This article first appeared on GuruFocus .
Release Date: November 04, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Test volume increased approximately fivefold from Q1 2026, with a 54% sequential increase in Q3, demonstrating strong commercial momentum.
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Medicaid coverage established in Illinois and Florida, covering nearly 7 million lives and approximately 140,000 annual births, with Florida pricing at $450 per test.
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Physician adoption is accelerating: the number of ordering physicians nearly tripled compared to Q1 2026, and new ordering accounts and providers outperformed Q2 levels.
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Reimbursement strategy is progressing with four active commercial pilot programs, including two with major national health plans, and discussions for a multi-state 2027 implementation with a large managed care organization.
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Strong cash position of $72.8 million, sufficient to fund operations into fiscal year 2029, with operating expenses declining 11% sequentially due to cost-saving efforts.
Negative Points
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Average selling prices (ASPs) declined in Q3 due to a higher mix of low or non-reimbursed patient classes, and a reversal is not expected until fiscal year 2027.
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Adoption of the preterm test by physicians is a lengthy process, typically taking 12 to 18 months to move from initial awareness to high-volume ordering, delaying revenue growth.
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Medicaid reimbursement rates are relatively low (e.g., $450 in Florida, roughly 60-70% of Medicare rates), which may limit revenue potential per test compared to commercial payers.
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The company expects only one or two additional states to enact Medicaid coverage in fiscal year 2027, indicating a slow reimbursement expansion path.
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Operating expenses are projected to be flat or down in 2027 while the commercial team expands, which may constrain resources and require careful cost management to support growth.
Q & A Highlights
Q: On the commercial front, you mentioned engagement with a large managed care organization. Could those discussions result in a national coverage policy, or would it still be necessary to go market-by-market? A: CEO Zhenya Lindgardt said the company absolutely believes the discussions will result in national coverage, though timing remains uncertain and the process will be step-by-step. CFO Scott Gleason added that Sera has checked all the evidentiary boxesanalytical validation, clinical validation, strong clinical utility data from PRIME, and a health economic analysis expected to publish in Q4and that the pilots give the payer real-world experience with its own patient data to add to that evidence base.
Q: What are the key steps remaining before you begin seeing meaningful volumes in both Illinois and Florida, and how do you view the revenue TAM for both states combined? A: CEO Zhenya Lindgardt noted Medicaid represents roughly 40%43% of births nationally, so both states offer substantial covered volume, and physicians who adopt the test tend to use it across all patients, not just Medicaid. She said at 20%30% penetration each state could reach tens of millions of dollars, with low single-digit penetration expected in year one. CFO Scott Gleason sized Florida at about 225,000 annual births (~90,000 Medicaid) and Illinois at about 125,000 births (~50,000 Medicaid), and noted the 1218 month physician adoption curve means momentum should build in the second half of 2027.
Q: Are there prior authorization requirements or other restrictions on who can be tested under Florida Medicaid, and what is the reimbursement rate? A: CEO Zhenya Lindgardt confirmed there are no restrictions in Florida, matching Illinois, with coverage available to all Medicaid recipients. On pricing, she said the rate is in the low $400s, which CFO Scott Gleason clarified as $450. Gleason added that most states use formulaic approaches based on the Medicare fee schedule, typically landing at 60%70% of the Medicare rate, and the company can manage the economics from a cost-of-goods perspective at scale.
Q: Do you expect any friction on the reimbursement side, and where could you be in 12 months in terms of states covering the test through Medicaid? A: CEO Zhenya Lindgardt said several states could follow suit and the company hopes at least one or two will land in fiscal 2027. She said the focus remains on Medicaid expansion plus programs with multiple super-regional and national payers to accelerate commercial coverage, noting that pilot programs likely need to read out before national coverage decisions are made.
Q: What drove the sequential volume growth this quarter, and what does the physician adoption funnel look like? A: Chief Commercial Officer Lee Anderson said new ordering accounts, new ordering providers, and total ordering providers all outperformed Q2, delivering a 54% sequential increase in test volumes. In Illinois, the team conducted over 100 field activities across 60 practices in the first month, reaching over 70 providers, and onboarded nine providers and eight accounts in two monthssome delivering 500 or more babies per year. CFO Scott Gleason added that physicians typically progress from trialers to high-volume adopters over 1218 months, so the recent expansion of ordering physicians should support significantly higher adoption and revenue in fiscal 2027.
Q: What is the status of the commercial payer strategy, and what evidence do payers still need? A: Chief Medical Officer Tiffany Inglis said the company has four active pilot programs underway, including two with major national health plans, and is in discussions regarding a potential multi-state 2027 implementation with one of the nation's largest managed care organizations. She said the Q4 publication of the PRIME health economic analysis is particularly important because it completes the core evidence package payers seekanalytic validation, clinical validation, clinical utility, and health economic impact.
Q: How should investors think about ASP trends going forward? A: CFO Scott Gleason said ASPs declined in Q3 because a larger percentage of patients came from low- or non-reimbursed patient classes. He expects that trend to begin reversing in fiscal 2027 as the mix shifts toward Medicaid patients in Florida and Illinois, where fee-schedule pricing is higher, and potentially toward patients on paid commercial pilots.
Q: What is the outlook for operating expenses and cash runway? A: CFO Scott Gleason said total operating expenses declined 11% sequentially on targeted cost savings initiated after Q2, partially offset by incremental commercial investments in Illinois and Florida. He said the company expects flat or down operating expenses in 2027 while significantly increasing the size of its commercial team, and ended the quarter with $72.8 million in cash, which is believed sufficient to fund operations into fiscal 2029.
Q: What is the status of the international strategy and the CE mark submission? A: CEO Zhenya Lindgardt said the company remains on track to pursue CE mark approval for Preterm Global, its kitted version of the test, in 2027. The registration study is complete and the company is working with its notified body on the CE mark submission, while engaging in active discussions with potential commercial partners, including laboratory and IVD companies. She noted the addressable market outside the U.S. is at least as large as the domestic market.
Q: What is the significance of the proposed 2027 CPT changes to maternity care reimbursement? A: Chief Medical Officer Tiffany Inglis said the new CPT structure moves away from the traditional global obstetric package and allows prenatal encounters to be reported individually, better reflecting the complexity and variation of pregnancy care. She believes this shift is highly consistent with Preterm's value proposition of identifying risk earlier so care can be tailored to the patient, and that a more service-based framework can reduce structural friction around providing differentiated care to higher-risk pregnancies.
Q: What is the status of the contract research grant and other grant opportunities? A: CFO Scott Gleason said the company recognized its first milestone payment this quarter under a subcontract award to provide contract research services supporting active research on a new prenatal test, with the current grant allocation running into early 2028. The company is considering additional government or privately sourced maternal-focused grant opportunities, which, if awarded, would likely start in late fiscal 2027 and could be recognized as either other income or revenue depending on structure.
Q: What progress has
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
