Sera Prognostics, Inc. (SERA) Q3 2026 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen, and welcome to the Sera Prognostics Third Quarter 2026 Financial Results. [Operator Instructions] I would like to remind everyone that this call is being recorded on Wednesday, November 4, 2026. I would now like to turn the call over to Jennifer Zibuda, Head of Investor Relations. Please go ahead.

Thank you, operator. Welcome to Sera Prognostics Third Quarter 2026 Earnings Conference Call. Earlier today, Sera reported financial results for the quarter, which ended September 30, 2026. Joining me on today's call are Zhenya Lindgardt, President and Chief Executive Officer; Lee Anderson, Chief Commercial Officer; Tiffany Inglis, Chief Medical Officer; and Scott Gleason, Chief Financial Officer. Following our prepared remarks, we will open the call for questions. A copy of today's earnings release can be found on the Investors section of our website at sera.com, and a replay of this webcast will also be available. We have also posted an accompanying slide deck presentation pertaining to today's earnings call on the Events section of our Investor Relations website. Before we begin, please note that today's discussion will include projections or forward-looking statements about events and circumstances that have not yet occurred, including regarding our business, future financial results and performance and market opportunities. These statements are based on our current expectations and are subject to risk factors and uncertainties that could cause actual results to differ materially and adversely from these expectations and forward-looking statements. Please refer to our filings with the Securities and Exchange Commission, including our most recent Forms 10-K, 10-Q and 8-K for important information regarding these risk factors. With that, I will turn the call over to Zhenya.

