BillionToOne Q3 2025 Earnings Call - Surpassing Profitability with 117% Revenue Growth Amid Rapid Tech-Driven Expansion

Conference Operator: Good day, and thank you for standing by. Welcome to the BillionToOne Q3 2025 earnings call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, we’ll open up for questions. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s call is being recorded. I would now like to hand the call over to your speaker today, David Deichler, Investor Relations. Please go ahead.

David Deichler, Investor Relations, BillionToOne: Good afternoon, everyone. Thank you for participating in today’s conference call. Joining me on the call from BillionToOne, we have Ozan Atey, Co-founder and Chief Executive Officer, and Ross Taylor, Chief Financial Officer. Earlier today, BillionToOne released financial results for the third quarter ended September 30, 2025. A copy of the press release is available on the company’s website. Before we begin, I want to remind you that during this call, we may make forward-looking statements within the meaning of federal securities laws. Such statements about future events may include statements about our financial outlook and performance, market size, products and services, reimbursement coverage, future clinical performance, and other statements. We caution you that such statements reflect our current best judgment, and actual results may differ materially from those expressed or implied in any forward-looking statement.

Risk factors that may cause our results to differ are discussed in our filings with the SEC, including our previously filed registration statement on Form S-1, our quarterly report on Form 10-Q to be filed following this call, and the current report on Form 8-K filed today. Any forward-looking statement made during this call is made as of today, December 9, 2025. If this call is replayed or reviewed after today, the information made during this call may not contain current or accurate information. BillionToOne disclaims any obligation to publicly update any forward-looking statements, whether because of new information, future events, or otherwise, except as required by law. And with that, I’ll turn the call over to Ozan.

Ozan Atey, Co-founder and Chief Executive Officer, BillionToOne: Thank you, David. Good afternoon, everyone. Thank you for joining our Q3 earnings call. Today marks our first earnings call as a public company, and we look forward to continuing the dialogue with the investment community as our business grows in the years ahead. In November, we completed a successful initial public offering on NASDAQ, raising $314 million in gross proceeds for the company. I’d like to start this call by thanking our dedicated and hardworking employees, along with our shareholders, all of whom made this substantial milestone possible. A new chapter for BillionToOne is just beginning, and I am excited for our future as a public company. At BillionToOne, we have four pillars of differentiation that we believe make us a different type of molecular diagnostics company. Everything that we do starts with a revolutionary single-molecule next-generation sequencing platform.

This is enabled by our patented QCT, Quantitative Counting Template Technology, which achieves single-molecule level sensitivity and precision. With our technology, we have built unique category-defining products both in prenatal and oncology. In prenatal, we are redefining what it means to do non-invasive prenatal testing with our UnityToOne products by enabling a more efficient and more sensitive test to help mothers understand the health status of their developing babies. In oncology, we offer NorthStar Select to help guide therapy selection across multiple indications, and NorthStar Response, which helps physicians monitor the patient’s response to therapies. Both our prenatal and oncology products are highly differentiated and have a direct impact on critical decision-making for patients. Our unique technology and product portfolio have led to exponential growth rates, even as we reached $334 million in annualized revenue run rate, or ARR, in the third quarter.

That said, we believe that we are just scratching the surface of what is possible. With our SMNGS technology, we believe that we are uniquely positioned to address more than $100 billion in U.S. market opportunity over time. Importantly, having a unique technology and differentiated products allowed us to achieve a superior gross margin profile, achieving 70% in Q3 2025, even with subscaled ASVs and using only about one-fourth of our current lab capacity. We believe that we have significant opportunity for further ASV growth and COGS per test reductions, both in our prenatal and oncology product lines. Last but not least, I am perhaps most proud of our capital and operational efficiency, which have allowed us to achieve emerging profitability while growing at 100-plus %, an unprecedented feat in molecular diagnostics.

