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Natera, Inc. (NTRA)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue and EPS beat with margin expansion; Natera delivered $501.8M revenue and diluted EPS of -$0.50 versus consensus of $446.7M and -$0.62, respectively, driven by volume and ASP strength and ~$34M revenue “true-ups,” with GAAP gross margin at 63.1% and underlying gross margin at ~60.4% (+110 bps q/q) . Revenue consensus and EPS consensus values marked with an asterisk are from S&P Global.*
  • Guidance raised: FY25 revenue increased to $1.94B–$2.02B (from $1.87B–$1.95B), SG&A to $975M–$1.05B, and R&D to $550M–$590M; gross margin guide maintained at 60%–64%; cash flow guide remains positive .
  • Operational momentum: tests processed rose to ~855.1K (+16.2% y/y) and oncology tests to ~167.7K (+46.1% y/y); record sequential Signatera growth and continued ASP improvements underpin performance .
  • Catalysts: Medicare coverage expansion for Signatera surveillance in NSCLC, NCCN guideline enhancements (CRC, rectal, MCC), upcoming ASCO/ESMO readouts, and the broad launch of Signatera Genome; near-term investor focus on coverage traction and data readouts .
  • Watch for Q2 women’s health seasonality and possible short-term margin headwinds from new product uptake (tumor‑naive MRD, genome), though management expects steady execution and sustained cash generation .

What Went Well and What Went Wrong

What Went Well

  • Revenue, margin, and cash beats with raised FY25 guide; “We delivered another strong quarter… including a record growth quarter for Signatera” and generated ~$23.2M positive cash flow .
  • Underlying gross margin expanded ~110 bps q/q to ~60.4% excluding true‑ups, reflecting ASP strength and COGS execution; Signatera ASPs moved above ~$1,100, supported by Medicare Advantage reimbursement progress .
  • Strategic advances: Medicare coverage in NSCLC surveillance, NCCN strengthening ctDNA guidance (CRC/rectal prognostic; MCC surveillance), and broad clinical launch of Signatera Genome .

What Went Wrong

  • Operating and net losses persisted amid deliberate growth investments; loss from operations -$79.2M and net loss -$66.9M (EPS -$0.50) despite improved scale .
  • True-ups remain a modeling complication; ~$34M included in Q1 gross margin (management does not guide future true-ups), implying some variability in reported margins .
  • Expense growth outpaced prior year as SG&A and R&D increased with headcount, legal, and trial activity (OpEx +39.9% y/y) .

Financial Results

Headline Financials vs Prior Periods

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$367.7 $476.1 $501.8
Gross Margin (%)56.7% 62.9% 63.1%
Loss from Operations ($USD Millions)$(74.3) $(64.7) $(79.2)
Net Loss ($USD Millions)$(67.6) $(53.8) $(66.9)
Diluted EPS ($)$(0.56) $(0.41) $(0.50)
Total Operating Expenses ($USD Millions)$282.9 $364.4 $395.9

Actual vs Wall Street Consensus (Q1 2025)

MetricConsensusActual
Revenue ($USD Millions)$446.7*$501.8
Diluted EPS ($)$(0.62)*$(0.50)

Values marked with * are retrieved from S&P Global.

Segment/Line Item Breakdown

MetricQ1 2024Q4 2024Q1 2025
Product Revenues ($USD Millions)$364.7 $472.9 $500.0
Licensing & Other Revenues ($USD Millions)$3.1 $3.2 $1.8

