wanna add anything?
Alexey Aleshin: Yeah. Think I still need Great question. And yes. Yeah. The only thing I'll add is you know, we're we're very aware, right, that degradation can occur, and, you know, we do believe that probably the biggest source of degradation is you know, poorly matching, you know, the FDA study with the case control studies that are being used to assess early assay performance. So we've really taken a very thoughtful strategy of really launching the proceed study and using that as the basis for the FIND study. Right? So the study really rolled from proceed into FIND, the enrollment criteria the you know, processes for enrolling patients are very, very similar, found the same.
And this allows us to really accrue samples from PROSED, which hopefully are matched almost kind of one to one. You know, with the final FIND study. And then the last thing I'll say is that, you know, while getting enough prospectively collected colon cancers may be difficult, actually collecting enough advanced adenomas to read out, you know, a very good performance estimate is much easier. Right? Because the rates of advanced adenoma are between five to ten percent. From proceed, we're gonna get hundreds of advanced adenoma samples. So this allows us to actually read out with a well-powered cohort and really estimate what the final performance of the assay is gonna be. So we're doing that.
We're gonna read out some data end of the year. And there could be additional readouts right before the final, readout for the FIND study. And then Steve mentioned, you know, FIND is going. It's enrolling. We're very, very excited. And right now, we're kind of guiding to readout of that study in 2027, but know, as we can get closer to that date, we'll kind of further refine our guidance.
Puneet Souda: Got it. Super. And then just if I could squeeze one in, just given the number of in the balance that I'm getting very quickly, Briefly, if you could provide me the number of product launches this year just if you could encapsulate that and how quickly can you monetize the AI initiatives that you talked about and turn them into assays and products and to start to see the revenue there? Thank you.
Steve Chapman: Yeah. I'll take I'll I'll comment and then, you know, Alex, jump in again. But, yeah, on product launches, I mean, we just announced fetal focus. We're excited about that. We launched genome. Earlier in the year. As we said, we've got several other things coming you know, largely focused around MRD. So, you know, we'll we'll I think stay tuned, you know, as those launch, we'll give you guys an update. But lots of cool stuff happening. Lots of MRD-related activity that's that's on track. Coming down the pike. So the vast majority of our investment there is focused on MRD.
And then, you know, on the AI side, I think you know, there's we talked about a couple of different things. One is sort of efficiency improvement. In UX tools. Those are gonna be rolled out, you know, over a period of time. Some of that work's just beginning. Some of that work has been underway. You know, that's really more cost reduction and user experience. The more technical, medically focused stuff is super exciting.
And we think there, there's a couple different opportunities to commercialize mean, one is, you know, you've seen some of these big multi $100 million, multimillion dollar deals you know, with pharma companies or partnerships, and we think we have an incredibly unique dataset and incredibly unique you know, set of tools and foundation models that are going to be important, very important for pharma going forward. And I think this for the first time, you know, kinda puts us in a position to be doing those you know, very large deals.
And then the second is, we're going to be you know, commercializing a lot of this stuff through our, you know, current diagnostic platforms, either as of add-on capabilities alongside our existing tests or as standalone biomarkers. Got it. Thanks, guys.
Operator: The next question comes from Catherine Schulte with Baird. Your line is open.
Catherine Schulte: Hey, guys. Thanks for the questions. Maybe first, you talked about the, you know, 250 to 300 million of revenue from potential Medicare coverage of noncovered indications. You just give us a bit more in terms of details on the timeline for some of the submissions and, you know, how should we think about those being paced going forward?
Steve Chapman: Yep. Good question. So, yeah, I mean, that, we basically just looked at, you know, all the noncovered indications and the volume that we have there that, you know, we're not billing And we said, what would it be worth if we got covered for that? You know, basically, in the next kind of twelve to eighteen months or, you know, something in that time frame, And you get, you know, $253 million dollars in revenue. So we're there's a lot of upside opportunity from the business that is already coming in just simply from getting these coverages. And you can believe this is a big focus of ours is to get these commissions in and, you know, get coverage.