Good afternoon, everyone, and thank you for joining us today. At Sera, we believe we're building something truly unique in health care. We have developed one of the most highly validated advanced lab tests in history, addressing one of the most important and underserved challenges in medicine, preterm birth. The PreTRM test has demonstrated the ability to identify high-risk pregnancies early and drive meaningful improvements in outcomes for mothers and babies. We're no longer simply an evidence generation story. We're actively transitioning into the commercialization phase of our journey with the goal of establishing PreTRM as a foundational component of prenatal care. The opportunity remains largely untapped with no effective standard for broad population screening of preterm birth risk. As a result, we believe there is the potential to create a new category in prenatal care and address one of the largest unmet needs in health care while driving substantial long-term value for shareholders. The third quarter represented a significant step forward in that journey. Following publication of the landmark PRIME study and the addition of highly experienced commercial leaders to our management team, we saw strong momentum in the third quarter. Compared to the first quarter of this year, the number of physicians ordering PreTRM nearly tripled, while test volume increased approximately fivefold. We believe these results provide early evidence that the combination of compelling clinical data and focused commercial execution can drive meaningful adoption of PreTRM in real-world clinical practice. We also continue to make significant progress on reimbursement as we execute a multi-tiered strategy to expand coverage across both state Medicaid programs and commercial insurers. We now have seen a second major Medicaid state cover the test. Florida has established coverage for Medicaid beneficiaries and has added the PreTRM test as a covered service under the state biomarker testing law. Additionally, pricing has been established on the state's fee schedule. With nearly 90,000 Medicaid births and approximately 4 million Medicaid lives, Florida represents our largest reimbursed market opportunity to date. More importantly, we believe Florida further validates a repeatable pathway for expansion into additional states in a market where Medicaid policy often serves as a catalyst for broader adoption. Combined with coverage in Illinois, these milestones demonstrate the growing recognition of the clinical and economic burden of PreTRM birth and the need for solutions that improve outcomes while also reducing health care costs. Supported by strong clinical utility data, compelling health economic evidence, increasing provider engagement and growing public policy focus on maternal health, we believe we're well positioned to accelerate adoption of PreTRM and advance our long-term vision of establishing the test as a standard component of prenatal care. While our immediate focus remains on executing in the United States, our long-term vision is to build a truly global company. As evidence of our progress, we continue to advance our international strategy and remain on track to pursue CE Mark approval for PreTRM Global, our kit-based version of PreTRM in 2027. In parallel, we are engaged in active discussions with potential commercial partners, including both laboratory and in vitro diagnostic companies as we evaluate opportunities to expand access to PreTRM in markets outside the United States. We have successfully completed our registration study and are working with our notified body on our CE Mark submission. This represents an important milestone in our growth strategy. The addressable market opportunity outside the United States is at least as large as our domestic market. We believe these efforts have the potential to establish a meaningful new growth engine and further advance our mission of improving outcomes for mothers and babies around the world. As we go forward, we're actively focused on executing on 3 critical strategic imperatives to achieving our long-term goals. These include: first, demonstrating a repeatable and scalable commercial model. Our priority is to validate and scale our commercial model in reimbursed markets. With coverage now established in Illinois and Florida, we have 2 significant opportunities to demonstrate how strong clinical evidence, reimbursement and focused field execution can drive adoption. We believe success in these markets will not only support near-term growth, but also establish a playbook for expansion into additional geographies and validate the scalability of our commercial strategy. Next, converting leading clinical evidence into expanding reimbursement and market access. Our second priority is to convert our best-in-class evidence base into broader reimbursement coverage and increase adoption of PreTRM. We're executing a comprehensive market access strategy designed to expand coverage across both Medicaid and commercial payer channels while establishing the foundation for long-term growth. We believe the growing national focus on maternal health creates a favorable environment for additional state Medicaid coverage mandates in 2027 and beyond. We're actively supporting professional guideline inclusion based on the strong clinical utility and health economic outcomes demonstrated through PRIME. We're also evaluating opportunities to take advantage of existing legislative actions and laws supporting improved maternal and neonatal care, which will collectively impact nearly 1.4 million births each year. We believe these efforts position us to expand access to PreTRM, strengthen reimbursement and move closer to our goal of making preterm birth risk assessment a routine component of prenatal care. And finally, driving capital-efficient growth. Our third priority is to maintain a disciplined approach to capital allocation and ensure that every dollar we invest is directed towards our highest return opportunities. As part of our 2027 planning process, we are carefully evaluating our cost structure, identifying opportunities to improve efficiency and streamline operations and reallocating resources towards initiatives that directly support commercial growth and market expansion. Our goal is to maximize return on invested capital while building the capabilities, infrastructure and market presence necessary to support the next stage of our growth. To provide more detail on our progress against these strategic priorities, I will now turn the call over to our Chief Commercial Officer, Lee Anderson, to discuss our commercial execution. Lee? Thank you, Zhenya.