As I shared with the private and public investment community over the last five or more years and throughout the IPO roadshow, our long-term goal is to build a category-defining generational company and become a member of the S&P 500. Our Q3 performance and achievements allowed us to continue to make important strides towards this goal, and the results are simply stunning. Our revolutionary SMNGS platform and products continue to be validated by publications and partnerships, including two prenatal publications, a head-to-head study on NorthStar Select, and an exclusive agreement with Johnson & Johnson, all of which I will cover on the next few slides. On revenue and test volume front, we continue to scale rapidly as we reported 51% test growth and 117% revenue growth year-over-year in Q3.

Gross margins were a remarkable 70%, a 17 percentage point expansion from last year, due to robust outperformance in ASVs and continued reductions in cost per test. We were able to achieve this growth with emerging GAAP profitability, reporting 11.5% positive GAAP operating margin and bringing all year-to-date GAAP profitability metrics to be positive. Ross and I will take you through our quarter in more detail, but I first like to provide you with an update on a few exciting publications and business developments. We have recently had impressive prenatal and oncology publications in peer-reviewed journals. Notably, the largest study of Cystic Fibrosis in any prenatal setting, published in the Journal of Cystic Fibrosis, demonstrated 100% sensitivity for UnityToOne in identifying high-risk Cystic Fibrosis pregnancies. Importantly, 95% of these cases were eligible for Cystic Fibrosis modulator therapies, highlighting the clinical utility of our approach.

Another UnityToOne publication in pregnancy validated the clinical utility of fetal antigen cell-free DNA testing and highlights the advantage in providing precision to pregnancies that are at risk for hemolytic disease of fetus and newborn, or HDFN, which UnityToOne provides. Finally, we also finalized an exclusive agreement establishing us as the official companion diagnostic partner to Johnson & Johnson for hemolytic disease of fetus and newborn. This positions our UnityToOne fetal antigen test for treatment of HDFN as the first CDx of its kind in the NIPT space, and we have successfully met all milestones to date. Turning to oncology, NorthStar Select demonstrated superior sensitivity in a prospective head-to-head validation study published in the Journal of Liquid Biopsy.

In this study, we asked clinicians across the country to use whatever liquid biopsy that they are using for standard of care, but for the same patient, on the same day, as part of the same blood draw, send us another tube of blood as well. We did not prescribe what test that they should use. We did not create inclusion/exclusion criteria. At the end, we reported our results, and other liquid biopsy companies reported their results. Here, we show that in this head-to-head study, we detected 51% more pathogenic SMVs and 109% more copy number variants versus these comparators. These publications further validate the transformative nature of UnityToOne and NorthStar tests. With these differentiated products, we have been able to drive rapid growth. Our rapid growth is becoming even more impressive as our organization scales.

In Q3 2025, total test accession in the quarter grew 51% year-over-year to 163,000 tests. Strong test volume growth was driven by expanded geographic coverage by our growing commercial team as we enter new markets and increased commercial density in existing markets while expanding in-network status with commercial payers. We also have seen acceleration even with larger health system adoptions, which was one of the drivers of our growth. We believe that the competitive product launches for fetal risk assessment validate the market need that we had identified in this market more than five years ago. Given the significant technology differentiation, more than five years of peer-reviewed publications, and significant product advantages we have, we haven’t seen any impact on our business so far as it can be seen in the growth that we achieved in this quarter and until today.

It’s also important to note that we have achieved this phenomenal growth without having invested as significantly in EMR. That said, as we are seeing more of our growth to start to come from broad health system adoptions across the United States, we decided to invest more heavily in this area. As such, we have signed the contract with Epic for Aura implementation. While this may take nine months to become live, once live, we believe this will remove one of the biggest impediments to faster UnityToOne adoption in health systems across the United States. Total revenue in Q3 2025 was $83.5 million, which was an increase of 117% compared with $38 million in Q3 2024. Our results in this quarter were driven by robust test volume growth, along with expanding average selling prices, or ASVs, across all products, drivers of which I will discuss in more detail shortly.

