Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to the Natera, Inc. Q1 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Mike Brophy, Chief Financial Officer. Mike, please go ahead.

Thanks, operator, and good afternoon. Thank you for joining our conference call to discuss the results of our first quarter of 2024. On the line, I'm joined by Steve Chapman, our CEO; and Solomon Moshkevich, President of Clinical Diagnostics; and Alex Aleshin, General Manager of Oncology and Chief Medical Officer; John Fesko, President and Chief Business Officer, is also on the call and will be available for Q&A. Today's conference call is being broadcast live via webcast. We will be referring to a slide presentation that has been posted to investor.natera.com. A replay of the call will also be posted to our IR site as soon as it's available. Starting on Slide 2. During the course of this conference call, we will make forward-looking statements regarding future events and our anticipated future performance, such as our operational and financial outlook and projections. Our assumptions for that outlook, market size, partnerships, clinical studies and expected results, opportunities and strategies and expectations for various current and future products, including product capabilities, expected release dates, reimbursement coverage and related effects on our financial and operating results. We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. Please refer to the documents we file from time to time with the SEC, including our most recent Form 10-K or 10-Q and the Form 8-K filed with today's press release. Those documents identify important risks and other factors that may cause our actual results to differ materially from those contained in or suggested by the forward-looking statements. Forward-looking statements made during the call are being made as of today, May 9, 2024. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. Natera disclaims any obligation to update or revise any forward-looking statements. We will provide guidance on today's call, but will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum. We will quote a number of numeric or growth changes as we discuss our financial performance. And unless otherwise noted, each such reference represents a year-on-year comparison. And now I'd like to turn the call over to Steve. Steve?

Great. Thanks, Mike. Let's get into the highlights on the next slide. We had an excellent quarter across the board, and I'm very pleased to share that we met a major milestone in the life cycle of the company and reaching cash flow breakeven in Q1, significantly ahead of schedule. Revenues were up 18% sequentially versus Q4 of 2023 and up 52% compared to Q1 of last year driven by record volume growth and improving ASPs. Volumes were up over 17% sequentially versus Q4 of 2023, which is the fastest sequential growth rate we've seen since 2021, when the volumes were less than half the size they are now. We had record volumes across oncology, organ health and women's health. In oncology, we performed 115,000 units in the quarter, representing sequential growth of 17,000 units versus Q4 of last year, a record growth quarter for the company. Women's Health was also particularly strong, up more than 85,000 units versus Q4 of last year. Improving ASPs and continued execution on cost reduction drove a record gross margin of 57% compared to 39% gross margin in Q1 of 2023. All of this momentum puts us in a great position to significantly raise every aspect of the guide for the rest of the year. We are now expecting revenues of $1.42 billion to $1.45 billion, which is $100 million above the midpoint of the range we provided in February. We are also raising gross margins from 50% to 53% to a new range of 53% to 55%. And importantly, even as we increase investments in commercial operations and R&D, we are significantly reducing our cash burn guide for the year. Our previous range included a burn of $75 million to $50 million, and we are now projecting to be cash flow breakeven for…

Thanks, Steve. On to some of the highlights from our clinical and product road map. In April, we were pleased to mark that we surpassed over 200 peer-reviewed papers as a company. This chart highlights that we have pursued the strategy throughout the history of the company across all key areas of focus with more than 85 papers in women's health, more than 75 in oncology and MRD, and more than 40 in organ health. We've also been published in some of the most highly respected journals in the world, including science, nature and nature medicine. These papers include major breakthroughs in patient care, such as the SMART trial with Panorama, the GALAXY study with Signatera in the proactive trial with Prospera, the latter which was the paper that brought us to the 200 mark. We look forward to growing this even further as we continue generating meaningful evidence to support our road map and our mission. In women's health, as Steve mentioned, the launch of our new fetal RhD test was a major advancement in prenatal care and one that really differentiates Natera. The test can be performed alongside Panorama as early as 9 weeks gestation and is designed to determine the fetal Rh status from a maternal blood draw. The launch is particularly timely right now as OB/GYNs are currently facing limited supplies of medication that are traditionally given to RhD negative women to prevent potential complications during pregnancy. The FDA warned about the shortage earlier this year. And following suit, ACOG came out with a statement just in April that supports the use of NIPT for fetal RhD testing essentially to help conserve medication supply. We are proud to offer this test at a time of critical need in the prenatal community. Beyond the shortage, we view…

