Daniel Markowitz

Daniel Markowitz asked about the OpEx guide, the expected operating leverage in 2026, and how Natera defines the threshold for opportunistic spending in excess of the guide, given the company's stated freedom to invest for future growth.

Answer

Michael Brophy (CFO, Natera) reiterated that opportunistic spending decisions, whether for small acquisitions like Foresight or internal projects, are based on an ROIC (Return on Invested Capital) framework. He emphasized that the management team, with its long tenure, evaluates each opportunity based on risk, benefit, and execution challenges to make decisions that yield the right returns and are best for patients.

Daniel Markowitz asked about the operating margin guidance for 2026, specifically the breakout of margin contraction drivers and the confidence in margin expansion in 2027-2028.

Answer

Gerardo Hernandez, CFO, explained that approximately half of the incremental investment in 2026 is transitory, driven by the completion of OCS ENHANCE and De Novo clinical programs, OCS Kidney development, and OCS Gen 3.0 development. This gives confidence that spend will normalize, allowing for operating leverage and margin expansion in 2027-2028.

Daniel Markowitz asked for a breakdown of the 2026 operating margin contraction, distinguishing between transitory and ongoing investments, and the rationale for expected margin expansion in 2027-2028.

Answer

CFO Gerardo Hernandez explained that approximately half of the incremental investment in 2026 is transitory, driven by the completion of OCS ENHANCE and De Novo clinical programs, OCS Kidney development, and OCS Gen 3.0 development. He expressed confidence that spend will normalize, allowing for operating leverage and margin expansion in subsequent years.

Daniel Markowitz inquired about Guardant Reveal Ultra, asking about its differentiated features, the evolving competitive landscape for tumor-informed tests, and the expected timeline for data release or substantial updates.

Answer

Helmy Eltoukhy, Co-CEO, expressed excitement for Reveal Ultra's launch this year, emphasizing its expected best-in-class clinical sensitivity and additional unique features beyond other tumor-informed offerings. He advised to 'stay tuned' for more details later in the year.

Daniel Markowitz asked about the differentiated features of Reveal Ultra, the evolving competitive landscape for tumor-informed tests, and the expected timeline for data or updates on the asset.

Answer

Co-CEO Helmy Eltoukhy expressed excitement for Reveal Ultra, stating it will redefine sensitivity in the tumor-informed space with best-in-class clinical sensitivity and additional unique features, promising more details later in the year ahead of its launch.

Daniel Markowitz asked for more color on the delta between demand and supply for high-value components excluding GLP-1s in Q4, and when incremental capacity is expected to service this demand.

Answer

CEO Eric Green explained that capacity expansion in Europe (labor and equipment) has continued, but demand still outpaces supply, particularly from biologic customers and Annex 1 work. CFO Bob McMahon stated they wouldn't give specific gap details but noted capacity grew substantially in Q4 vs. Q1, yet demand grew faster. VP IR John Sweeney highlighted the expectation for high-single to low-double-digit growth in non-GLP-1 HVP components in 2026 as part of the acceleration.

Daniel Markowitz inquired about the mid-single-digit growth in high-value product (HVP) components excluding GLP-1s in Q4, noting that demand outstripped supply. He asked for details on the demand-supply delta and the timeline for bringing incremental capacity online. Later, he asked about the Annex 1 opportunity, specifically what customer conversations suggest about it becoming a greater area of focus.

Answer

CEO Eric Green explained that capacity expansion in Europe (labor and equipment) continues, but demand still outpaces supply, driven by biologics and Annex 1 projects. CFO Bob McMahon stated that capacity grew substantially in Q4 vs. Q1 in European operations, but demand grew faster, leading to continued capacity additions. VP of Investor Relations John Sweeney highlighted the expectation for high single- to low double-digit growth in non-GLP-1 HVP components in 2026 as part of the acceleration. Regarding Annex 1, Eric Green noted increased customer engagement due to contamination control issues, regulatory audits, and the need to prevent delays, with West providing comprehensive solutions. Bob McMahon added that the 6 billion unit opportunity could expand further due to reshoring and standardization efforts.

Daniel Markowitz from Evercore ISI asked about the high-level headwinds and tailwinds for high-value components in 2026, including destocking, GLP-1 growth, Annex 1 acceleration, and a one-off customer situation, and specifically inquired about the implied growth rate for GLP-1 elastomers in 2025 and expectations for sustained growth.

Answer

CFO Bob McMahon confirmed strong GLP-1 growth, noting it's largely in line with market trends, and expects healthy growth next year despite the law of large numbers. CEO Eric Green identified GLP-1s, biologics/biosimilars, and Annex 1 as key tailwinds, while potential headwinds include timing variations for Annex 1 project conversions and new drug molecule approvals. He also noted the market for GLP-1s is expected to remain a healthy blend of injectables and orals.

Daniel Markowitz asked about the high-level headwinds and tailwinds for high-value components in 2026, including destocking, GLP-1 growth, Annex 1 acceleration, and a unique customer situation. He also inquired about the growth rate and sustainability of GLP-1 elastomer sales.