Exceptional performance across every metric drove sequential growth of 25% from Q2. ARR of $334 million represents an approximately $69 million increase sequentially compared to ARR in Q2, highlighting the demand for our test and the general momentum of our business. This outperformance was driven by rapid growth in both prenatal and oncology revenues. In Q4, prenatal revenue was $74 million, representing growth of 101% year-over-year. The oncology business is growing even faster than our prenatal business, delivering $8.7 million of revenue in Q4, growing 664% compared to Q3 of last year. The revenue performance was driven by rapid test volume growth of both select and response tests, as well as improved ASVs. We have seen tremendous growth in oncology over the last two years from when we first launched our Northstar products and continue to expand our oncology sales team as we grow.

We believe there exists a large opportunity for NorthStar in the future with expanded coverage decisions, especially for NorthStar Response to support meaningful revenue opportunities in the years to come. Our superior gross margin profile is driven by both expanding ASVs and a reduction in cost per test. Overall blended ASV was $501 in Q4, a remarkable increase of 44% year-over-year, and a sequential quarter-over-quarter growth of 10%. The primary drivers of ASV growth have been expanded payer coverage in prenatal as we grow our commercial contracting efforts to where we now have approximately 235 million contracted lives. We have also brought reimbursement in-house last year, and our team is continuing to make strides towards getting more of our tests to be paid. Finally, we have seen more Medicaids loading and covering the UnityToOne carrier panel PLA code, which has contributed to incremental ASV improvement.

We continue to expand coverage for specific parts of our test as we continue to drive ASV improvement over time. In addition to driving ASV growth, we have remained committed to our operating philosophy of continuous improvements to reduce the total cost per test. In Q3 2025, our blended cost per test decreased by 10% to $151, primarily driven by our cost initiatives and increased volumes driving fixed cost per test lower. This decrease came despite an increasing shift to a higher proportion of revenues coming from oncology, which, of course, as you know, has higher COGS per test, as well as higher stock-based compensation expense as we move towards being a public company. As BillionToOne’s overall COGS has decreased and overall blended ASVs have increased, gross margins have rapidly expanded.

Our gross margins were 70% in Q3 compared to 53% in Q3 of 2024, a remarkable 17 percentage point increase. Since our earliest days, we have been highly capital-efficient, prioritizing spend with purpose and focus on efficiency. We expect to maintain the same disciplined approach to investment and growth to drive profitability as we continue as a public company. With that, I will turn the call over to Ross to review our financial results and provide 2025 guidance before I conclude. Thank you, Ozan. As Ozan noted, total revenue in Q3 of 2025 was $83.5 million compared to $38.4 million in Q3 of 2024, representing an increase of 117%. Furthermore, revenue growth for both our prenatal and oncology product lines was strong in the quarter.

Our prenatal revenues, consisting of both our clinical testing revenues of $74.1 million and roughly $800,000 in revenues from clinical trial support and other services, increased just over 100% to $74.8 million in Q3. Our oncology revenues increased 7.6 times to $8.7 million in Q3 of 2025 compared to the same period last year, and oncology revenues increased 76% sequentially from $4.9 million in Q2 of 2025. Our total revenue growth was driven primarily by test volume growth across both prenatal and oncology, as well as expansion of our prenatal and oncology ASPs. Our total revenues included true-up revenue resulting from higher cash collections related to tests delivered in prior periods. True-up revenue was $3.7 million in Q3 of 2025 and $8.7 million for the nine months ending September 30, 2025.

In comparison, true-up revenue was $1.4 million in Q3 of 2024 and $10.2 million for the first nine months of 2024. Excluding true-up revenue, total revenue growth in Q3 was 116% compared to the same period last year. Gross profit in Q3 of 2025 was $58.4 million compared to $20.2 million in Q3 of 2024, resulting in a gross margin of 70% in Q3 of 2025 and 53% in Q3 of 2024. The increase in gross margins was primarily attributable to increases in our overall ASV and a decline in our overall cost per test. I will note that ASVs and cost per tests improved in all of our product lines this quarter. Total operating expenses were $48.8 million in Q3 of 2025 compared to $32.8 million in the comparable prior year quarter, representing an increase of 49%.