Thank you, Solomon. I'll start with colorectal cancer, in particular, the ALTAIR study, where we have an exciting few months in store. As a reminder, ALTAIR is a treatment on molecular recurrence randomized, placebo-controlled Phase III study in colorectal cancer that is part of the ongoing CIRCULATE-Japan study. We've been working closely with our partners in Japan and are looking forward to approaching the key milestones you see outlined on the slide here. First and foremost, we recently surpassed the prespecified target of 190 events for the trial, which is a key step in getting to the next phase of statistical analyses for the readout. After completion of data analysis by our collaborators in Japan, we plan to announce top line results in August. We expect to present the complete analysis including primary and secondary endpoints at a major conference in the fall. And by the end of the year, we plan to submit the study for peer-reviewed publication. We're very excited to share these results with you as we do believe that this study, if positive, may be one of the most impactful readouts in early-stage CRC in quite some time. Also in colorectal cancer, we recently announced in March our participation in the CIRCULATE-France trial which is another randomized Phase III study. We were pleased that Signatera was selected based on the well-validated asset performance characteristics for patient enrollment into this study, which is the only ongoing randomized trial dedicated to studying the benefit of ctDNA testing in low-risk stage II colorectal cancer. It complements our data generation in both CIRCULATE-Japan and North America trials which are also studying MRD guided treatment in colorectal cancer, but in a higher risk population. CIRCULATE-France specifically addresses the need for a personalized approach in a population who currently does not receive…

Great. Thanks, Alex. The next slide is just a summary of the P&L in Q1 and the year-over-year progress we've made. Steve covered the key points on revenues and margins, so I won't repeat them here. On the expense lines we've made several growth-oriented investments in SG&A over the past year. For example, picking up the women's health sales team from [ Invitae ] and doubling down on our staffing and technology investments and revenue cycle that we've described previously. We also had some elevated litigation expenses in the quarter given all the activity we had on the IP front in Q1. We stepped up R&D modestly in part with the goal of accelerating several product launches in the near future. The first of which is the time-sensitive Rh launch Steven, Solomon described earlier. I think each of these investments are delivering strong ROICs as evidenced by the significant bottom line improvement year-on-year in EBITDA, EPS and of course, cash burn where we burned $86 million in Q1 last year and broke even in Q1 this year. I was particularly pleased to see us breakeven on cash flow this quarter given the disruption to the entire health care payments that's been caused by the Change Healthcare Cyberattack. Change is not a direct vendor to us, but the attack nonetheless cost several weeks of confusion and delayed claims submissions as changes of very large claims and payments clear in-house. So I still think the impact is ultimately immaterial to our results. We are still dealing with backlog responses from payers and I think the cleanup will last well into Q3 at least. The good news is that our team is able to move quickly, find some alternative pathways to get claims submitted and responded and our overall positive momentum on volumes…

[Operator Instructions]. It looks like our first question comes from the line of Dan Brennan with TD Cowen.

Maybe just the first one on Signatera kind of volume and price. Steve, I think you talked about the GALAXY impact. I would love to hear you elaborate a little bit on that in terms of new docs, existing docs and what you're seeing in Q2 from that? And then on the pricing side, Mike, I think you heard -- I heard maybe flat pricing from here on Signatera, sequentially, just wondering why it couldn't keep ticking up throughout the year?

Yes, it's a great question. So when you look at growing, I mean, really with any clinical diagnostic, you want to add new physicians, new accounts and then within the accounts you want to grow the business to increase utilization with the existing physicians. And so with that exactly what we're seeing is once doctors start using Signatera. They tend to increase their utilization and continue using it. And then once one doctor starts within a practice, it tends to sort of spread within the practice. So obviously, ASCO GI, we had some great additional data coming out of the GALAXY study. We think that was received very well, and we're seeing that lead to increased growth. Mike, do you want to talk about ASPs?

Yes. No, thanks for the question. So Signatera ASPs are above $1,000 in the quarter. As I look at the more recent fundamentals on Signatera ASPs, I mean, I think there is scope for the ASPs to continue to increase through the course of the year. Specifically, I'm just looking at payment rates and trends from Medicare Advantage payers as they continue to come online and some of the early green shoots from the biomarker states that we're talking about in the prepared remarks. And really, these accruals quarter-to-quarter really come down like a judgment call, like how much history do you want to see before you step up the accrued ASP again? And it may turn out, we were a bit cautious on this accrual, but I just want to see some more history there. So I feel pretty good about our ability to grow ASPs for the remainder of the year. So that maybe begs the question on the guide, why hold ASPs steady at these levels? And it really goes back to that kind of precaution. I just want to see enough history with new payers coming online to see that stable trend within a given payer before starting to accrue. But the underlying fundamentals look great for the Signatera ASPs, I think.