We saw a significant positive inflection in the third quarter with new ordering accounts, new ordering providers and total ordering providers outperforming Q2 levels. This trend delivered a 54% increase in test volume sequentially, demonstrating our commercial model is effectively driving adoption of PreTRM. The third quarter was defined by 2 important milestones: the approval of Medicaid coverage in Illinois and our commercial expansion in Florida following established Medicaid coverage under the state's biomarker law. These 2 states represent approximately 7 million newly covered lives, encompassing approximately 140,000 Medicaid births per year. Illinois represented our first large-scale state coverage activation effort and will serve as the blueprint for future market launches. In anticipation of coverage becoming effective, we expanded our Illinois field presence in late August with additional regional account executives and a medical science liaison. The team is focused on high-value provider targets, Medicaid-heavy practices and clinical key stakeholders. We saw significant interest and engagement from physicians wanting to learn about PreTRM testing. In the first month, we conducted over 100 field activities across 60 practices and reached over 70 providers. In just 2 months, we have onboarded 9 providers and 8 accounts working with them to incorporate PreTRM into their clinical workflow. Some of these providers deliver 500 or more babies per year, creating a significant opportunity to drive adoption of PreTRM. We have focused efforts to support driving practices towards standard of care by changing practice patterns, educating the support staff and when needed, integrating with electronic medical records to support workflows. Late in the third quarter, we began replicating the Illinois playbook in Florida to maximize the opportunity of state Medicaid coverage. In the month of October, we hired additional regional account executives in the state. We aligned the targeted providers and territories based on Medicaid birth volume, provider concentration and the presence of major referral centers. Like Illinois, we also have a medical science liaison in the state to drive our educational efforts and peer-to-peer programs. Field activity began in mid-August through our Gulf Coast territory, generating approximately 30 engagements across a number of practices, including multiple physician education programs. We have completed sales training for the Florida representatives and have implemented state-specific collateral to support broad market activation. Supporting the field efforts was a broad medical affairs and awareness strategy. As part of these efforts, the medical science liaison team has created and launched a PreTRM implementation playbook. This is a standardized protocol to aid accounts at incorporating PreTRM into their current workflow, which we believe will aid our commercial team in driving depth of penetration at ordering accounts. During the quarter, we conducted 48 medical education meetings, 24 implementation meetings, multiple conference presentations and ongoing field training programs designed to improve utilization. We will also execute 2 physician advisory boards by year-end, one in Illinois and one in Florida to support KOL engagement. In addition to the field organization and activities, we continued building awareness and demand generation capabilities ahead of broader reimbursement adoption. PreTRM.com traffic increased dramatically in the third quarter as Illinois-specific educational resources were introduced and engagement rates were significantly above industry benchmarks. We saw over 1,000 page views at our Illinois physician site and patient education assets more than doubled their page views during the quarter. Collectively, our third quarter deliverables demonstrate a commercial plan and company that is increasingly capable of converting reimbursement wins into provider activation, clinical adoption and scalable market expansion. With that, I'm pleased to turn the call over to Tiffany to discuss our payer access strategy.

Thanks, Lee. Turning to market access. Our reimbursement strategy is centered on building durable long-term coverage pathways that support broad adoption of PreTRM across both Medicaid and commercial populations. We're executing a multipronged approach focused on expanding Medicaid access, advancing commercial payer coverage and positioning the company to capitalize on emerging state legislation. We continue to see momentum in our Medicaid strategy. Medicaid remains one of the most efficient pathways for expanding pregnancy care access and has historically served as a driver of maternal health innovation. Both Illinois and Florida enacted legislation requiring state Medicaid coverage of the PreTRM test and have added our PLA code to their respective fee schedules. We have now completed the credentialing process with Illinois Medicaid and are in the final stages of enrollment in Florida. We have confirmed that there are no prior auth requirements will apply in Illinois, and we are actively pursuing contracts with the managed Medicaid organizations that administer benefits across each state. Importantly, Illinois and Florida are serving as reference models as we engage policymakers and stakeholders in additional geographies. We are aware of another state actively pursuing similar legislation in early 2027, while a fourth state is evaluating options for action. Over time, we believe the combination of clinical evidence, real-world outcomes, Medicaid claims data and health economic analyses can support similar coverage pathways in additional states. We are also focused on expanding our commercial reimbursement efforts. Since joining the company this summer, Liana Burns, our Head of Payer Government and Strategic Partnerships, has led a focused payer engagement strategy designed to translate our growing body of evidence into positive medical policy decisions and contract coverage opportunities. We currently have 4 active pilot programs underway, including 2 with major national health plans and are in discussions regarding a potential multistate 2027 implementation with one of the nation's largest managed care organizations. Our commercial engagement efforts are supported by an increasingly comprehensive body of evidence. We expect to publish our health economic analysis from the PRIME randomized controlled trial in the fourth quarter. We believe this publication is particularly important because it completes the core evidence package sought by many payers, including analytic validation, clinical validation, clinical utility and health economic impact. We are also currently tracking a proposed change coming to maternity care reimbursement in 2027. The new CPT structure moves away from the traditional global obstetric package and allows prenatal encounters to be reported individually, creating a framework that better reflects the complexity and variation of care delivered during pregnancy. We believe this shift is highly consistent with the value proposition of PreTRM, identifying risk earlier so care can be more appropriately tailored to the patient. Over time, we believe a more service-based reimbursement framework can help reduce structural friction around providing differentiated care to higher-risk pregnancies and further support the adoption of risk-stratified maternal care. We also continue to see growing clinical recognition of PreTRM. During the quarter, the European Association of Perinatal Medicine included a mention of PreTRM as a potential tools to support improved prediction of PreTRM birth risk in its recently released guidelines. In parallel, we remain actively engaged with major U.S. guideline organizations. We are collaborating with preeminent thought leaders to explore insights from the rich data set we have accumulated over the last decade. The first outcomes of these efforts were multiple PRIME-related presentations, which were accepted to the Society for Maternal-Fetal Medicine Global Conference, including an oral presentation on first-time mothers and a top 5 ranked health economics poster. Finally, we believe state legislation represents an important longer-term opportunity to accelerate access. As states increasingly seek solutions that improve outcomes while addressing health care affordability, legislative action focused on improving maternal and neonatal morbidity and access to quality care may provide an additional mechanism to support coverage of clinically validated tests. We are actively evaluating opportunities to pursue coverage pathways as part of our broader market access strategy. Overall, we're encouraged by the progress we're making across the reimbursement landscape. We believe our strategy of first expanding Medicaid access, then translating that momentum into broader commercial coverage while continuing to strengthen our clinical and health economic evidence base positions us well as we enter 2027. I will now turn the call over to Scott for a review of our financial results.