So, you know, I mean, I think I think we said in the prepared remarks, you know, at least seven or something in that range. Yeah. I was on a call today, you know, where we went over opportunities. For 15 different submissions. So know, I think there's there's gonna be a lot coming, but you I think as you've seen, you know, it's it's not always as easy as just doing a submission. You have to have the right data and you, you know, you have to make sure the trial is done the right way And so we've developed a significant expertise in doing the right MRD trials, in submitting those and getting coverage.
And, you know, that's what we're doing, again, in all these other indications.
Catherine Schulte: Okay. Great. And then you highlighted any over a hundred and fifty million in breast cancer clinical trials. You know, is that signaling a real focus on breast in terms of prioritizing additional indications. You've got a competitor potentially coming who has a large presence on risk of recurrent side for breast cancer. So just maybe talk through how you view your competitive position in that cancer type.
Steve Chapman: Yeah. I think I think breast has always, from the very beginning, been a major focus for us, you know, along with initially colorectal and immunotherapy monitoring, and now really pain cancer. So, you know, if you look back at some of the trials we present presented, I mean, I think the DARE study which now has, you know, like, 2,000 plus time points, started in 2021. You know? So, you know, four or five years ago now, So this isn't like a sort of a new thing. I think there's there's continued investments that are new. Like, for example, the TEADORE study but we've been investing heavily into breast the whole time.
And like we said, we've we've invested and are in the process of investing over a $150 million in just in breast cancer alone in clinical trials. And that's in our budget, and that's in the forecast that we've shown So, you know, the point is that it's it's it's a big effort. To do these things, and there's a lot of different trials that need to be done. And, you know, we're already doing it, and we think it's gonna be very hard for someone to come you know, and sort of replicate that. But, obviously, breast is a big opportunity.
There's a there's a chance to really help a lot of patients, and it's it's it's a cancer, I think, that's, you know, very near to me and, you know, many others at the company as well. For personal reasons.
Operator: The next question comes from Doug Schenkel with Wolfe Research. Your line is open.
Doug Schenkel: Hey, guys. Thank you for taking my questions. First, on gross margin, in a period of strength, how much was gross margin actually adversely affected by the launch of Olexime? I'm I'm just trying to get a baseline in advance of full exome gross margin improving over the next few quarters, you know, especially given the first half strength. So that's the first one. The second is on volume trajectory. You've been signaling that we should be modeling an expectation for 12,000 incremental clinical Signatera units each quarter. The trailing four-quarter average is already about 16,000 At what point would you consider bumping that up? And the last one is on revenue strength. And operating spread spend.
So in the first quarter, on a really strong top line, you increased operating spends. This quarter, again, really strong at the top line, but you maintained your operating spend guide. Is this a sign that you are where you wanna be in terms of things like headcount and number of r and d programs for the next several quarters? Thank you.
Michael Brophy: Yeah. I think Mike you could probably, run the table there. No. Thanks for the questions. So Doug, remind me the first one again. Should have been writing those down, man. You gave me a you gave me a good list.
Doug Schenkel: I can go from the back of
Michael Brophy: First one for Yeah. Yeah. Yeah. Okay. So the gross margins, I think, you know, ex the big step up we had in new patients, I think it's fair to estimate that the gross margin sequentially would have been kind of similar to what we saw in Q1. So I think you would have had that kind of same kind of steady improvement in gross margins. And that would really would have been driven by you know, the bump up we had. Again, we had another, you know, a bump up in, in Signatera ASPs primarily, and we had another strong ASP quarter. Women's health, which I was very pleased to see.
I wanna see those you know, the strong ASP tracks we've had there. I wanna see that see that kind of maintain, and we definitely saw that in the quarter. Give me the next one again. You beat
Doug Schenkel: by 16,000, on average the last four quarters. You've been guiding up to 12. At what point are we moving that up?
Michael Brophy: Yeah. I mean, I think you I think you have to move it up modestly, but I just I would just caution you not to anchor on any one quarter, and it's the reason for that is just that there has to be some randomness there quarter to quarter, where we'll have we'll fluctuate up and down. So you just gotta allow for that. But beyond that, I mean, in terms of kind of fundamental drivers, Steve covered them. I mean, we're we're really in a in a fantastic position here. Where the operations are running incredibly smoothly.