Great. And then maybe I just want to follow up on gross margins, really strong. Even ex the true-up still beat us by over 300 basis points. So I think you discussed COGS reductions, ASP and then also cash collections beyond the true-up. So just did I hear you guys right, you're thinking gross margins flat from here. I'm just wondering some of the benefits you had in the quarter, like I would assume there's possibly further tailwind from those. So maybe just speak a little bit what really drove the beat on gross margins and how we think about that going forward?

Yes. I mean on gross margins, I mean, just to clarify, I mean I think the guide now is 53% to 55% and organic implied like 53%. So the midpoint to guide now implies sequential improvement through the rest of the year, so it's like your total year would end up higher, although 53% in the guide. The reasons for that, again, I mean, there's some caution that's warranted as it relates to forecasting gross margins in this business quarter-to-quarter just because the ASPs can fluctuate quarter-to-quarter, right? We also don't -- in the guide, we just presume that there's no true-ups kind of in the guide. And of course, if you had true-ups through the course of the year, that would tend to be upside to the guidance. So what that guide is intended to do is to express confidence and our ability to modestly improve the gross margins through the rest of the year.

And our next question comes from the line of Tejas Savant.

Maybe just a math question for you, Mike. You beat by $50 million, including about $34 million and true-ups, but you're raising your guide by a $100 million, right? So as we try to build that bridge in terms of incremental upside. Can you just help us parse it out between Signatera? You've got the Renasight, KDIGO update and any incremental Invitae upside as well versus the $20 million to $25 million that you had baked in earlier?

Yes. Yes. So ASPs across the board were holding relatively stable in the guide through the rest of the year, there's some modest improvements in the guide in women's health that we feel quite good about. But overall, it's really stable in the guide for ASPs. So that leaves volumes for you as the major source of upside kind of across the products which we think makes a turnaround sense just given that we've seen this big step-up in Q1, and now we feel like we're in a position to grow from this base understanding that there is some seasonality to be seen in some of these businesses, particularly in women's health. What we've seen historically is that you have a big Q1 and then you're kind of sequentially down a bit in Q2 and then you grow the remainder of the year, just like we talked about in the prepared remarks. And then in Signatera and Prospera where, frankly, we're just expecting continued sequential quarterly volume growth in each of those businesses, probably not at the level that we saw in Q1, just to be cautious about that. I mean that was a massive outperformance on Signatera volumes although we are off to a good start so far in Q2. So that's some kind of flavor on where the raise is coming from. It's primarily volume based. And it's really sorry for the boring answer, but its kind of volume from across the board is really contributing to that.

Got it. And a 2-parter for my follow-up here. So starting with Renasight, following KDIGO, have you had any sort of discussions with the National Kidney Foundation. Is that something that we could see in the summer year? And can you share some data on just how the conversations have gone since KDIGO went into effect? Are you starting to see that nephrologist penetration go up from the 50% who use the test? And are you starting to see repeat use come through as well? And then, Steve, one for you on just screening, right? We've had some competitor readouts here. We've got an FDA AdCom coming up as well. So I'm just curious as to whether you still think that better performance versus those tests that have read out in blood is good enough? Or has the goalposts shifted in your mind a little bit and you expect sort of step function better performance particularly in advanced adenoma as the threshold for Natera to go after that indication.

Yes. That's a great question. So I'll comment briefly on KDIGO and Renasight and then Solomon if there's something you want to add. So certainly, we've been having a lot of conversations with physicians about the guideline and those -- it's being very well received. I mean, there's a lot of excitement about the updated guideline. So I think there is a lot of opportunity here to more deeply penetrate this market, which there's, I think, maybe 40 million Americans or something in that range that are sitting with the diagnosis of chronic kidney disease. So there's a big opportunity here. Really, I think the goal is not necessarily to go get more and more physicians ordering the test. It's to increase the utilization within the accounts, and that's what we're working on now. We do think that the NKF will be coming out with an updated guideline at some point in the future. We hope that comes this year. We don't know exactly what it's going to say. But I think they're obviously working closely with KDIGO and looking at all the new data coming out. So that's exciting. And on [ ECD ], I think, obviously, we've got a readout coming pretty soon. So I'll probably just defer comments there until I think we said in June when the case-controlled study reads out.

