Catherine Schulte

Catherine Ramsey Schulte inquired about the net ASP impact from Medicare changes, specifically the ADLT surveillance rate decrease and adjuvant bundle rate increase, and how these factor into the +$30 annual guide for Signatera ASPs. She also asked for an update on Signatera's mix by indication and the potential ASP impact of a pan-cancer indication from MolDX for solid tumors.

Answer

Michael Brophy (CFO, Natera) clarified that the ADLT and bundle rate changes roughly net out, with the +$30 ASP guide embedding continued execution on Medicare Advantage reimbursement and biomarker state progress, leaving additional coverage decisions as upside. Steve Chapman (CEO, Natera) noted that 30-35% of tests fall into non-covered buckets, and pan-cancer coverage for remaining Medicare indications could generate $200 million in gross profit and revenue, which is considered upside.

Catherine Schulte asked about the net ASP impact from Medicare changes, specifically the ADLT surveillance rate decrease and adjuvant bundle rate increase, and how these factor into the projected +$30 annual Signatera ASP guide. She also inquired about the current Signatera mix by indication and the potential ASP impact of a pan-cancer indication from MolDX.

Answer

Michael Brophy (CFO, Natera) explained that the ADLT and bundle rate changes roughly net each other out. The $30 ASP guide incorporates continued execution on broadening reimbursement for covered Medicare Advantage volumes and progress in biomarker states, with additional coverage decisions representing potential upside. Steve Chapman (CEO, Natera) added that 30-35% of tests fall into non-covered indications, which could represent $200 million in gross profit and revenue if covered, with CRC, breast, bladder, and lung making up the majority of current volumes.

Catherine Schulte inquired about Natera's long-term strategy for multi-cancer early detection applications, seeking updates on when such initiatives might be discussed, while acknowledging the current focus on CRC. She also asked for confirmation on the 2026 Signatera volume growth projection, specifically if the "rolling average of the last four quarters" (around 18,000 units) refers to sequential unit volume growth and if this level is expected to hold for Q4.

Answer

CEO Steve Chapman affirmed that Natera's immediate focus is on completing the CRC product's clinical trial and approval, but confirmed "a lot of activity" in the background for multi-cancer early detection (MSET), indicating Natera would be well-positioned in that space. CFO Michael Brophy confirmed that the "rolling four quarters average for the growth units" is the correct benchmark for 2026 Signatera volume growth, emphasizing that while it's a healthy target requiring good execution, it might not be exceeded every single quarter, including Q4.

Catherine Schulte asked for the timeline to secure Medicare coverage for the $250-$300 million opportunity in non-covered Signatera indications and questioned if the $150 million investment in breast cancer trials signals a strategic prioritization.

Answer

CEO Steve Chapman stated the $250-$300M opportunity is a key focus, with numerous submissions planned over the next 12-18 months. Regarding the breast cancer investment, he clarified that it has always been a major priority, with trials like DARE starting years ago, and the significant, budgeted investment creates a high barrier for competitors to replicate.

Catherine Schulte inquired about the timeline and path to reimbursement for Signatera in Japan and asked how the company's commercial strategy is evolving amidst a changing competitive landscape for MRD testing.

Answer

President of Clinical Diagnostics, Solomon Moshkevich, detailed the Japan timeline: PMDA approval is expected late 2025/early 2026, followed by a 6-9 month reimbursement process, with top-line impact anticipated in late 2026. CEO Steve Chapman addressed competition by stating that Natera's growth remains strong because physicians value its extensive clinical data, proven test performance, and long-term outcomes data, which he believes competitors lack, making Natera's offering superior.

Catherine Schulte from Baird inquired about the success rate in securing payment in states with biomarker bills and asked for a breakdown of the significant R&D spending increase planned for 2025.

Answer

President and Chief Business Officer, John Fesko, acknowledged that progress with biomarker bills has been gradual but noted recent formal policy publications from payers are positive signs that should drive improvement. CEO Steve Chapman explained the R&D increase is primarily focused on MRD (clinical trials, product extensions), with important investments also in Women's and Organ Health. He highlighted that the FDA-enabling study for early cancer detection (ECD) is a warranted new expense given the strong data and significant market opportunity.

