Natera Inc at Piper Sandler Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: David Westenberg - Piper Sandler & Co. - Analyst : We're going to start off with the show me the money moment. $34 million in free cash flow last quarter, so your Q3 was about $25 million higher than your Q2, I believe, in terms of revenue. So you really got the operating lift here. So what benefits did you see in Q3 that you didn't get in Q2? And is your contribution margin approaching your gross margins? Or is there still underspending in SG&A and R&D?

Question: David Westenberg - Piper Sandler & Co. - Analyst : So -- and you kind of answered my second question here, but gross margins to expand 1,000 basis points year-over-year. What were the key benefits? And sorry to put you on spot, Mike, I think you are going -- your guidance for Q4 does not drop into negative, right? So are you guys -- I mean, should we think about -- I mean, there's always scenarios where it could be different, but we think about Natera as just this cash flow positive company from here on out because I know you gave yourself room in Q2 and Q3 to go -- maybe there's one time.

Question: David Westenberg - Piper Sandler & Co. - Analyst : Got you. Okay. I think you said on the call, 40% of oncologists are used on Signatera. We just do oncologist kind of survey work and that kind of thing. So we don't have the perfect metric either, but we're getting a number significantly higher than that. I mean -- where do you think we're getting it wrong? Is that number actually probably growing, but you have to kind of say 40% oncologist because it's kind of hard to track or anything like that?

Question: David Westenberg - Piper Sandler & Co. - Analyst : Got you, well, I think Signatera has been on the market now, is it four, five years. So you probably have some visibility into some of these five -- four-year, five-year patient cohorts. Can you talk about the year 4 or year 5 ordering behavior? Now I know in the first year, it's first couple of years, particularly neoadjuvant, adjuvant, it's pretty -- you probably do want to order four or five tests, but what are you seeing in that three-year, four-year time frame? Time period? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 1:00PM, NTRA.OQ - Natera Inc at Piper Sandler Healthcare Conference

Question: David Westenberg - Piper Sandler & Co. - Analyst : Got you. Going back to Mike, models look fairly on the conservative side when you're talking about you're having 50% year-over-year growth in '24 how should analysts think about the true-ups? And in your mind, has consensus done a good job of actually capturing all the true-up benefits that you got in 2024.

Question: David Westenberg - Piper Sandler & Co. - Analyst : And I'd probably going back to Steve on this one. What are your next submissions from CMS for Signatera. What are the organ types?

Question: David Westenberg - Piper Sandler & Co. - Analyst : Got you. And just how should we think about lapping the invite benefits -- what did you quantify the benefits to being? And then and assimilating to that, I think Ambry was just acquired by Tempus. Now that's a good company and probably going to do it, run it pretty well. But any time there is a disruption or a change in hands, there is sometimes some shopping events. Is there any opportunity to pick up share in prenatal or BRCA there?

Question: David Westenberg - Piper Sandler & Co. - Analyst : Got it. Now let's just talk about the sequential Signatera volume. I think it's -- we're getting around 10,000 unit sequential improvement. Is that still the right way to think about that? I mean I think you guided -- you guys guided or talked about 8%, but you continue to get 10.

Question: David Westenberg - Piper Sandler & Co. - Analyst : Got you. Can you talk about maybe some of the ways of thinking about first-time exome and repeat testing? And what I'm kind of getting at with that is, internally, do you guys think about modeling it as an exome and then I think we have an expectation of two or three tests from this one or any kind of assumption there and if you guys want to talk about sometimes you talk about an adjuvant versus surveillance in terms of percentage test, that's cool too and on that note, what are the costs of the exomes these days? And I guess that one would be for Mike for sure. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 1:00PM, NTRA.OQ - Natera Inc at Piper Sandler Healthcare Conference

Question: David Westenberg - Piper Sandler & Co. - Analyst : Got you. Maybe you could talk about Signatera pan cancer, built from a CMS and a private payer coverage. You have CMS given you any kind of direction on what it takes to kind of get a pan coverage decision? And when you're talking to private insurers, do they want to talk about a pan coverage idea. I think some of the Blues may be extended beyond just CRC, if I'm not mistaken, but can correct me there.

Question: David Westenberg - Piper Sandler & Co. - Analyst : Got you. Maybe we can talk about IP. I mean, you had some success in IP against Invitae, a little success against NeoGenomics I think a lot of companies now are in this IP share with personals. How do you think it's just about IP and all the different competitive products that are coming out?

Question: David Westenberg - Piper Sandler & Co. - Analyst : Got you. Now next, if you think about big payer wins, private payer side, how are you kind of -- how should investors think about your ability to drive some payer wins. And if you can give maybe some context around some of the biomarker bill, if that could help some of the private payer wins in the coming year.

Question: David Westenberg - Piper Sandler & Co. - Analyst : Got you. Yes. And how should we think about NCCN guideline changes. I mean, what's kind of -- is there any goals for kind of next year, footnotes? How should we think about post Vega post Alter what that looks like in terms of how an update could look like? And again, is it footnotes? Is it small wins, I mean -- and kind of some of the timelines on when that could happen?

Question: David Westenberg - Piper Sandler & Co. - Analyst : All right. We're out of time. Thank you very much.