Within total operating expenses, R&D expense was $13.0 million in Q3 of 2025 compared to $9.6 million in the comparable prior year quarter, while SG&A expense was $35.8 million in Q3 of 2025 compared to $23.3 million in the comparable prior year quarter. We continue to scale our operating expenses to support rapid growth with efficiency and discipline. Operating income was $9.6 million in Q3 of 2025 compared to an operating loss of $12.6 million in Q3 of 2024. Our Q3 operating profit margin was 11.5%. Q3 2025 is the first quarter in which we achieved positive GAAP operating income, and it occurred more quickly than we expected as a result of the strong improvement in revenues and gross margins that we experienced in the quarter. We expect to operate our business such that we continue to generate positive GAAP operating income in the future.

Net income available to common shareholders was $1.5 million, or $0.10 per diluted share in Q3 of 2025, compared to a net loss of $14.9 million, or $1.47 per diluted share for the same period in 2024. Weighted average diluted shares outstanding used to calculate net income per share were 15.6 million shares in Q3 of this year. Cash flow from operations minus capital expenditures and investments was $7.9 million in Q3 of 2025 and $6.5 million for the first nine months of 2025. Net cash flow was $6.2 million and $3.7 million for these same periods, respectively. Following the upsized IPO and execution of the green shoe, diluted shares outstanding are expected to be in a range of $55 million-$56 million over the next several quarters for modeling purposes.

Please note that weighted average diluted shares will be lower in Q4, given that the IPO occurred in early November. Lastly, we are well-capitalized with a very strong balance sheet. We ended Q3 with approximately $195 million in cash and equivalents. Subsequent to Q3, we received approximately $314 million of gross proceeds, or $286.4 million in net proceeds from our initial public offering. Our very healthy balance sheet positions us for strong growth moving forward, particularly given our intent to continue to manage the business for profitability and positive cash flow. Finally, I will provide our full year guidance for 2025. We expect 2025 total revenue of $293 million to $299 million, representing a remarkable growth of 92% to 96% compared to 2024.

Embedded within this guidance is Q4 revenue expectations of $84 million-$90 million, which is growth of over 86%-100% compared to Q4 of last year. We note that despite Q4 historically being a seasonally slower quarter for our business due to fewer number of accessioning days in most of the larger clinics and health systems preferring to push their switches from one laboratory to another laboratory in January, our business momentum remained strong in Q4. This is leading us to expect modest sequential quarter-on-quarter growth from Q3 to Q4, even after an exceptionally strong Q3 that had every single metric outperforming our expectations. At the midpoint, the year-over-year growth we are projecting for Q4 is the second highest year-over-year percentage that we expect to achieve since July of 2024, highlighting our continued momentum.

Additionally, we expect positive GAAP operating income for both Q4 and the full year of 2025. I will now turn the call back over to Ozan to conclude. In summary, BillionToOne has made substantial progress this year, including outstanding performance in Q3 of 2025. Yet, we believe our journey is just beginning. We are transforming healthcare one molecule at a time, one patient at a time, to build a category-defining company and become the first one in our space to enter S&P 500. As a summary, in this quarter, we have had new publications supporting the superiority of our test and technology. Our Q3 outperformance was across all key metrics, leading to the best quarter over last year, and we are continuing to make investments both in the growth of our sales team and investment in areas such as EMR.

This is resulting in a guidance of a year-over-year growth of 90% both for Q4 and full year 2025. I am very excited for the future of BillionToOne, and I am confident in our ability to positively change the trajectory of millions of patients’ lives. I will now turn the call over to the operator for the Q&A. Operator. Thank you. At this time, we’ll conduct a question-and-answer session. As a reminder, to ask a question, you’ll need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please limit yourself to one question and one follow-up in the interest of time. Please stand by while we compile the Q&A roster. One moment for our first question. And our first question will come from the line of Mark Massaro from BTIG. Your line is open.