KPIs and Operational Metrics

KPIQ1 2024Q4 2024Q1 2025
Tests Processed (units)735,800 792,800 855,100
Tests Reported (units)679,400 771,700 804,800
Oncology Tests Performed (units)114,800 150,800 167,700
Cash & Investments ($USD Millions)N/A$968.3 $991.6
Total Debt ($USD Millions)N/A$80.4 $80.3
Positive Cash Flow ($USD Millions)N/A$45.7 ~$23.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY 2025$1.87 – $1.95 $1.94 – $2.02 Raised
Gross Margin (%)FY 202560% – 64% 60% – 64% Maintained
SG&A ($USD Billions)FY 2025$0.95 – $0.975 $0.975 – $1.05 Raised
R&D ($USD Billions)FY 2025$0.525 – $0.55 $0.55 – $0.59 Raised
Cash FlowFY 2025Positive Positive Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Signatera adoption & growthStrong sequential growth (+11.4K units); OS data in GALAXY (Nature Medicine) elevates MRD utility Guide assumes >8–10K q/q; expecting stronger volume; ASP ~$1,050 pre true-ups Record sequential growth; ~45% of U.S. oncologists ordered Signatera; ASPs >$1,100 Accelerating
Gross margin trajectoryEx-true-ups margin ~58%; COGS projects contributing Underlying GM 59% in Q4; goal to move above 70% longer-term GAAP 63.1%; underlying ~60.4% (+110 bps q/q); scale and ASPs driving Improving
Coverage & guidelinesAnticipated biomarker law tailwinds; convert retired; debt reduced NCCN strengthened; lung Medicare coverage for IO monitoring Medicare coverage expanded to NSCLC surveillance; NCCN CRC/rectal/MCC updates Expanding
Women’s HealthStrong growth; RHD launch amid supply constraints Invitae integration; stable ASPs; seasonality commentary +~40K sequential units; Q2 seasonality expected Stable with seasonality
Product innovationTumor-naive MRD, early detection program ramping Tissue‑free assay mid-2025; early cancer detection data (PRESIDE, FIND) Signatera Genome launch; ASCO pan-cancer data; DEFINE/PEDAL organ health readouts Broadening menu
AI/technology opsN/AAI tools in revenue cycle and appeals Continued AI-supported RCM improvements Scaling use in ops
Competitive landscapeN/AConfident vs hybrid-capture MRD; targeted deep sequencing advantage Sustained share against new entrants; physicians value clinical performance Favorable positioning

Management Commentary

  • “We generated $502 million in revenue… 855,000 units processed… record volume quarter for Signatera. Gross margins were 63%… [and] we substantially raise the revenue guide” — Steve Chapman, CEO .
  • “Underlying gross margins… about 110 basis points from 59.3% in Q4 2024 to 60.4% Q1 2025… ASPs and COGS were excellent” — Steve Chapman .
  • “We previously described a longer-term goal to get gross margins above 70% over time… [and] Signatera could eventually generate more than $5 billion in revenue annually” — Steve Chapman .
  • “We maintained a pristine balance sheet with nearly $1 billion in cash and no debt outside of [UBS LOC]” — Mike Brophy, CFO .

Q&A Highlights

  • Sustainability of Signatera volumes: management targets ~10–12K sequential adds, with Q1 above that; growth driven by evidence, user experience, and commercial scale .
  • Upcoming datasets: focus on I‑SPY 2 and DARE in breast, INVIGOR‑011 in GU (potential CDx), plus sarcoma and pan‑cancer genome data at ASCO .
  • Seasonality and weather: Q2 tends to be softer in women’s health; wildfires impacted volumes but urgency of tests mitigates disruption .
  • ASP trajectory and true-ups: stable women’s health and organ health ASPs; modest Signatera ASP improvement via Medicare Advantage; true-ups not guided due to lumpiness .
  • Microdeletion and carrier guidelines: potential upside; 22q volumes are large and currently unreimbursed, implying significant future ASP uplift if guidelines publish .

Estimates Context

  • Q1 2025 results beat consensus: revenue $501.8M vs $446.7M*, and EPS -$0.50 vs -$0.62*; beats driven by volume growth, ASP execution, and ~$34M true-ups included in Q1 . Values marked with * are retrieved from S&P Global.
  • Street modeling considerations: excluding true-ups, underlying gross margin ~60.4% with management reiterating FY25 gross margin guide 60%–64%; revenue guide raised by $70M midpoint . Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Clear beat-and-raise quarter: revenue/EPS beat and FY25 guide raised, with underlying margin expansion and positive cash generation — supportive of multiple expansion .
  • Signatera momentum is accelerating: record sequential units, ASPs >$1,100, and broadened coverage/guidelines; watch near-term catalysts from ASCO/ESMO and Medicare NSCLC surveillance coverage ramp .
  • Operational leverage continues: scale and ASPs driving gross margin; longer-term target >70% intact, albeit with potential short-term margin headwinds from new product uptake .
  • Women’s health solid but seasonal: expect softer Q2 volumes; broader guideline updates (22q, carrier screening) would be upside to ASPs and margins .
  • Balance sheet strength: ~$992M cash/investments and only ~$80M LOC; flexibility to invest in R&D and commercialization while remaining cash-flow positive .
  • Data leadership and innovation: Signatera Genome launch, sarcoma/MCC/CRC data, and tumor‑naive MRD initiatives enhance competitive differentiation .
  • Modeling note: true-ups (~$34M in Q1) likely moderate over time; management guides excluding future true-ups, anchoring on sustainable core trends .