Thanks, Tiffany. As Zhenya highlighted, we have seen substantial growth in PreTRM test volumes in the third quarter, with total volumes increasing almost fivefold from the first quarter of 2026. Key leading indicators such as new ordering physicians and website traffic to our physician landing page were also up significantly in the quarter. We believe these indicators bode well for future volume trends. We are increasingly focused through our PreTRM implementation playbook on driving high-volume practices to implement PreTRM as standard of care for their patients. Physicians moving from initial awareness and early interest to broad adoption and high-volume ordering is a process which we have seen take 12 months to 18 months. Therefore, we believe the recent expansion of ordering physicians will support significantly higher adoption and revenue as we look towards fiscal year 2027. From an ASP perspective, we saw our ASPs decline in the third quarter as a larger percentage of our patients were derived from low or non-reimbursed patient classes. We expect this trend to begin to reverse in fiscal year 2027 as we derive an increasing percentage of our mix from Medicaid patients in Florida and Illinois, where pricing is expected to be higher given established fee schedule rates. Additionally, patients on paid commercial pilots could also comprise a larger percentage of our mix in fiscal year 2027. This quarter, we also recognized our first milestone under a subcontract award we have received to provide contract research services to support active research on a new prenatal test. The current grant allocation will run into early 2028 and is based upon achieving targeted research milestones with the first payment recognized as other income this quarter. We are considering a number of additional potential grant opportunities from government or privately sourced maternal-focused grant funds to augment our commercialization efforts and provide additional real-world evidence. Depending on the structure of these grant agreements, they could be recognized either as other income or revenue. The timing of these new grant programs, if awarded, would likely start in late fiscal year 2027. From an expense perspective, we saw total operating expenses decline by 11% on a sequential basis based upon our targeted cost-saving efforts initiated following our fiscal second quarter. This was partially offset by some of the incremental commercial investments we made in the quarter to support our Illinois and Florida expansion plans. We ended the quarter with $72.8 million in cash and cash equivalents. We are currently heavily engaged in our forecasting and budgeting process for fiscal year 2027. As we look to prioritize resources effectively, our focus is heavily weighted towards commercial efforts in territories with coverage such as Illinois and Florida. At the same time, we are looking for areas of structural cost savings to support these increased investments. On an overall basis, we believe we will see flat or down operating expenses in 2027 while significantly increasing the size of our commercial team. We continue to believe we have sufficient cash to fund our operations into fiscal year 2029. Following the PRIME publication, our early market access wins and our renewed sales and marketing efforts under our relatively new commercial leadership, we believe we are positioned for meaningful increases in product traction next calendar year, especially as we transition to the second half of 2027. As we look toward our fourth quarter call at the start of 2027, we will look to provide more granular updates to investors on our progress. With that, I'm pleased to turn the call over to Zhenya for closing remarks.