Catherine Schulte asked about the agreement with NHS for extending the trial follow-up and the goals of this extension, as well as GRAIL's involvement in the NHS's national cancer plan and a related study for multi-cancer tests in primary care.

Answer

Harpal Kumar, Chief Scientific Officer and President of International, indicated that while not yet discussed in detail, he foresees no obstacles to extending follow-up via passive data collection, aiming for control arm data maturation. He confirmed ongoing active conversations with NHS, satisfaction with MCED references in the cancer plan, and GRAIL's application to participate in the competitive process for the symptomatic context study.

Catherine Schulte questioned whether the 6-12 month trial follow-up extension is agreed upon with NHS and its goal, and GRAIL's involvement in an NHS application process for a symptomatic context study.

Answer

CCO Andy Partridge stated that while not yet discussed in detail with NHS, he foresees no obstacles for the passive data collection extension, aiming for control arm data to mature. CSO Sir Harpal Kumar confirmed ongoing active conversations with NHS, their excitement for MCED, and GRAIL's application to be part of the competitive process for the symptomatic context study, following up on strong SYMPLIFY study data.

Catherine Schulte asked about the implied deceleration in Waters' standalone full-year 2026 organic constant currency revenue growth (5.5%-7%) compared to the Q1 2026 guidance (7%-9%), questioning if it's due to prudence, comps, or other dynamics. She also inquired about the pacing and expected Q4 exit rate for the acquired BD assets on their path to recovery.

Answer

President and CEO Udit Batra stated that the full-year guidance philosophy remains unchanged, with the lower end reflecting instrument performance and the upper end recurring revenue. He noted several potential upsides not baked into the guide, such as no recovery in academic/government drug discovery, mid-single-digit China growth assumption (vs. 9% in 2025), Empower headwinds already incorporated, no reshoring revenues, and a conservative 6% chemistry growth assumption (vs. 12% in 2025). SVP and CFO Amol Chaubal attributed strong Q1 momentum and four extra working days to the higher Q1 guide. For BD assets, Amol expects a low single-digit decline in Q1, with growth gradually ramping up as headwinds like China DRG become rooted in the baseline by Q3/Q4. Udit reiterated focus on operational execution, pricing discipline, launch readiness, and immediate contributions from instrument replacement, service attach, and e-commerce.

Catherine Schulte asked about the implied deceleration in Waters' full-year organic constant currency revenue guidance (5.5%-7%) after a stronger Q1 outlook (7%-9%), questioning if it's due to prudence, comps, or other dynamics. She also asked for comments on the pacing and recovery path for the acquired BD assets.

Answer

President and CEO Udit Batra explained that the full-year guidance reflects a prudent approach, with the lower end for instruments and upper for recurring revenue, noting several potential upsides not yet baked in. SVP and CFO Amol Chaubal added that Q1's strong momentum and extra working days support the initial guide. For BD assets, Amol expects a low single-digit decline in Q1, with gradual growth ramping up as headwinds become rooted in the baseline by Q3/Q4. Udit reiterated focus on improving operational execution and implementing integration planning for revenue synergies.

Catherine Schulte asked about confidence in the 4-4.5% top-line growth for the BD asset next year, given BD's preliminary announcement of incremental headwinds in academia for biosciences. She also questioned the Q4 chemistry guidance of 6% growth, which is a low sequential increase compared to historical patterns, asking if less burn-through of the Q2 pull-forward occurred in Q3.

Answer

CFO Amol Chaubal clarified that the Q4 chemistry guidance of 6% was a prudent assumption, adjusting for Q2 pull-forward dynamics, and not fully relaying Q3 performance. Regarding BD, he stated that the academic and government market headwinds were largely in line with or even better than Waters' underwriting assumptions, which had already significantly reduced ANG numbers in their models. He emphasized the team's resilience and commitment to delivering on financial commitments despite market challenges. CEO Udit Batra reiterated confidence in BD's biosciences business, especially FACSDiscover S8, given positive customer reception and a more stable pharma and academic environment.

Catherine Schulte asked about confidence in the 4%-4.5% top-line growth for the BD Biosciences & Diagnostic Solutions asset next year, given preliminary announcements of incremental headwinds in academia. She also sought clarification on the Q4 Chemistry guidance of 6% growth, which implies a low sequential increase, and whether less of the Q2 pull-forward was burned in Q3 than expected.