I think you hit all the key points, nothing to add there.

And our next question comes from the line of Puneet Souda with Leerink Partners.

I guess the first question is the contribution that you saw from Invitae accounts, how is sort of that likely to fall through the rest of the year? I mean it appears that you had a bolus. There are some organic account wins in the quarter. Could you talk about deepening of those accounts and further account wins that you haven't had so far may be falling into 2Q. And also, some of these accounts were maybe patient pay or no pay account. So talk to us a little bit about sort of cleanup of those accounts and how sustainable is the ASP trend going forward?

Yes, it's a good question. So I think when Invitae, last announced the numbers, I think, which is maybe in September 2023, things changed quite a bit between that time frame and when we took over at the end of January. And I think they had gotten -- really gotten rid of a lot of that cash pay business in that lower margin business. So when we came in the January generally it was sort of the higher-margin business, except for some of the international where we got what we could, but some of the lower-margin business there, just we weren't able to participate it. But most of the business came is on now that we're going to get. And I think a tiny amount in January, a little more ramping up in February. And then I think March was almost a complete month there, but we did really well. So you'll get the kind of full pacing of that quarter of the Invitae volume in Q2. But we did really well based on where we started in January, we got the majority of the business converted over, and we're feeling good about that. But again, there was a pretty significant step down from where we started in January to where they last reported. With that said, also you asked about organic growth. The majority of the Q1 volume growth in Women's Health, which was incredible, the 85,000 units I think that is one of the fastest-growing sequential quarters we've ever had in the history of the company. I've mentioned before that we were seeing record units per receiving day in December. There's just a lot of momentum with, I think the differentiators that we have at Natera, I think the data that we've put out, we're starting -- continuing to see, I think, a significant interest from physicians, and that's driving a lot of the organic growth.

Got it. Super. And then on the oncology side, if I may ask, if Salmon or Alex could cover this, could you just update the latest thoughts on sort of the timing of NCCN and sort of what is required there, and how essential is the success of ALTAIR to that?

Yes. Solomon, do you want to make a couple of comments and then maybe Alex, you can jump in.

Sure. Good question, Puneet. I think no change to our discussion back in San Diego at the conference where we expect that the CRC committee for the NCCN meets regularly once a year, usually in that late summer time frame. And we think that given the timing of the readout that we just described on the call. There's a pretty good chance that they incorporate some of the data that's reported from ALTAIR and we're optimistic that we see something early next year based on the regular timing. We do think the ALTAIR readout is pretty critical for that. But as a reminder, we're seeing really strong adoption and trends in the marketplace based on the existing evidence that we have. So Natera being able to achieve its goals in oncology, kind of happen independent of that, but it certainly provides a significant catalyst. And that, together with the expected readout in muscle invasive bladder cancer from the IMvigor011 trial, which should independently, assuming that's a positive readout, which remains to be seen and that would lead to a separate NCCN committee review as well.

Great Solomon. Few words to add to that, yes. So we did surpass the 190 events. So now the data is really being analyzed. So in August, the results will come out at a top line level. I think there's been a lot of questions about what good looks like? And I think we've previously guided to the MOSAIC study. Obviously, we do not control the guidelines, but we do control generating the data, right, to provide the evidence for those guidelines to hopefully be updated. So I think in terms of the guidelines timing, I think let's see what the results look like. And I think at that point, we can kind of provide some more guidance.

And our next question comes from the line of Doug Schenkel with Wolfe Research.

As a rule, in all these years, I don't think I've ever congratulated anyone on a quarterly performance, but I will at least say I can tell you, given how the market has been recently, we all appreciate a nice, clean and robust beat. So with that said, let me start with some model questions. On guidance, first, I don't think you're assuming improvement in Signatera ASPs even though coverage expanded at the beginning of the year. Is that just conservatism? And I'm sorry if I missed it, but what is now in guidance for Invitae contributions?

Mike, do you want to take that?