Thank you, Scott. As we complete our prepared remarks, I'd like to leave investors with 3 key takeaways. First, our results demonstrate that Sera's geographically targeted strategy is working. We have seen significant steps forward in reimbursement and commercial traction this quarter, including significant growth in ordering physicians and test volumes. This reinforces our belief that the foundation we have built is beginning to translate into measurable commercial momentum. Second, we continue to strengthen our reimbursement and market access position. With Medicaid coverage established in both Illinois and Florida, nearly 7 million covered lives and approximately 140,000 annual births are now supported by reimbursement pathways for PreTRM. Just as importantly, we believe these initial experiences provide a repeatable blueprint for future expansion into additional states and commercial payer channels. Combined with the publication of our health economics data, demonstrating reductions in NICU admissions and health care costs, we believe we now possess one of the most comprehensive evidence packages in maternal health across diagnostics and life sciences tools. Third, we remain disciplined stewards of capital. Our team is focused on deploying resources behind the highest return opportunities, particularly in reimbursed markets where we believe we can demonstrate the scalability of our commercial model. We're building the infrastructure, capabilities and partnerships necessary to support long-term growth while maintaining a strong focus on operational efficiency and shareholder value creation. When I joined Sera, I believe the company possessed a unique opportunity to transform prenatal care. Today, that conviction is stronger than ever. We have a highly differentiated product, a growing body of clinical and economic evidence, expanding reimbursement support and an increasingly experienced team executing against a clear strategy. While there is still significant work ahead, we believe we're building a category-defining company with the potential to improve outcomes for millions of moms and babies while creating substantial long-term value for our shareholders. Operator, we are now ready for the Q&A portion of the call.

[Operator Instructions] Your first question comes from Bill Bonello from Craig-Hallum.

A lot of exciting stuff going on. A couple of questions to follow up on one about Florida and then if I could follow up with that about the managed care discussion. But on Florida, first of all, you mentioned, I think, if I heard right, that there's -- in Illinois, there's no prior auth [ recoverment ]. Is that also true in Florida? And are there any other restrictions in terms of who can be tested in Florida?

No, the same -- no restrictions in Florida as there are no restrictions for coverage to all Medicaid recipients in Florida as there are none in Illinois.

Excellent. And then are you able to tell us what the reimbursement rate is? I mean we found something that we think list it, but I'm not sure if what we're seeing is right.

For Florida or Illinois?

Florida.

For Florida, I believe it is in the low 400s.

Okay. Yes.

Bill, I think the rate is $450 in terms of -- from a pricing standpoint.

Okay. And that's within your ability to manage on cost and whatnot. I know it's a little bit lower than maybe where you were thinking sort of ASP over the long run. Yes, I think when we look at most --...

Go ahead. Go ahead, Scott.

Bill, I think as we look at most states, they have formulaic approaches typically to determining what the reimbursement rate is based upon the Medicare fee schedule. And so I think that's what we've seen in Florida. Our expectation is that in most Medicaid states, you're going to see that percentage be somewhere between 60%, 70% of the overall Medicare rate, and it depends a little bit state to state.

Okay.

And indeed, Bill, we're very much able to manage it from the cost of goods perspective at scale.

Yes. Okay. And then the last thing was just on the commercial front. You mentioned engagement with a large managed care organization, which is exciting. Could those discussions result in some type of national coverage policy or decision? Or would it likely still be necessary to kind of go through even with that payer on a market-by-market basis?

