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Natera, Inc. (NTRA)·Q2 2025 Earnings Summary

Executive Summary

  • Strong top-line outperformance and guide raise: Q2 revenue $546.6M (+32.2% y/y) materially beat S&P Global consensus $476.8M; gross margin expanded to 63.4% (+460 bps y/y). FY25 revenue guide raised by $80M at midpoint to $2.02–$2.10B; gross margin guide to 61–64%, OpEx guides held flat . Revenue consensus from S&P Global: $476.8M*.
  • Mixed bottom line vs Street: GAAP EPS was ($0.74) vs S&P Global consensus ($0.607), with ~$19.8M legal accruals and $9.2M SBC estimate change ($0.21/share headwind). CFO noted ~$30M non-cash SBC/legal accruals; ex these, loss/share ~($0.53) .
  • Operating momentum: Record Signatera growth (+~20k sequential clinical units) and strong ASPs; DSOs improved to a record ~57 days; positive quarterly cash flow ~$24.3M .
  • Catalysts: Positive topline from IMvigor011 Phase 3 in bladder cancer (Signatera-guided) announced Aug 18; late-fall ECD PROCEED readout; launch of proprietary AI foundation models to drive diagnostics and pharma partnerships .

What Went Well and What Went Wrong

What Went Well

  • Record oncology momentum: “We had a phenomenal quarter… record Signatera growth,” with ~189k oncology tests (+50.6% y/y) and ~+20k sequential growth units; strong new patient starts and broader tumor-type adoption .
  • Margin and cash conversion: Gross margin up to 63.4% (vs ~59% LY); DSOs fell to ~57 days with continued revenue “true-ups,” enabling cash generation while investing for growth .
  • Product innovation and clinical data: Launched Fetal Focus NIPT for inherited conditions (EXPAND trial showed ~91% sensitivity in early readout), Prospera’s PEDAL study demonstrated monitoring predicts outcomes, and broad Signatera datasets across breast and GI; management highlighted multiple upcoming randomized and guideline-influencing trials .

What Went Wrong

  • EPS/EBITDA below Street: GAAP EPS ($0.74) missed S&P Global consensus ($0.607); EBITDA ($100.5M) below consensus ($79.1M). Management cited ~$30M non-cash SBC/legal accruals; ex these, loss/share ~($0.53) .
  • Higher OpEx and operating loss: Operating expenses rose 59.2% y/y to $457.0M, with loss from operations widening to $110.4M (vs $43.9M LY), driven by growth investments and legal accruals .
  • COGS headwind from first-time patients; sustainability caution: Ex “true-ups,” gross margin was flat q/q given significantly higher exome runs for new Signatera patients; management cautioned +20k quarterly growth units is not a “new normal” .

Financial Results

Headline P&L vs Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Revenue ($M)$476.1 $501.8 $546.6
Revenue YoY Growth+53.0% +36.5% +32.2%
Gross Margin %62.9% 63.1% 63.4%
GAAP Diluted EPS($0.41) ($0.50) ($0.74)
Loss from Operations ($M)($64.7) ($79.2) ($110.4)

Revenue and EPS vs S&P Global Consensus

MetricQ4 2024Q1 2025Q2 2025
Revenue Actual ($M)$476.1 $501.8 $546.6
Revenue Consensus Mean ($M)$447.9*$446.7*$476.8*
Surprise ($M)+$28.2*+$55.2*+$69.8*
EPS Actual ($)($0.41) ($0.50) ($0.74)
EPS Consensus Mean ($)($0.385)*($0.618)*($0.607)*
Surprise ($)($0.02)*+$0.12*($0.13)*
Values retrieved from S&P Global. Surprises computed vs S&P Global consensus.*

EBITDA vs S&P Global Consensus

MetricQ4 2024Q1 2025Q2 2025
EBITDA Actual ($M)($60.45)*($69.94)*($100.51)*
EBITDA Consensus Mean ($M)($59.43)*($79.46)*($79.05)*
Values retrieved from S&P Global.*

Segment/Revenue Mix (where disclosed)

Metric ($M)Q1 2025Q2 2025
Product Revenues$500.0 $544.4
Licensing & Other Revenues$1.8 $2.2
Total Revenues$501.8 $546.6

KPIs

KPIQ4 2024Q1 2025Q2 2025
Tests Processed792,800 855,100 853,100
Tests Reported771,700 804,800 812,900
Oncology Tests Performed150,800 167,700 188,800