We're kind of on the other side of a lot of very daunting challenges that we had to undertake, to launch this category. And things are rolling. The data's coming in that we that we started years and years ago, you know, is reading out. So it's a it's it's a great time think, for the whole space, for MRD, a great time for patients. So, I mean, I think I think it I would just without kind of laying out, like, a specific number, I'd say, you know, bump it up modestly versus our prior. And just look out for fluctuations. That's that's to be expected, and that's totally normal.
Operator: The next question comes from Rachel Vattenstall with JPMorgan. Your line is open.
Rachel Vatnsdal: Hey. Thanks so much for taking the questions. So I wanted to push a little bit further on the sales rep dynamics. So you talked a bit about expanding your sales force. Can you walk us through how large is your sales force at this point, and where do you think that needs to be over the medium to long term? And then just specifically on some of the recent sales rep adds, how should we think about the productivity for those new reps as we get into later this year and into 2026 as well?
Steve Chapman: Yeah. It's a good question. So, you know, I think I think, traditionally, we've we've sort of had, like, you know, a hundred and fifty hundred and seventy-five oncology reps, something in that range. You know, I think we've we've executed kind of a meaningful step up You know, that was completed during Q2. So a lot of those folks are kind of coming out of training. Or, you know, kind of just getting their feet wet out in the field, meeting customers and so forth. So in our view, you know, normally, takes six to nine months for the reps to really become productive.
And that's just when you, you know, you think about, like, all the complexity of the material, you know, 100 peer-reviewed publications, building relationships, So, you know, we're in this kind of dynamic now, which I think we called, like, a slingshot effect on the call where we have this built-in expense line and these people that we've hired, but they, you know, they're not really kind of driving productivity yet at this point. You know, as we look into when they do become productive, you know, what are sort of some of the metrics that we look at, You know, obviously, we look at, you know, the number of new accounts that they're bringing on.
Account retention in the business, their ability to add on new doctors, within the practice, their ability to expand you know, from one tumor type to the other, you know, within a particular practice. So, you know, I would just say those are the kinds that the types of things that we look at. You know, we don't really have, like, a you know, just given kind of the growth phase that we're in, we really we don't have, like, a necessarily a you know, immediate, like, revenue that every rep has to hit within x number of time, but you know, there's certainly you know, a lot of attention on, you know, the growth trajectory.
And, you know, the amount of, return that's that's being driven by each rep.
Rachel Vatnsdal: Great. And then for my follow-up, on Signatera, it sounds like you guys had another standout quarter there on new patient adds. Can you explicitly tell us how many new patients were added in the quarter for Signatera? And any color on what indication or use cases you primarily saw those in? And then as a follow-up to that, how should we think about this in terms of volume expectations for Signatera as we look into 2026? Thank you.
Steve Chapman: Mike, do you wanna comment on new patients?
Michael Brophy: Yeah. On new patients, I mean, just as I was just covering with Doug. I mean, if you'd had just a normal kind of mix that we have, it would have been about 40 basis points. And so this was you know, this is multiples of that as Steve described in the call. I'm like, I don't wanna get into, like, laying that out as a KPI that were within kind of giving all the time because I know that is the growth in new patient starts is a very volatile metric for the business.
I mean, I think in terms of kind of looking forward into 2026, I mean, it does it does give me some confidence now if you just look back just look at that chart on the on the volume growth and the consistency of that. I'm actually surprised with, like, how consistent that has been. That plus just the just what when you go to the academic conferences now, it used to be that, you know, MRD was sort of, like, a new thing, and it's you know, to be to be examined, and there's interesting data. And now it just feels like the tone has kind of shifted at those things where this is doing MRD.
You know what I mean? This is gonna be something that it looks like it's inevitably part of the standard of care, and that gives me a lot of confidence in the kind of the trajectory of the of the franchise, both, you know, rest of this year, '26 and beyond.
Operator: The next question comes from Tycho Peterson with Jefferies. Your line is open.