Answer

CFO Amol Chaubal stated that the Q4 Chemistry guidance was set prudently at 7% growth, adjusted for Q2 pull-forward dynamics, without fully relaying Q3 performance. He added that the academic and government market headwinds for BD were largely in line with or even better than Waters' underwriting assumptions, which had already significantly reduced U.S. academic and government numbers. President and CEO Udit Batra reiterated confidence in BD's performance, citing positive customer reception for FACSDiscover S8/A8 and a more stable Pharma and academic environment, emphasizing the team's resilience in delivering commitments.

Catherine Schulte of Robert W. Baird & Co. asked for a breakdown of the $115 million in commercial excellence revenue synergies from the BD deal, specifically between the biosciences and diagnostics segments. She also questioned the company's confidence in being able to replicate its operational success with BD's underperforming microbiology business.

Answer

SVP & CFO Amol Chaubal clarified that instrument replacement synergies are largely on the biosciences side, while e-commerce and service attachment potential is spread across both businesses. President and CEO Dr. Udit Batra explained his confidence in turning around the microbiology business, noting the performance gap versus competitors is addressable through better pricing (enabled by a new product launch) and operational initiatives, which are not in the deal model.

Catherine Schulte of Robert W. Baird & Co. requested a breakdown of the $115 million in commercial excellence revenue synergies from the BD deal between the biosciences and diagnostics businesses. She also asked for the basis of management's confidence in being able to turn around the underperforming BD microbiology business.

Answer

SVP & CFO Amol Chaubal clarified that instrument replacement synergies are largely on the biosciences side, while e-commerce and service attachment potential is spread across both businesses. President and CEO Dr. Udit Batra explained that the microbiology business's 180 basis point growth gap to its competitor is addressable through better pricing with the new Bactech launch (~100 bps) and operational initiatives (~80 bps). He stressed this turnaround potential is not in the deal's underwriting model.

Catherine Schulte from Baird inquired about the outlook for China for the remainder of the year, including any customer hesitation and stimulus assumptions, and asked about the potential timing and cadence of reshoring tailwinds.

Answer

CEO Udit Batra reported that China grew 5% in Q1, ahead of expectations, but the forecast for the rest of the year prudently assumes low single-digit growth. Regarding reshoring, Batra noted it's 'early days' with no detailed customer plans yet, but Waters is well-positioned to benefit when capacity expansions occur. CFO Amol Chaubal added that the service organization's involvement in tech transfers provides early visibility.

Catherine Schulte asked to quantify the Q4 budget flush impact on the Pharma segment's double-digit growth and inquired about the growth assumptions for Pharma in 2025. She also asked about the trajectory of service contract attachment rates.

Answer

President and CEO Dr. Udit Batra stated the Q4 revenue ramp was typical of pre-pandemic years (high-teens QoQ), reflecting a normalization of spending behavior in late-stage pharma. SVP and CFO Amol Chaubal noted that over 50% of the active installed base is now on a service plan, with nearly 60% covered including warranties, and the organization is now pivoting towards service-led lead generation.

Catherine Schulte asked for the outlook of the service business in 2026, both including and excluding acquisitions. She also requested a more detailed breakdown of market trends in China, specifically for lab versus industrial segments, given the modest growth in Q4 and the low single-digit guide for the year.

Answer

CFO Shawn Vadala stated that the service business grew 8% in Q4 (6% organic) and is expected to achieve mid- to high-single-digit growth for Q1 and the full-year 2026, with Q1 being mid-single-digit organic. He highlighted the recent milestone of $1 billion in service sales and the significant remaining addressable market. Regarding China, Shawn Vadala noted that Q4 was as expected, with strong industrial growth against easier comparisons, driven by the pharmaceutical end market, while the chemical sector remains challenging. He guided for low single-digit growth in China for Q1 and the full year, with both lab and industrial expected to be in that range. He expressed optimism for the medium to long term, citing investments in pharma/life sciences and the 'China-for-China' strategy.

Catherine Schulte inquired about the 2026 outlook for service revenue, both including and excluding acquisitions, and asked for more details on China's market dynamics, specifically the outlook for lab versus industrial segments.