Yes. So on the ASPs, the operative one is stable. So I don't expect extremely meaningful ASP bonds to the guidance, this is not dependent on massive outperformance versus Q1 ASPs, and we've got some modest ASP improvement for Signatera in the back half of the year. I think that's pretty achievable and that would contemplate some contribution from the expanded coverage we saw early in the year. But again, I think there is -- if we can do the things that we're trying to do internally, I think that's a potential source of upside versus the guide today, which I think that's the appropriate way to do it. In terms of the Invitae contribution, we had initially with only the benefit of a few weeks operating in those accounts. I mean we had initially carved out something like $20 million that we had in revenues this year that we attributed to the Invitae accounts. We think we're modestly exceeding that now. Although I would highlight that as Steve mentioned this in his prepared remarks around that we really had a very meaningful step-up in the women's health volume sequentially over Q4, which was really quite ratifying to us. And when we peel back the onion on that, I mean, the vast majority of that is coming from organic sources, which I think kind of speaks to the strength of the franchise and our ability to just kind of continue to grow the market and win share. And the Invitae added accounts are really just their additional momentum on top of that. But I think fundamentally, this is a strong underlying performance. So it's above, I think the Invitae is above expectations and that's incorporated in the size of the raise.

Okay. And I'll try to be quick with the follow-ups. First, as a rule, how long would you expect it to take going from guideline expansion to actually seeing ASP increases on the women's health side. And then the other one I just wanted to touch on as a cleanup because we're getting this question increasingly as new investors look at the name. What percentage of Signatera assays today are for true surveillance versus point in time MRD?

Yes. I'll comment on the first question. So one of the things that's really exciting about Natera right now is we're growing rapidly. We're hitting this cash flow of breakeven milestone and we're increasing our investment in the future of the business in both innovation and in the commercial franchise. So it's great to be doing all of those things at one time and seeing the company's strategy working. But at the same time, we're not really forecasting in the impact of these big potential catalysts that could come in the future. For example, as you mentioned, the 22q guidelines. And these could be very significant meaningful events in the future if they do come through and they're positive. The guidelines can impact payer coverage policies very quickly like was in a period of sort of 3 to 6 months if the guidelines are very definitive. If the guidelines are a little more vague, it can take longer potentially if it does have an impact at all. And so it really depends on what the guideline says. And we're just going to have to wait and see. On the second question, I think Mike that was a question for you. Yes, go ahead.

Yes. So the question was on kind of the mix in Signatera volumes between adjuvant and surveillance. And what we've seen is that there's a slight majority of the volumes that are still adjuvant volumes, and that's been pretty stable now for several quarters. Initially in the launch, of course, all of the units are adjuvant treatment units, because patients almost always start with us in Signatera in the adjuvant setting. And then as those patients go into remission, we're seeing very high compliance with patients staying with Signatera into the surveillance setting, which we find very encouraging. It's kind of consistent with kind of qualitatively, we think we heard about patients understanding of the utility of the test. So absent other factors, you would expect steady state to have the vast majority of your volumes to be recurrence monitoring volumes. And we haven't quite seen that. We've seen some of that trend progression, but we've been holding steady work and it's still a little bit of the majority is in the adjuvant setting. And what's causing that is just the rapid new patient starts that we continue to see. So you think about kind of the top of the funnel just continues to grow really rapidly. So I actually think that penalizes your margins in the immediate term, but I think that's a great sign for the order progression of the product here in the future.

And our next question comes from the line of Catherine Schulte with Baird.

First, Mike, maybe on that slide from 1Q '22 earnings that you showed. Do you still feel comfortable with this 70% plus gross margin and 25% plus EBIT margin target when you get to over $2 billion of revenue?

I knew that someone was going to come and ask me about like what about the long term? So yes, no, thanks for the question, Catherine. Yes, I mean, look, I mean, obviously, with the revenue trajectory that we've been on, $2 billion plus, I think if you're talking about long-term steady state. I mean I think that looks pretty safe. At this point, I think we're going to be able to get beyond that. 70% and 25% EBIT margins, I think, are achievable. I mean, if you think you're willing to go out a few years and this is not kind of time dated guidance as the cash flow breakeven target was, but this is more kind of conceptual what can the business do based on the forecasted unit economics. And I think the path to getting to those types of margins are going to require continued maturation in the Signatera ASP, continued excellent prospective data, which we want to publish, and is obviously slated to come down the pipeline, we'll support that. I think there's still room to move the women's health margins meaningfully, particularly if you can get some benefit from guideline inclusion that we haven't yet seen, as we talked about in the prepared remarks. On the EBIT margin, it's really a function of those couple of variables I just described, plus this concept that we don't need to grow expenses anywhere near as rapidly as we're seeing the revenue growth happening. So an increasing percentage of every incremental revenue dollar from here drops more to the bottom line, right? And so I do think that given -- if you can get to 70% gross margins, at this scale well beyond $2 billion, I do think that 25% EBIT margins are still in play for us. So really encouraged by the trajectory in the business, obviously.