Hey, guys. Congrats on your first quarter as a public company and on the IPO. Thanks for taking the questions. So I wanted to start, it’s nice to see the positive GAAP net income come in. I heard you talk about expecting that to continue to be positive in Q4. I am curious, is that also your plan to be positive in 2026? Now, I recognize that you’re ramping up some investments in the business, probably in oncology as well. So how should we think about 2026 GAAP net income, or even adjusted? Thank you, Mark, and thank you for your kind words. While we are going to be leaving the kind of exact guidance for 2026 to JPMorgan Healthcare Conference, I think we have iterated previously that it is our aim to continue to grow our company in a profitable way.

That is a goal that I think we will continue to maintain for years to come. Okay, great. And then maybe on the oncology side, I recognize it’s early days. But I’d be curious. I think you’ve got your first test reimbursed by Medicare. I think the second test. I would be curious, Ozan, how you’re thinking about timing there. And then can you just give us a sense for how significant of an investment you’re planning to make in 2026? I don’t need dollars, but just conceptually from a strategic standpoint. Yeah, thank you, Mark. We have already invested significantly in clinical studies for our Northstar Response coverage. We believe that we have already completed the studies that we need to be able to get coverage.

We will be supplementing it with additional studies in 2026, but we believe that the first Medicare coverage for Northstar Response, based on the timing of MolDX discussions and back and forth as well, will come before the end of 2026. That’s perfect. I will hop back in the queue. Thanks. Thank you, Mark. Thank you. One moment for our next question. Our next question will come from the line of Andrew Brackman from William Blair. Your line is open. Hi, Ozan. Hi, Ross. Good afternoon. Thanks for taking the question. Maybe just given this is the first time sending guidance as a public company, can you maybe just sort of talk about the overall process that you have in place for sending guidance?

I guess related to that, just the overall philosophy when it comes to sort of embedding conservatism or sort of error bars around the forecast year? Thank you, Andrew. I think we have been operating close to a public company for the last two, three years now. As you may remember, we had even shared some of our projections back in JPMorgan earlier this year in the conference, both for actually 2025 and 2026. And as you can see from the numbers that we have been able to provide, we have been conservative in those projections. In general, I think our business has been very repeatable and predictable in general, but there are also a lot of tailwinds that we don’t put into our models, especially with respect to ASV growth. So a lot of our test volume numbers are still conservative but predictable.

But then ASV increases tend not to be embedded into the guidance as much. So a lot of the tailwinds that we see with respect to increased coverage, increased contracting due to more of our tests getting paid result in outperformance compared to what we project. I would also note, though, we are almost to the end of this year, so the guidance that we are showing, at least for Q4 and 2025, is actually relatively accurate. That’s perfect. Yeah, I might just add. Sorry, Raf. Yeah, I might just add, I think in some ways, the numbers we’ve put out for the Q4 guidance is somewhat analogous or similar to what we did with the Q3 flash numbers in the S-1. We tried to kind of bracket our expectations. So I think we’ve put out a pretty reasonable guidance range for Q4. Okay. Appreciate all that color.

With respect to the investment in the EMR, I recognize that it’s going to take several quarters to sort of roll out here. But I guess conceptually, how should we be sort of thinking about the opportunity and sort of the impact that this can have for your business? When you’re speaking with customers, how much of those conversations are driving this decision, and how should we sort of think about the effect and the realization that you might be able to see? Thanks for the question. Yeah, thank you, Andrew. This is an area that I think many of the analysts also have uncovered in their independent searches as well. This is an area that we haven’t invested as heavily compared to other companies because it can be significantly additional cost to be able to do some of these.

It can cost millions of dollars, but I think what we are realizing and recognizing is that as we get into more and more health systems, this actually becomes really the only impediment for getting very large volume health system accounts switched to us, so we believe that this is going to essentially accelerate our adoption in these large health systems pretty significantly once it is live. It is also something that we have been probably the only standout company that hasn’t done this, so I think it is pretty remarkable that we have been able to grow without the existence of this, but really, this opens up almost about half of this prenatal market that has been previously much more difficult for us to penetrate because they really want those EMR integrations to be able to order this.