Answer

CFO Bob McMahon confirmed healthy GLP-1 growth expectations for next year. CEO Eric Green elaborated on GLP-1 market growth (injectables vs. orals), West's strong position, and the multi-year opportunity of Annex 1 conversions. He also noted potential timing uncertainties for new drug molecule approvals as a minor headwind, while emphasizing strong tailwinds from biologics, biosimilars, GLP-1s, and Annex 1.

Daniel Markowitz of Evercore ISI asked for the specific basis point contribution from Annex One in Q2 and whether the rapidly growing number of projects could serve as a proxy for future revenue.

Answer

CEO Eric Green reiterated the full-year 2025 contribution target of 150 basis points, declining to provide a specific quarterly figure due to timing of revenue recognition. He advised against using project count as a direct proxy for near-term revenue, explaining it's a multi-year process, but emphasized the strong project growth reflects high customer interest and confidence in West's capabilities.

Daniel Markowitz asked about the potential upside from Annex 1, given the strong sequential growth in related projects, and requested any customer anecdotes that might suggest further positive developments.

Answer

CEO Eric Green described Annex 1 as a long-term growth driver that aligns perfectly with West's HVP strategy and creates a positive mix shift. He noted that while the number of projects is growing, the revenue impact is not yet significant. The opportunity is currently more concentrated in the pharma and generics space, as biologics often already use high-end components.

Daniel Markowitz asked about the methodology for calculating the impact of physician fee changes on the business, noting the significant delta between potential physician fee cuts (10%-50%) and the revenue guidance range (6%). He also inquired about the expected cadence for achieving the high end of the revenue guidance, suggesting it might involve mid-teens% growth exiting the year and patient redirection.

Answer

Tim Herbert, Chairman and CEO, explained that the impact is not a straight math equation across all centers. He highlighted that salary-based surgeons at academic centers or surgeons who are partial owners of ASCs are less affected by professional fee reductions. Inspire will focus on driving patients to these consistent centers while advocating for lower reductions for private practice physicians. Matt Osberg, CFO, added that Q1 coding uncertainty also compounds the range. Herbert confirmed that achieving the high end of guidance would involve acceleration in the second half of the year as clarity on reimbursement minimizes risk, making surgeons more comfortable committing time to Inspire.

Daniel Markowitz asked about the strength in equipment, noting another strong quarter compared to peers, and whether this is primarily due to ATF equipment placements or is more broad-based. He also requested the revenue contribution from these placements in Q3 and insights into consumable pull-through and broader ATF momentum for 2026.

Answer

President and CEO Olivier Loeillot reported that capital equipment revenue grew over 20% and orders grew high teens. He confirmed that ATF and analytical equipment were the main contributors to growth in Q3, but emphasized that year-to-date performance has been broad-based, including downstream hardware. Loeillot highlighted Repligen's differentiation as a newcomer in the hardware field, particularly by pairing systems with PAT technologies (one in four downstream systems are now paired). He noted that the specific ATF project was only a small part of Q3's growth and did not significantly alter the overall strong hardware performance.

Daniel Markowitz inquired about the drivers of Repligen's equipment strength, specifically if it's primarily ATF or broad-based, and asked for the Q3 revenue contribution from specific placements. He also questioned the outlook for consumable pull-through and broader ATF momentum in 2026.

Answer

Olivier Loeillot, President and CEO, confirmed strong capital equipment performance with over 20% revenue growth and high-teens order growth in Q3, driven by both ATF and analytical equipment. He emphasized broad-based performance year-to-date, noting Repligen's unique position as a newcomer pairing systems with PAT technologies. He declined to give specific numbers for the ATF project but stated it was a small part of the overall strong hardware growth.

Daniel Markowitz from Evercore ISI questioned the fiscal 2026 margin expansion plan, asking if the level of reinvestment from the ExoDx divestiture would be adjusted based on top-line performance. He also asked if the strong 20% growth reported for Wilson Wolf was representative of the entire cell and gene therapy portfolio.

Answer

CFO James Hippel stated the company is currently managing the business for a low single-digit growth environment, using productivity and the ExoDx divestiture to fund reinvestments while expanding margins. He noted that if growth accelerates, they will re-evaluate the balance between further investment and returning more margin to investors. President & CEO Kim Kelderman confirmed that the growth profile across the rest of the cell and gene therapy portfolio was "almost identical" to Wilson Wolf's 20% growth.

Daniel Markowitz of Evercore ISI asked if the implied Q4 margin of around 32% is a reasonable baseline for fiscal 2026 and sought color on the potential 10-15% headwind in the U.S. academic market mentioned by peers.

Answer

CFO Jim Hippel declined to provide fiscal 2026 margin guidance but stated the company is well-positioned for any market environment. Regarding academic funding, he noted that current spending is from existing grants and that historically, Congress has increased NIH budgets despite proposed cuts. He also highlighted a potential benefit if funding shifts toward Bio-Techne's core research areas like cancer and neurology.