All right. Great. And then on the Signatera volume outperformance in the quarter, are there any particular indications that are driving that strength? Or is it pretty broad-based?

Yes. Solomon, do you want to talk about that?

Yes. Great. First of all, it was really broad-based. I mean, we're seeing great continued adoption and growth in our core areas of colorectal cancer and breast cancer and IO monitoring. We did see pretty strong bumps in bladder cancer and ovarian cancer. In ovarian cancer, we just recently got the coverage from Medicare. So it's great to see that reaction from the marketplace and from physicians. In bladder cancer, there's just a lot of opportunity there. And I think that's a pretty underpenetrated space. But both of those together in terms of overall absolute numbers are not as big as the colorectal and breast and IO monitoring. So -- and the other thing I'll say is just generally the drivers are which I think Mike or Steve mentioned earlier, just the number of new physicians ordering the test was very strong in Q1, which led to the outperformance?

And our final question today comes from the line of Matt Sykes with Goldman Sachs.

Just, Steve, for you, just more of a longer-term question on women's health. Just given the step-up you saw in Q1, I realized this 1 quarter, but it was a pretty impressive quarter given the level of market share and penetration and assuming Invitae revenues kind of fold in this year. What's now and have you changed your long-term expectation for when women's health as a segment would sort of start to normalize growth just given the I guess, relative maturity of that category and just your penetration of market share. Any thoughts on how you're thinking about it long term in terms of growth?

Yes. So that's a good question. I mean, obviously, we had an incredible Q1. And what we normally see, and this has always been the case in the women's health businesses, a lot of the growth for the year comes in Q1. And then there's a little bit of a dip in Q2 due to seasonality and then we start to see kind of things grow again in the second half of the year. And that's really kind of been the trend for a long period of time. We think we have somewhere around like 50% share and the markets slightly over 50% penetrated. So there's still a long way to go. We're actually seeing opportunities, both competitive wins for some of the more established players, but also still new conversions where people are moving from serum screening over to NIPT or on carrier screening, where they're going from looking at just testing a single gene to maybe series of genes or sort of a broader panel. So we think there's a lot of opportunity ahead of us. And I think, obviously, at some point, you start to get more further penetrated in the NIPT space. But we're always innovating and we always have new things coming out, for example, with the Rh launch and these create opportunity for us. And we said before, we've got a lot of new stuff coming out, both on the MRD side, where we said we have product enhancements and new products coming, but also on the women's health side, where we have new products and product enhancements coming. So we're still very excited about the opportunity to help more patients. And then keep in mind, it's not just about volume growth, it's also about ASP and revenue growth. And there's still a lot of tests that we're doing today, where we're not getting coverage where we think there's upside opportunity. Particularly, I think we mentioned 22q where we have a very high attachment rate and those are generally not reimbursed. I think there's some opportunities there. Obviously, the guidelines come in, but there's still a lot of room to improve ASPs by increasing coverage for things like carrier screening or even still some of the base panorama testing. So lots of opportunity ahead and we feel good about it.

Great. And then Mike, just a modeling question. I understand the true-ups are not embedded in the guide. But just given your focus on cash collections, like how should we think about [ true-ups ] over the course of the year? I'm sure there's some unpredictability about it. But just wanted to get your sense for how we should be thinking about these true-ups Q2 through Q4.

Yes, it's a good question. I mean the reason why we typically don't include it in the guide, it's not our intention when we set the accrual, we're trying to set it at exactly 100%. But of course, you'd rather collect at 101% and at 95%, for example. So that's on my mind when we set the accrual. I think in terms of the guide, I really -- I don't have a way to tell you, hey, there's going to be x amount of Q2 versus Q4. My goal is just to have the accruals hit 100% and let's see where we land.

All right. Thank you, Matt. And ladies and gentlemen, that is our time today. That concludes today's call. Thank you all for joining, and you may now disconnect. Have a great day, everyone.