As you know, especially in the prenatal setting, ease of use is critical. In fact, that is one of the value propositions of Unity Fetal Risk Screen. It allows a much easier way to screen for pregnancies for a very comprehensive set of conditions. But of course, not having EMR was essentially contradictory to that ease of use. So by being able to invest in here, I think we are going to get to parity with others, and that will really drive our continued growth at the rates that we have seen in the past. Okay. Appreciate the question. Thank you, and as a reminder, that’s star 11 for questions, star 11. One moment for our next question. Our next question will come from the line of David Westenberg from Piper Sandler. Your line is open. Hi. Thanks for taking the question, and I echo the response.

Congrats on the IPO and coming out of the gate strong here. So your clinical spending annually is somewhere around $50 million, whereas some of your competitors that are spending 10X that. Do you think you’re spending sufficiently? And how are you thinking about design in studies in oncology? We appreciate the data you gave about 51% increases in indels, SMVs, and a copy number variant, etc., up 100%. But ultimately, your test is about finding more actionable mutations that get patients on the right therapy. Do you think that you could be running bigger studies, which maybe say OS and disease-free survival? I would make an argument that you are like your competitors building markets in this as well. So I know that was a long question, but I have one follow-up. Thank you. Thank you, Dave, for the question.

So I think we recognize that it is important to invest in clinical studies. But when we are investing in clinical studies, we are also really trying to understand what the question that we are answering is and whether that is going to be incremental to what physicians want. So with respect to therapy selection, of course, I think I agree with you that we are finding and we have shown, I think, pretty conclusively that we are finding more mutations. Does that lead to better outcomes, clinical outcomes for the patients? In our discussions, at least with the physicians, that is not a question or a concern that they have. So we could run those studies, but I don’t think it would change essentially the adoption curve that we are seeing in this very established area of therapy selection.

On the other hand, though, as we go into more new areas like response monitoring and MRD, I believe that larger studies and more investment is certainly needed because those are the areas that physicians are maybe a little less comfortable, right? If they see essentially an EGFR mutation or a KRAS mutation that we detect, I think the physicians, I think, intrinsically understand and know that that is going to lead to a better outcome for the patient. But that is not, I think, as clearly demonstrated in the response and MRD areas, not just by us, but broadly by all of the different diagnostics companies that, especially outside of the adjuvant setting, if you detect progression early, if you are doing surveillance with MRD, is that leading to better clinical outcomes? And in those areas, I think it is important to continue to invest.

But we are always going to be very thoughtful about what studies that we are running. So we will continue our investments. We will increase our investments as we go into, especially into MRD. But I would also think that there are a lot of investments that happen in this field that might not really move the needle. So we really want to work on studies that actually make that answer the questions that oncologists have. And that is, I think, really important and different in different areas. For therapy selection, I don’t think that is OS, but in response monitoring and MRD, it may very well be. Thank you very much. And then sticking with oncology, how do you see the mix between monitoring and therapy selection in terms of test numbers per patient?

Can you discuss how if a doc might ever use just one of your tests and use a competitor for maybe the other? I wouldn’t think that would be that common, but can you talk about circumstances what it is? I’m just trying to think about that mix on a go-forward basis and any kind of variables that would change that. Really good question. Because Response and monitoring tests, we see roughly a two-to-one ratio for Response test to Select tests. So 95% of our providers, as we also discussed in the roadshow, actually use Select and Response together. So it is very rare for a physician to only use Select or only use Response.

What we see after they use select and response together, some physicians would actually repeat both select and response, whereas other physicians might do more response tests until they see progression, and then they use another select test. On a per-patient basis, we are actually seeing certainly more than one select usage. We see a two-to-one ratio of response to select, but that is kind of a more blended basis just because different physicians use it differently. Some of them only along with select. Some of them use response to follow up, and then they see progression, and then they use select. Thank you very much. Thank you, Dave. Thank you. One moment for our next question. Our next question will come from the line of Casey Woodring from JPMorgan. Your line is open. Great. Thanks for taking my questions.

