Natera, Inc. (NTRA) Earnings & Analysis

Latest quarter

Natera reported third-quarter revenue of $794.0 million, up 34.1% from $592.2 million a year earlier and above the consensus estimate of $702.9 million. The company reported diluted earnings per share of −$0.42, compared with −$0.64 a year earlier.

Natera’s filing attributed product revenue growth to higher test volumes and improved average selling prices. The company said a greater share of revenue came from Signatera, which commands higher prices than its women’s health products, while payer coverage also improved, primarily for Signatera.

Natera reported a quarterly gross margin of 64.7%. Its filing said research and development expenses rose as the company added staff and increased spending on laboratory work and clinical trials, including early cancer detection.

Natera generated $5.3 million in free cash flow, compared with $37.0 million a year earlier. The company reported a net loss of $59.9 million.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Solomon Moshkevich said clinical minimal residual disease (MRD) testing grew as Natera added accounts and new patients, while subsequent repeat testing also contributed. He said clinical MRD volumes reached approximately 316,000 units in the quarter, spanning Signatera and Latitude. Colorectal and breast cancers remained the largest indications, he said, while other cancer types contributed to growth.

Moshkevich said Medicare had granted coverage for serial Signatera use in surveillance of early-stage liver cancer. He added that Natera was working with Japan’s health ministry on reimbursement and pricing for colorectal and bladder cancer indications. In response to a question about other coverage submissions, he said Natera did not know their timing or order.

On pricing, Moshkevich said Signatera’s average selling price increased from the preceding quarter. He also said gross margin excluding revenue true-ups was 63.2%, citing higher Signatera pricing, laboratory scale, efficiencies and supplier negotiations. CFO Michael Brophy said Natera had incorporated some recent pricing gains into its quarterly revenue accruals as true-ups declined.

Moshkevich said pharmaceutical demand for MRD technology in clinical trials had increased and that Natera was also seeing activity in trial matching, data licensing and trial-design services. Brophy said the company accelerated investment in pharmaceutical offerings, its commercial team and operations to support that demand. He also pointed to spending on early cancer detection and clinical trials.

Asked about competition, Moshkevich said Natera had competed with other MRD laboratories for years and saw no major change. He said the company remained focused on test performance, clinical evidence and making ordering easier. Brophy said the full-year outlook assumes steady average selling prices and continued volume growth, and excludes true-ups; he nevertheless expected some true-up contribution in the fourth quarter. He also said the company could deliver another quarter of positive free cash flow if margins continued to progress.

Guidance

Natera raised its full-year 2026 revenue guidance. CFO Michael Brophy said the outlook assumes steady average selling prices and continued volume growth, without revenue true-ups.

Brophy said Natera raised the upper end of its research and development expense range by $25.0 million and the upper end of its selling, general and administrative expense range to $1.3 billion. He attributed the changes partly to investment in pharmaceutical and data services, clinical trials and commercial initiatives.