We absolutely believe it will result in national coverage. The question is on the timing of that. We do believe it will be a step-by-step process. And we will update you on the launch of that program as soon as we're able. For now, it's very, very exciting. It's a very -- it's one of the leading national organizations, and we look forward to engaging on a big program with them on path to national coverage. Yes.

And Bill, I think when you think about what it takes to get kind of national coverage, we've really checked all of those boxes, right, in terms of having the analytical validation, the clinical validation, the very strong clinical utility data as we think about the PRIME study. And then we mentioned on the call that we expect our health economic analysis from PRIME to be published here in the fourth quarter. And so we're in those discussions, obviously, with payers as they go through their medical policy review cycles. I think when we think about these pilots, what that obviously helps is get actual experience with the payer in their own patient populations and data that they can add to that evidence base. And so that's kind of how we see it from an evidentiary standpoint.

[Operator Instructions] Your next question comes from Dan Brennan from TD Cowen.

This is William on for Dan. I'm just curious, what are the key steps remaining before you begin seeing meaningful covered volumes in both Illinois and Florida? And how do you view the revenue TAM for both of these states combined?

First, we do believe we will have meaningful coverage already given Medicaid births on average across the country represent 40%, 43% of all births. So in each Florida and Illinois, we should see a substantial volume of birth there. So that's certainly incredibly meaningful. Plus what we are seeing is physicians treat all patients the same. So as soon as they adopt the office adopts the test into the standard of care, they don't just administer the test to the Medicaid population. They want to give it to all of their expectant mothers. So from that perspective, we're looking forward to achieving meaningful coverage already in the coming months and years. As far as the revenue TAM is concerned, we're talking about tens of thousands of births in each state. And we believe it could be at scale when we are deeper penetrated at, let's say, 20%, 30% of each state, could be in tens of millions of dollars. We spoke in the last call that the percent penetration of the births in each state will take time. And we're hoping to achieve in the low single-digits percentage penetration in each state in the first year and quickly accelerating afterwards. I hope that answers the question.

Yes. And Will, I would maybe just provide a little additional color on that. As we think about Florida, there's about 225,000 births per year. About 90,000 of those are actual Medicaid births within the state. As we think about Illinois, it's about 125,000 births and a little under 50,000 of those are Medicaid births. And so as we think about the Medicaid TAM, it would really be kind of in the fee schedule pricing times that population. As we think about the total TAM, obviously, we would expect higher pricing on commercial samples around the business given our current Medicare fee schedule pricing of around $750 or so. And then just as we think about the adoption curve, I think what we are really excited about this quarter was bringing on the additional the large number of new physicians that we saw, that's what we think is a really strong leading indicator. It does take time as we go through the process with physicians. They typically start off kind of as trialers and then they move through the process through higher utilization. One of the things we obviously mentioned on the call was our process, what we call implementation, which is the process design that really as a physician comes across from an actual medical conviction standpoint to want to move towards standard of care, it's the process to really help that practice in terms of all the blocking and tackling that needs to be done to get that practice towards kind of standard of care across the whole practice. And so we're working through that. But as we mentioned, that can take 12 months to 18 months to work through that. And so I think what we would see is kind of the initial physicians will start to scale and that will really build momentum, we think, as we get into the second half of next year.

Got it. And as a follow-up, do you expect any friction at all on the reimbursement side? And then do you have any indication where you could be in 12 months from now as far as the number of states that could be covering this with Medicaid since you've already got 2 of the larger population states with Florida and Illinois?

We believe there are several states that could follow suit. How many of them will fall into fiscal year 2027? We're hoping at least 1 or 2. As far as coverage goes, focus on Medicaid and continuing to run programs with multiple super regional and some national payers will certainly accelerate the commercial plan coverage. in the coming months. We think that the programs need to read out before the national coverage decisions are made. But again, we will update everyone on our progress.

And there are no further questions at this time. I will turn the call back over to Jennifer for closing remarks.

We would like to thank everyone for joining us on the call today, and please reach out with any questions. Have a good rest of your day.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.