Answer

CFO Shawn Vadala expects mid-to-high single-digit growth for service in 2026, with Q1 organic growth in the mid-single digits, highlighting the $1 billion sales milestone and the remaining $2 billion serviceable addressable market. For China, he noted Q4 met expectations with strong industrial growth (easier comp) and positive momentum in the pharmaceutical end market, while chemicals remain challenging. He anticipates low single-digit growth for both lab and industrial in 2026, with long-term optimism for mid-single-digit growth.

Catherine Schulte from Baird asked for the value of imports into the U.S. from Switzerland to better assess potential country-specific tariff risks. She also inquired about the company's appetite to increase share buybacks given the current stock price.

Answer

CFO Shawn Vadala declined to provide a specific figure for Switzerland but stated that of the approximately $250 million in imports from Europe and the rest of the world, a 'significant portion' comes from Switzerland. He also affirmed that the company will stick to its previously stated share repurchase plan for the year, as they do not try to time the market.

Catherine Schulte asked for the specific benefit of the extra week on Revvity's Q1 organic growth and commentary on the pacing of organic growth for the rest of 2026, including any implied Q4 exit rate.

Answer

Max Grykowiak, SVP and CFO, stated that Q1 organic growth is expected to be 2%-3%, consistent with the full year, with similar pacing for each quarter. He quantified the extra week as a 100 basis points tailwind to Q1 organic growth (20 bps for the full year), primarily from life sciences reagents, service, and software, but noted it's a margin headwind due to labor costs, resulting in an approximate $0.06 EPS headwind for Q1.

Catherine Schulte asked about the specific benefit to Q1 organic growth from the extra operating week and requested further pacing commentary on how organic growth is expected to unfold throughout the rest of the year, including any implied Q4 exit rate.

Answer

Max Krakowiak, SVP and CFO, stated that Q1 organic growth is expected to be in line with the full-year 2%-3% outlook, with relatively consistent performance anticipated for each quarter. He specified that the extra week is expected to be an approximate 100 basis points tailwind to Q1 organic growth (roughly 20 basis points for the full year), primarily benefiting life sciences reagents, service, and software contract amortization. However, the extra week also presents a margin headwind due to additional labor costs, resulting in an approximate $0.06 EPS headwind for Q1.

Catherine Schulte asked about the 2%-4% organic growth outlook for the full year, noting it creates a wide range for Q4, and inquired if performance should be anchored towards the lower end, along with segment performance expectations for Q4.

Answer

Senior Vice President and CFO Max Krakowiak stated that a 2%-4% full-year range is not uncommon for Q4, and the midpoint of the full-year guidance implies 2%-3% organic growth for Q4. Schulte also asked about the performance of U.S. academic and government in Q3 and how the government shutdown impact was sized in guidance. Krakowiak reported that Americas academic and government was down mid-single digits in Q3, acting as a headwind. He noted that the government shutdown impact, primarily on the reagent side, was modest and not a huge number embedded in the guidance.

Catherine Schulte of Baird requested a quantitative breakdown of the tariff mitigation efforts between manufacturing shifts, cost actions, and pricing. She also asked about the latent TB test's exposure to immigration trends and any related concerns.

Answer

CFO Maxwell Krakowiak explained that supply chain and manufacturing adjustments account for the vast majority (75-80%) of the tariff mitigation, with the remainder coming from supplier changes and selective pricing. He also clarified that the latent TB business is more heavily indexed outside the U.S., so potential changes in U.S. immigration policy would not have a material impact on the company.

Catherine Schulte asked about the impact of the annual Lunar New Year timing on the Q1 guidance of 4-6% core growth, noting it was a two-point headwind last year but falls in February this year. She questioned if the Q1 guide implies a 2-4x Lunar New Year impact and what drives any sequential slowdown.

Answer

President and CEO Padraig McDonnell explained that the Q1 guide assumes low single-digit growth for China on reduced stimulus volume, which is a negative 700 basis point year-over-year impact. This is offset by a favorable Lunar New Year timing impact of approximately 800 basis points. He noted that Q2 will be meaningfully impacted by Lunar New Year timing and a tougher comparison, with the effects balancing out over the quarters.

Catherine Schulte inquired about the impact of Lunar New Year timing on the first quarter, noting it was a two-point headwind last year but falls in February this year. She asked if the 4-6% Q1 guide implies a sequential slowdown after accounting for the Lunar New Year effect.