Tycho Peterson: Hey. Thanks. I didn't hear you mention Latta which I think was on deck for a mid five launch tumor naive. You know, you kind of mentioned the question on, you know, how many products are you launching more coming in MRD, but the latter two get pushed out. What's the latest there? And then have you ever sized a TOMA opportunity for Signatera? You know, I think that's certainly, very interesting. Yeah. Solomon, you wanna take those? Or Alex?
Solomon Moshkevich: Sure. Yeah. We're thanks for those questions. Tycho. The on the tumor side, or excuse me. The on the Latitude side first, we're we're very excited about the progress there. So we presented excellent data recently, and we announced that, sensitivity you know, looking very good, think, at eighty-one percent. Specificity at ninety-seven percent on a per sample basis. We see that as competitive with any other you know, tissue-free test on the market. And we're already getting a lot of inbound you know, requests and interest on it. So, you know, we're we're in the process of bringing that to our customers, and we will you know, we'll we'll talk more about that in the future update.
On the tumor side, yeah, we're we're really excited about Tomer. It's a concept we've been talking about. With physicians and with investigators and with the investor community now for a while. I think, you know, the way we think about the size is really the surveillance setting for all the tumor types where Signatera can be used. Because at any of those patients, who are being monitored for recurrence if they ever turn positive, which some percentage unfortunately, will. You know, those patients become eligible for some intervention.
And, you know, roughly between a quarter to a half of those patients will be will be negative excuse me, will be positive on a reflex scan and will be treated according to standard guidelines for treating metastatic disease, But the other half now to three-quarters as we saw from the DARE study will be negative. On a scan. And that means that, you know, they're gonna be looking for something else whether that's escalated imaging is the current standard, You know, do some do a different type of scan, do it more frequently, or they become eligible for a novel clinical trial where they can get treated directly. Look for that clearance of the ctDNA.
So I think there's gonna be more and more trials coming out of this nature. And, you know, we but we see the overall opportunity as all recurrence monitoring.
Tycho Peterson: Okay. That's helpful. And then maybe shifting over to Oregon. You know, Multiax has proposed some changes to the transplant l LCD solid organ allograft rejection. I know this doesn't directly impact you, but, a, you know, have you had communication with them? Are you confident it won't be an issue? And then one question we've gotten is, is there any risk that this could eventually spill over to MRD just in whole concept of capitating the number of tests? They're willing to cover.
Steve Chapman: Yeah. I'll take that. So I think you know, first on the LCD, I mean, we see it as upside for us. You know, we're not in a position where we're kind of running two different assays, like, kind of running a DNA assay, running an RNA assay, and kind of billing for them separately. So you know, our Organ Health test is DNA only, and there's there's sort of one bill. So we're not impacted by that at all. And then the surveillance piece, we see as upside and know, actually, when we kind of look at the cadence, we see it as upside for us. So you know, we're excited about that.
And Organ Health, like we said on the call, I mean, you know, we talk mostly here about oncology, but we're doing really well. And we're seeing a lot of big major academic centers, switching over to us. That's across the board you know, kidney, heart, and lung. We got a ton of great data that's been published very unique features that set us apart. So, you know, we're excited about continuing the opportunity at Organ Health. And risk just this concept of capitating, you know, number of tests by mol d x could spill into MRD. I mean, I think that already exists.
You know, in, you know, in many ways, right, with these sort of bundled reimbursement where it doesn't really matter how many tests they run. You're gonna get paid a certain amount. I mean, that's that already exists in a in a significant portion of the business. And then, you know, there's other, you know, other tumor types where they have already said, hey. This is the cadence that we're going to reimburse for. So you know, I don't think it's a risk. I think it already exists where they kind of look at what they think the appropriateness of ordering is. And in some cases, they put you know, specific guidance in place You know?
But, normally, what we're seeing is the doctors order the test, kind of roughly around the cadence that, you know, Mobiax sort of is aligned with? So, you know, I don't really see it as, we don't see that as any real risk at all.
Operator: That is all the time we have for questions. This will conclude today's conference call. Thank you for joining. You may now disconnect.