Key Takeaways:
Natera reported Q2 revenue of $752.8 million, beating consensus by 13.9 percent, as clinical MRD testing volume jumped 56 percent.
"The quarter reflected several factors coming together, including the FDA approval halo, commercial team productivity and years of clinical investment," Chief Executive Steve Chapman said.
The genetic-testing company processed about 1.044 million tests, a quarterly record and its second straight quarter above 1 million. Clinical molecular residual disease volume reached 283,000 units, up 34,000 from the first quarter — the largest sequential increase in company history. Gross margin was about 65 percent, and Signatera's average selling price rose to roughly $1,275.
Shares jumped 16 percent to $308 in after-hours trading, above the 52-week high of $288.04, after closing down 3.4 percent at $265.38. Management raised full-year revenue guidance to $2.85 billion-$2.91 billion, up $100 million at the midpoint, implying about 31 percent growth excluding true-ups.
Revenue included about $52 million in true-ups tied to reimbursement timing, which management said are declining both in dollar terms and as a share of revenue. Excluding true-ups, revenue grew about 40 percent year over year. Days sales outstanding improved to about 57 days, down roughly four days from the first quarter, and the company generated positive cash flow for the quarter.
Signatera, the company's tumor-informed MRD test, drove the oncology business. In May the FDA approved it as a companion diagnostic for muscle-invasive bladder cancer, the first such approval for an MRD test. Japan's PMDA cleared it for colorectal cancer in June, and the NCCN issued a Category 1 recommendation for Signatera-guided adjuvant treatment in bladder cancer. Chief Financial Officer Mike Brophy said pending MolDX coverage decisions could add about $150 million to $200 million to Signatera's average selling price over time, supporting the long-term target of roughly $2,000.
Women's health posted high single-digit growth on a seasonally adjusted basis despite the typically soft second quarter, helped by the May launch of an enhanced Panorama prenatal test and continued demand for Fetal Focus. In organ health, a final Medicare local coverage determination effective Aug. 30 expands transplant surveillance testing frequency, which management expects to lift Prospera volumes and pricing in the second half.
The raised guidance reflects management's expectation that MRD demand will keep accelerating as more prospective study readouts land over the next few years. Investors will watch the FIND early-cancer-detection study, which is approaching full enrollment with about 24,000 average-risk adults and is expected to read out in 2027.
This article is for informational purposes only and does not constitute investment advice.