Answer

President and CEO Padraig McDonnell explained that the Q1 guide assumes low single-digit growth for China on reduced stimulus, representing a negative 700 basis point year-over-year impact, which is offset by an 800 basis point favorable Lunar New Year timing. He added that Q2 will be meaningfully impacted by Lunar New Year timing and a tougher comparable, but overall, it balances out over those quarters.

Catherine Schulte from Robert W. Baird & Co. asked for the growth rate assumptions by business segment for the fiscal fourth quarter, including the breakdown between instrumentation and consumables/services. She also inquired about the performance of the small molecule pharma business when excluding China.

Answer

CFO Bob McMahon provided Q4 guidance by segment: LSAG expected to be down low single-digits, DGG down mid-single digits, and ACG up mid-to-high single digits. He noted consumables would outperform instruments. CEO Padraig McDonnell highlighted Europe as a standout for small molecule. McMahon then clarified that the small molecule business was down mid-single digits overall but only down low single-digits when excluding China.

Catherine Schulte, under the name Catherine Ramsey, asked for the growth rate assumptions by business segment for the fourth quarter, as well as the outlook for small molecule pharma's performance excluding China.

Answer

CFO Bob McMahon and CEO Padraig McDonnell responded. Mr. McMahon provided Q4 guidance by segment: LSAG expected to be down low-single digits, DGG down mid-single digits, and ACG up mid-to-high single digits. Regarding small molecule pharma, Mr. McDonnell noted Europe was a standout performer. Mr. McMahon clarified that the segment was down mid-single digits globally but only down low-single digits when excluding China.

Catherine Schulte of Baird asked if the increase in China's stimulus-related funnel activity could be quantified to help size the future opportunity. She also requested the performance of the LSAG segment in the quarter, excluding China.

Answer

CEO Padraig McDonnell responded that it is too early to quantify the impact of the China stimulus on the sales funnel for 2025, as customers are still determining how the funding mechanisms will work. CFO Bob McMahon reported that the LSAG business declined 13% globally in the quarter, and when excluding China, the segment was down 8%.

Catherine Schulte inquired about Twist Bioscience's gross margin guidance for fiscal 2026, specifically questioning the implied incremental margins and the timeline for returning to the 75-80% range. She also asked for more detail on the drivers behind the fiscal 2026 NGS revenue guide, including expectations for a ramping customer and the long-term growth outlook for the NGS business.

Answer

Adam Laponis, CFO of Twist Bioscience, explained that while the company expects to maintain 75-80% incremental gross margins on average, fiscal 2026 faces tough comparisons. He attributed quarterly variations to customer mix and reiterated expectations for continued gross margin expansion. For NGS, Mr. Laponis noted an anticipated 'air pocket' in Q4 and Q1 due to a customer transition, with a return to 20% year-over-year growth by Q4 2026, and 1-2% growth from new MRD products.

Catherine Schulte asked about Twist Bioscience's gross margins, including the fiscal year guidance, incremental margins, potential pricing impacts, manufacturing investments, and the timeline for returning to 75-80% incrementals. She also inquired about the NGS guide for fiscal 2026, specifically the drivers for a customer ramp and long-term growth expectations for the business.

Answer

Adam Laponis, CFO, expressed encouragement regarding the team's progress on gross margins, noting a 20% increase over two years. He expects 75-80% incremental margins to generally hold, with some quarterly noise due primarily to customer mix. For NGS, he highlighted a customer transition impacting Q4 and Q1, with an expected ramp in Q2 leading to 20% year-over-year growth by Q4. He also noted 1-2% growth from MRD products in 2026.

Catherine Schulte of Robert W. Baird & Co. asked for details on the expected gross margin progression for the year and the impact of specific operational improvements, like the change in plastic tips.

Answer

An executive, likely CFO Adam Laponis, confirmed expectations for sequential quarterly improvements in gross margin, aiming to surpass 50% by Q4. President and COO Patrick Finn added that a pipeline of incremental improvements exists, highlighting the future use of proprietary enzymes to both drive new products and reduce internal costs.

Catherine Schulte of Baird asked about near-term business trends in July and August and customer reactions to recent policy headlines affecting mRNA and cell therapy. She also questioned if Maravai could return to its pre-COVID 40%+ EBITDA margins or if the business is now structurally different.