Guidance Changes

MetricPeriodPrevious Guidance (5/8/25)Current Guidance (8/7/25)Change
Total RevenueFY 2025$1.94B–$2.02B $2.02B–$2.10B Raised
Gross Margin %FY 2025~60%–64% ~61%–64% Raised (low end)
SG&AFY 2025~$0.975B–$1.05B ~$0.975B–$1.05B Maintained
R&DFY 2025$550M–$590M $550M–$590M Maintained
Net Cash FlowFY 2025Positive Positive Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Signatera adoption & ASPMomentum into 2025; strong oncology volumes exiting 2024 and “record growth quarter for Signatera” in Q1’25 Record sequential +~20k growth units; ASP ~$1,175; broadening to non-covered tumor types; $250–$300M TAM from Medicare coverage over time Accelerating
Gross margin driversGM 62.9% in Q4’24; improvement from mix/efficiency 63.4% GM; ex true-ups flat q/q due to first-time patient exomes; DSOs ~57; multivector plan: revenue cycle, coverage, COGS, AI Improving with investment
Women’s healthSolid baseline exiting 2024 Launch of Fetal Focus; EXPAND validation early readout Product expansion
Organ healthBuilding momentum; data cadence PEDAL study shows Prospera dd-cfDNA monitoring predicts outcomes; LCD surveillance update positive Strengthening
Early Cancer Detection (ECD)2025 catalysts referenced PROCEED readout late fall; FIND enrollment started; FDA readout targeted 2027 Advancing toward readouts
AI/Tech initiativesLonger-term innovation referenced AI foundation models for diagnostics and therapeutics; operational savings potential ~$200M over time New platform launched post-Q2

Management Commentary

  • “We had a phenomenal quarter… record Signatera growth… Gross margin ticked up again in Q2 at 63.4%… Raising the revenue guidance by $80,000,000 at the midpoint… We are not increasing our operating expenses” .
  • Margin playbook: “We think about margin expansion… revenue cycle operations, expanded coverage… further COGS reductions and AI-driven efficiencies… DSOs are now down to fifty seven days, which is a record” .
  • Investment versus returns: New oncology reps added in Q2; 6–12 month “slingshot effect” to productivity; OpEx held steady despite guide raise .
  • Pipeline: Prospera PEDAL outcomes monitoring, DARE TOMER strategy in breast, GI publications (GEJ lead-time ~6 months; HCC outperformed AFP with up to 16.5 months lead time) .

Q&A Highlights

  • Signatera growth drivers and sustainability: Growth from colorectal, breast, IO monitoring, and expanding to additional histologies; record new patient starts; management cautions 20k quarterly growth units is not the “new normal” .
  • Coverage expansion: Non-covered tumor types submissions over next 12–18 months could add ~$250–$300M revenue once covered; multiple submissions planned, data-first approach .
  • Early cancer detection timeline: PROCEED advanced adenoma readout late fall; FIND enrollment underway, FDA submission targeted 2027; design aligns screening protocol with FDA trial to mitigate performance degradation risk .
  • Sales force expansion: Oncology reps stepped up to ~150–175+ with adds in Q2; productivity expected 6–9 months post-onboarding .
  • Policy/regulatory: Proposed MolDx transplant LCD seen as neutral/positive for Prospera; capitation-like dynamics already exist in MRD; cadence largely aligns with clinical practice .

Estimates Context

  • Q2 beats/misses vs S&P Global: Revenue $546.6M vs $476.8M* (beat), GAAP EPS ($0.74) vs ($0.607)* (miss), EBITDA ($100.5M) vs ($79.1M)* (miss). Management cited ~$30M non-cash SBC/legal accruals; ex these, loss/share ~($0.53) . Values from S&P Global.*
  • Prior quarters: Q1 revenue $501.8M vs $446.7M* (beat); EPS ($0.50) vs ($0.618)* (better than expected). Q4’24 revenue $476.1M vs $447.9M* (beat); EPS ($0.41) vs ($0.385)* (slight miss). Values from S&P Global.* .
  • Implications: Raised FY25 revenue/margin guide suggests upward estimate revisions to revenue and modest GM; however, higher first-time patient mix can dampen near-term GM progression, and legal/SBC items introduced EPS variability. Street models likely lift FY25 revenue while reassessing Opex phasing and EBITDA trajectory.*

Key Takeaways for Investors

  • The growth engine is intact and broadening: record Signatera sequential units, strong women’s and organ health, and ASP support indicate durable demand drivers .
  • Estimate momentum: FY25 revenue guide up to $2.02–$2.10B, with GM 61–64% and positive cash flow maintained—consensus should move higher on revenue and potentially gross margin .
  • Watch the mix: First-time patient exome runs are great for future recurring volume but can pressure COGS; management’s four-vector margin plan (RCO, coverage, COGS, AI) is the offset to monitor .
  • Coverage catalysts: Submissions for non-covered indications and biomarker-state payers could unlock $250–$300M revenue over time; payor wins and LCD updates are key near-term stock drivers .
  • Clinical inflections: Positive IMvigor011 topline (Signatera-guided) and PROCEED advanced adenoma readout in late fall could be material sentiment catalysts for MRD and ECD narratives .
  • Operating leverage building: DSOs at a record ~57 days and continued “true-ups” support cash generation while the expanded sales force ramps; OpEx guide held steady despite top-line raise .
  • AI optionality: Newly launched AI foundation models could open pharma monetization and drive operational leverage; early pilots outperformed benchmarks .

Additional data and citations:

  • Q2 revenue $546.6M; GM 63.4%; tests processed 853.1k; oncology tests 188.8k; cash/cash equivalents/short-term investments/restricted cash ~$1,016.0M; total debt $80.3M .
  • Q1 revenue $501.8M; GM 63.1%; tests processed 855.1k; oncology tests 167.7k .
  • Q4’24 revenue $476.1M; GM 62.9%; oncology tests 150.8k .
  • CFO on non-recurring accruals and EPS ex items .

Values retrieved from S&P Global where marked with an asterisk (*).