Yeah, congrats on the IPO. I guess the first one, just curious on sales force expansion. Curious what the expectation is in terms of how many reps do you expect to hire in Q4, and then any thoughts on how you expect to expand sales force in 2026, both in prenatal and oncology? Thank you, Casey. I think we have been very consistent in the way that we have been growing our sales team. We grow our prenatal sales team with eight to 10 net rep addition per quarter and around four to six or seven on the oncology side per quarter. Of course, it changes from quarter to quarter, but we have been very consistent about how we are adding these reps. It allows us to grow in a way that our service level remains excellent. Our turnaround time remains great.

All the support functions are growing similarly at same rates. It also really allows us to hire best of the best, really the top 1% of the candidates. So we have been, I think, looking at our sales efficiency numbers. It might look like it would make sense to really accelerate this growth because our sales teams are very efficient and very effective. But we believe that doing this in a kind of methodical, deliberate way has served us really well until now. So we want to keep using the same strategy on a go-forward basis as well. Got it. That’s helpful. And then maybe my follow-up. You mentioned better traction with Medicaid for the Unity Carrier panel, the Unity Carrier panel code, I should say. I guess, how much did this contribute to ASP growth in the quarter, and how should we think of that contribution in 4Q and beyond?

Thanks. It is difficult to predict essentially one change to a specific dollar amounts of ASP. But just to give you a sense of how important this can be, the carrier code, standard carrier panels versus our PLA code is almost a 2X difference in where the ASPs are. So from that perspective, essentially, even a single Medicaid incorporating our PLA code into their coverage policy can be significant. And it is not just significant with respect to the state Medicaid lives that allows us to go then to manage Medicaids in that state and be able to add our PLA code to those contracts as well. So it does take a while for its full impact to be embedded into our ASPs, but it really sets a different, I think, long-term ASP goal for us as we essentially get more Medicaids covering our PLA code. Okay. That’s helpful.

Thanks, guys. Looking forward to having you at our conference next month. Thank you, Casey. Thank you. One moment for our next question. And our next question will come from the line of Brandon Couillard from Wells Fargo. Your line is open. Hey, thanks. Good afternoon. Ross, the 70% gross margin in the quarter, pretty strong performance. Do you expect that to be the new baseline as we look out exiting the year and into 2026? And just talk about what additional areas you still see room to lower the COGS per test over the next year or two. Yeah. I don’t think we’re quite ready to talk about 2026 and gross margins, Brandon, but I think to have an expectation that we remain somewhere in the high 60s% is probably a pretty reasonable expectation for at least the next several quarters.

I think you know that we do have a negative mix shift that we’re confronting as the oncology products are lower gross margin but growing much faster. So that does create a kind of negative mix shift versus prenatal. So we had really nice gross margins in Q3, but I don’t think our expectations have really changed for gross margin versus what we’ve talked about recently. Yeah. As a minor addition to that, Brandon, I think it really depends on the rate at which our ASPs grow, rate at which our COGS decrease, and in comparison to the mix shift. Our prenatal ASPs are growing, I think, quite nicely. Our COGS continue to decrease as we are using more of our lab capacity. And that is particularly true on the oncology side as well. So if you look at each of these products, ASPs are growing, COGS are decreasing.

Each product’s gross margin is expanding over time. But given that our oncology revenue is growing faster, essentially, you have those opposing forces. So it really depends on exactly essentially how fast the gross margin of each product continues to expand versus the growth rate of each of those products. But as Ross said, we expect to essentially maintain high 60s%, low 70s% as we continue to grow. Okay. That makes sense. And then one clarification, Ross, is there any true-up revenue that’s embedded in the fourth quarter revenue guide? And then as we just think about 2026, and you just talk about the major data readouts or clinical or reimbursement milestones we should keep on the radar for next year. Thanks. Sure. Just on the revenue question, Brandon, during this year, the first nine months, our true-up revenues range between 3% and 5% of revenues.