Answer

CFO Raj Asarpota described near-term trends as 'fairly positive' but noted the CDMO business is lumpy. CEO Bernd Brust added that policy news has had no material impact as it mainly affects research, where Maravai has low exposure. Regarding margins, Brust said it was too early to comment on returning to 40%+ levels, stating the first priority is achieving positive free cash flow and EBITDA.

Catherine Schulte of Baird asked about the expected revenue contribution from Maravai's recent acquisitions. She also questioned the implied decline in the base NAP business in 2024 after excluding high-volume CleanCap and sought the rationale for confidence in its stabilization in 2025.

Answer

Chief Executive Officer William Martin clarified that the Q4 2023 base business comparison was skewed by a large, non-recurring take-or-pay chemistry order. Chief Financial Officer Kevin Herde added that the Molecular Assemblies deal is a vertical integration play with no direct revenue, while Officinae Bio will contribute low single-digit millions, as it was acquired for its technology platform.

Catherine Schulte of Robert W. Baird & Co. asked if the implied second-half growth for DecisionDx-Melanoma is a good baseline for future years and questioned what is driving TissueCypher's growth between new and existing clinicians.

Answer

CFO Frank Stokes reiterated the full-year 2025 guidance for high single-digit melanoma growth but declined to provide a 2026 outlook. Founder, CEO, & President Derek Maetzold explained that for TissueCypher, both new customer acquisition and deeper penetration are strong growth drivers due to the early stage of market development.

On behalf of Catherine Schulte, Tom Peterson asked about the company's promotional strategy and salesforce incentives for DecisionDx-SCC following the assumed noncoverage, and requested an update on the current and long-term size of the TissueCypher salesforce.

Answer

CEO Derek Maetzold stated that if Medicare coverage is lost, the dermatology salesforce's incentive compensation will shift to be almost 100% focused on DecisionDx-Melanoma starting around May 1. He added that the TissueCypher salesforce is currently in the low 60s, with a potential mature size of 60-80 representatives, and further expansion will be considered after evaluating the productivity of the recent hires.

Catherine Schulte asked about business trends in China, comparing the diagnostics and life sciences segments, and inquired about the performance of QIAGEN Digital Insights (QDI) and its path to achieving its long-term growth targets.

Answer

CEO Thierry Bernard reiterated that China (4% of sales) is not a strategic priority due to its complexity and preference for local manufacturers, which impacts life sciences more than diagnostics like QuantiFERON. For QDI, he noted an encouraging Q1 with both discovery and clinical portfolios performing well. He guided to high single-digit growth for 2025 as the business completes its transition to a SaaS model, which positions it to achieve its long-term growth ambitions.

Inquired about the revenue guidance cadence for the second half of the year and the specific drivers behind the raised outlook.

Answer

The guidance increase is based on strong Q1 results and Q2 visibility. The second half of the year implies higher screening revenue growth (around 15%) compared to the first half (13%), driven by the Cologuard Plus launch and commercial execution. The entire guidance raise is attributed to the improvements seen in commercial execution.

Catherine Schulte inquired about the assumptions for care gap programs embedded in the full-year guidance, specifically their weighting between Q3 and Q4. She also asked for a timeline on when the pivotal samples for the blood-based screening test would be run and what preparatory steps are required.

Answer

CEO Kevin Conroy explained that care gap programs see a significant step-up in Q3 and an even larger one in Q4, as payers and health systems work to improve quality scores by year-end. CFO Aaron Bloomer confirmed this Q4 weighting and noted that revenue from these programs in H1 2024 already surpassed the full-year 2023 total. Regarding the blood test, Conroy detailed the extensive software validation, lab automation, and reagent QC work required before running the 10,000-20,000 pivotal samples, confirming they have not yet been processed and results are expected in Q4.

Catherine Schulte inquired about the relative performance of reagents versus instrumentation in China and the expected trend in Q3. She also asked for a breakdown of RUO reagent growth between academic and pharma customers.

Answer

CFO Jim Hippel stated that reagent and instrument performance in China was comparably weak in Q2 but is expected to improve to modest positive growth in Q3, with similar trends for both categories. For RUO reagents, he noted that growth was also relatively comparable between academic and pharma customers, with slightly stronger performance in Europe for both.