Sera Prognostics, Inc. (SERA) Earnings

Management highlights

### Commercial and Policy Progress - Secured a landmark policy milestone with the passage of Illinois Medicaid coverage legislation for the company's preterm birth risk test, covering tens of thousands of annual Medicaid pregnancies in the state. This is the first state legislation to formally recognize the clinical and economic value of the company's test-guided care, serving as a blueprint for future nationwide expansion. - Exceeded the 2026 full-year goal of doubling payer discussions, with ongoing engagement for more than 20 payer opportunities across over 20 states, up from the targeted 15-17 states. Pipeline growth has been faster than expected, driven by payer referrals and growing market awareness. - Launched the fourth state-based commercial partnership program with a national payer, remaining on track to hit the 2026 goal of establishing 5 to 7 total commercial programs. ### Clinical Evidence and External Validation - Published a PRIME subgroup analysis focused on first-time mothers (a population that accounts for 40% of U.S. pregnancies, where traditional risk tools have limited accuracy). The analysis found a 22% reduction in NICU admissions, 30% reduction in severe neonatal morbidity, with a number needed to screen of just 28 to prevent one NICU admission. - Two PRIME-related abstracts were accepted for presentation at the October Society for Maternal Fetal Medicine (SMFM) Global Congress, including one oral presentation on first-time mother outcomes and one top poster presentation on test economic impact, providing key external clinical validation. - The company continues to pursue guideline inclusion by expanding high-quality evidence publication and collaboration with key opinion leaders, building on the existing evidence base for its test. ### Research and Pipeline Expansion - Launched an ARPA-H supported multi-institutional collaboration to develop a novel point-of-care diagnostic for fetal hypoxia risk during labor and delivery. This collaboration advances pipeline innovation with limited incremental company investment, maintaining focus on core commercialization efforts for the preterm birth test. ### European Regulatory and Commercial Progress - Published European expert commentary supporting biomarker-based preterm risk prediction and convened a nine-country European expert advisory board, which recognized the test as the first validated spontaneous preterm birth risk prediction tool. - Elected to complete additional performance testing for the company's ELISA-based assay platform to strengthen the regulatory submission and reduce execution risk. Pre-application activities are scheduled to begin in Q3 2026, with full CE marking submission on track for Q4 2026. ### Organizational and Commercial Strategy - Added new leadership capabilities in marketing and payer strategy, and expanded the board of directors to strengthen execution of strategic and commercial priorities. - Shifted focus in the second half of 2026 from initiating new payer discussions to advancing implementation, reimbursement readiness, and adoption in high-priority opportunities. The commercial pipeline is segmented into three stages: engagement and evaluation, implementation preparation/contracting, and provider activation in covered markets, with most opportunities expected to contribute meaningfully by early 2027.

Guidance

- R&D spending is expected to decline in future periods as the company reallocates resources to prioritize core commercialization activities. - The company's current cash, cash equivalents, and available-for-sale securities balance of $80.3 million is sufficient to fund operations through significant commercial and adoption milestones through 2029. - Pre-application activities for the European CE marking submission will begin in Q3 2026, with full submission completed in Q4 2026. - Management expects low single-digit penetration of Illinois' 50,000 eligible Medicaid births in the first full year of commercial access (2027), with penetration growing gradually over subsequent years, aligned with industry benchmarks for new diagnostic tests.

Segment performance

SARA Prognostics is an early-stage commercial diagnostic company focused on its core preterm birth risk test product, with no other distinct product segments reported. For Q2 2026, total company revenue was $30,000, compared to $17,000 in Q2 2025. Operating expenses totaled $10 million, up from $9.3 million in the prior year period. Research and development (R&D) expenses were $3.5 million (35% of total operating expenses) versus $3.3 million in Q2 2025. Selling, general, and administrative (SG&A) expenses were $6.5 million (65% of total operating expenses) versus $6.0 million in the prior year period. The company reported a net loss of $9.1 million for the quarter, compared to a net loss of $8.0 million in Q2 2025.

Risks & headwinds

- After securing legislative coverage in states like Illinois, the contracting, provider onboarding, and utilization scaling process takes 6 to 9 months (and up to 12 months for initial registration) before meaningful volume growth is achieved, delaying revenue recognition from new market access wins. - National payer policy review processes typically take 9 to 12 months, with no transparent timeline for definitive reimbursement decisions, creating uncertainty around the timing of new market access. - While additional performance testing for the European CE submission strengthens the regulatory package, it extends the timeline for market entry compared to original expectations.

Analyst Q&A

• Q: What steps are needed to move from Illinois' Medicaid coverage mandate to active reimbursement, how will volume ramp, and which other states are likely to follow this model? /

  A: The three-step process to convert coverage to meaningful volume is: 1) provider registration and network onboarding, which can take 2 months to 1 year, 2) contracting with all 5 Illinois Medicaid payers, which typically takes 6 to 9 months, and 3) provider activation and clinical education to drive adoption. Several other states have prioritized preterm birth as a healthcare budget priority, but timelines vary based on legislative session schedules; management will provide updates as public signals emerge.

• Q: How will the company's SMFM 2026 presence differ from last year, following PRIME study publication? /

  A: The tenor of clinical conversations has shifted dramatically: last year, discussions focused on basic clinical utility and primary endpoint results, while now the clinical community has accepted that the test works, aligned with existing literature on the company's biomarkers. Conversations now focus on deeper implementation questions and what additional conditions the test can risk-stratify, confirming the validation stage is nearly complete and the industry is moving toward adoption.

• Q: What is the expected penetration ramp for Illinois' 50,000 eligible Medicaid births once full implementation is complete? /

  A: Management expects very low penetration in 2026, as contracting and awareness building will take the first six months after the July 1 2026 effective date. Aligned with industry benchmarks for new diagnostic tests, management expects 1-2% penetration in the first full year (2027), 2-4% in the second year, and 5% penetration by the third year, with a goal to outperform these historical benchmarks.

• Q: What is the path to reimbursement for the 20+ payers engaged across 20+ states? /

  A: Engagements fall into three segments: 1) payers conducting formal policy review, which typically takes 9-12 months for national payers before a definitive reimbursement decision; 2) payers interested in launching a targeted partnership program, currently in the process of selecting target geographies aligned with their quality metric needs; 3) payers exploring pilot implementations with specific provider or employer customer groups to test real-world outcomes.