And I think our expectation would be that it’s probably somewhere in that range in Q4 as well. So small amount of true-up, I think, consistent with what we’ve seen this year. And the question in terms of the readout, we are continuing to do our clinical studies, especially on Northstar Response. And in support of getting coverage for Northstar Response, I think the biggest milestone would be getting our first Medicare/MolDX coverage for Northstar Response. So this is one of our big initiatives and big goals for 2026. And given that we have this two response to one select ratio, any increase in response ASPs would be significant for both our oncology gross margins as well as our oncology revenues. Great. Thank you. Thank you. One moment for our next question. Our next question will come from the line of Tycho Peterson from Jefferies.

Your line is open. Hey, thank you. One of the common questions we’ve gotten post-IPO is just on MRD and any timelines you can provide on when we can start expecting data, what indications you may prioritize and pursue, and what gives you kind of the right to win there. Can you maybe just touch on that as we think about the pipeline? Certainly. I think the way that we think about MRD is that MRD is going to be split into two areas, especially over time, especially as we get out of the colorectal cancer to other cancer types, tumor-informed and tumor-naive. And as you are seeing, I think more and more, tumor-informed essentially is going to get very competitive. Essentially, achieving a 1-10 PPM clinical LODs is going to be possible with many different methodologies.

These ultrasensitive tests are going to be really competing with each other with good clinical data over time as well on the tumor-informed side. Our goal is to focus on the tumor-naive MRD. There, actually, our technology solves the fundamental problem that forces all these different companies to actually focus on tumor-informed MRD. Right? Why does anyone develop a tumor-informed MRD? Certainly, it is not the cheapest, and it is not something that the physicians want. It is more difficult to use. They do tumor-informed MRDs because if you know where to look at in cell-free DNA, you are going to be able to achieve these ultrasensitive levels. Our technology, our SMNGS, QCT, Quantitative Counting Template Technology, solves exactly this noise problem. Right? Essentially, what we are doing is we are removing this noise that they are trying to remove by having a tumor-informed MRD.

So from that perspective, we believe that we can achieve ultrasensitive levels of sensitivity with a tumor-naive test that no other company has been able to get anywhere near until now. So that is, I think, on the technology side, why we believe that we have a right to win in tumor-naive MRD and why we can solve a problem that really stumps a lot of different methodologies. That it is really a technology question, and our technology is very uniquely positioned for that noise problem, that the fact that people are doing tumor-informed MRD solves. In terms of our data readout and approach there, it is going to be a pan-cancer assay, similar to our response monitoring approach that we have taken there. But of course, we will want to launch with data.

We are expecting the launch to be towards the end of 2026, essentially at around the similar times that we expect to get coverage for our response test. From our growth perspective, we have always had this philosophy of having only one test that doesn’t have broad coverage and high gross margins. Once we have our response monitoring covered by Medicare, we want to launch MRD for a pan-cancer indication, but we, of course, know that we are not going to have coverage for our MRD, at least for the first year of commercialization. Okay. That’s very helpful. And then on Unity, I think you said certain parts could see expanded coverage. I assume that’s on the carrier screening side. And any change on the competitive front? Obviously, we saw your competitor introduce the Fetal Focus assay. Any change you’re seeing in the market today?

As I sit here in December 9, I see no impact in our business from competitive launches. In some ways, it is as if it didn’t happen. So from that perspective, we continue to grow as expected. I think it is a good thing. In some ways, it can lead to guideline changes, more awareness, but we also have a significant, I think, lead in our approach here, in our ease of use, in the way that we are approaching this particular market. So so far, no impact, as you have seen in the Q3 numbers and I think as embedded into our Q4 guidance. Okay. Thank you. Thank you. I’m not showing any further questions in the queue. I would like to turn the call back over to Ozan Atey for any closing remarks. Thank you. And thank you for all the questions.

This was our first earnings as a public company. We are very excited about the future of our company and how we can continue to grow, continue to change standard of care, continue to create a different type of molecular diagnostics company that can combine hypergrowth with profitability. We believe that we have shown how this is possible, and we are on a 20-mile march to show that a company in this space can even enter S&P 500. So thank you for all the questions and listening to us today, and we look forward to seeing you in future earnings calls. Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone, have a great day.