Natera (NTRA) Q2 Revenue Jumps 32%

Natera (NTRA 2.14%), a leader in genetic testing across oncology, women's health, and organ health, reported its earnings for Q2 2025 on August 7, 2025. The most significant news was a 32.2% year-over-year revenue increase, rising to $546.6 million (GAAP) and outpacing analyst expectations by $70.3 million or 14.8% (GAAP). However, earnings per share (GAAP) were $(0.74), missing the consensus estimate of $(0.62) (GAAP), driven by elevated legal accruals and changes to stock-based compensation. Management also raised annual revenue guidance by $80 million at the midpoint, increasing the 2025 annual revenue outlook from $1.94 billion–$2.02 billion to $2.02 billion–$2.10 billion, reflecting confidence in continued adoption of its core product lines. Overall, the quarter combined record revenue and margin expansion with heavier operating expenses, resulting in a net loss (GAAP) that widened from the same period last year.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About Natera: What It Does and Where It Focuses

Natera is a molecular diagnostics company specializing in genetic testing spanning oncology (cancer testing), women’s health, and organ health. Its technology analyzes tiny fragments of DNA circulating in blood to provide insights for doctors on cancer detection, prenatal conditions, and organ transplant monitoring.

The company’s growth relies on three core product families: the Signatera cell-free DNA test for minimal residual disease (MRD) detection in cancer, Panorama for non-invasive prenatal testing (NIPT), and Prospera for organ transplant rejection monitoring. Recent business strategy has focused on deepening adoption in oncology, securing broader reimbursement in women’s health, and expanding clinical evidence for all franchises. Key factors for success include continued test innovation, favorable payer coverage, strong clinical trial results, and nimbleness in adapting to changing regulatory requirements.

Quarter Highlights: Financial and Operational Performance

Revenue climbed 32.2%, reaching $546.6 million (GAAP) and topping analyst expectations by nearly $70.3 million. Product revenue accounted for $544.4 million of the total, up 32.3% year over year. The number of tests processed rose 12.2% to 853,100, showing strong growth across core business areas. Oncology testing led the way, with 188,800 tests performed, up 50.6% versus Q2 2024. This surge was primarily due to the continued adoption of Signatera, the company’s flagship MRD test for cancer recurrence assessment.

The women’s health business delivered growth as well, adding more than 40,000 units sequentially in Q1 2025. Both the Panorama (a non-invasive prenatal screening test for chromosomal conditions) and carrier screening products saw expanding uptake, supported by momentum following the integration of acquired test volumes from Invitae accounts in Q1 2024. Organ health also contributed with solid uptake of the Prospera transplant rejection test, which outperformed traditional biopsy in recent clinical studies.

Gross margin (GAAP) reached 63.4%, a 4.6 percentage point increase from the prior-year period. Management attributed this boost mainly to improvements in average selling price, especially for Signatera, and incremental "true-up" revenue, which captures cash collected in excess of initial estimates from prior periods. “Natera had higher gross margin in the second quarter of 2025 primarily as a result of higher revenues, continued progress in reducing cost of revenues associated with tests processed, as well as incremental cash receipts during the quarter in excess of initial revenue estimates for tests delivered in the prior period.”

Operating loss (GAAP) widened to $(110.4 million), up significantly from the prior year, due in part to a 59% year-over-year increase in total operating expenses. Higher research and development spending, expanded sales and administrative costs, and approximately $19.8 million in legal accruals pushed the loss higher. There was also a $9.2 million increase in stock-based compensation. These two items alone amounted to about $(0.21) per diluted share. Cash flow was a bright spot, as the company generated $24.3 million in positive cash flow (GAAP) and maintained over $1 billion in liquidity ($1,016.0 million in cash, cash equivalents, short-term investments and restricted cash) against relatively modest debt of $80.3 million as of June 30, 2025.

Technological advancements continued to be key. The "Signatera Genome" update increased the sensitivity of the oncology test and is now available for multiple cancer types. In the women’s health segment, the company continues to wait on new reimbursement guidelines for microdeletion screening and extended carrier screening, which management views as a future revenue opportunity if and when official coverage is secured. In organ health, new data from the DEFINE study presented at ISHLT showed Prospera outperforming standard biopsy in predicting graft dysfunction one year after transplant, affirming its clinical advantage for transplant patient monitoring.

Competitive dynamics intensified, with Natera seeing growth even as new market entrants arrived and some rivals secured Medicare coverage. Management says over 45% of U.S. oncologists have ordered Signatera as of Q1 2025, signaling deep penetration in key markets. The regulatory environment remains closely watched, as the Food and Drug Administration (FDA) moves to more tightly oversee laboratory-developed tests (LDTs), which could affect future product launches or operating costs.

Outlook and Investor Considerations

Gross margin (GAAP) is projected to remain healthy at 61–64% for 2025. Forecasted research and development and selling, general, and administrative expenses are expected to remain at elevated levels, with management emphasizing the importance of ongoing investments in growth and innovation. Management reaffirmed its goal to maintain positive cash flow for 2025. No explicit expectations were given for when the company will move to profitability.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.