Genetic testing company Natera (NASDAQ: NTRA). beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 34.7% year on year to $592.2 million. The company’s full-year revenue guidance of $2.22 billion at the midpoint came in 6.1% above analysts’ estimates. Its GAAP loss of $0.64 per share was 74.5% below analysts’ consensus estimates.

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StockStory’s Take

Natera delivered a third quarter marked by robust revenue growth and a positive market reaction, with management attributing the results to strong adoption across its portfolio, particularly the Signatera molecular residual disease (MRD) test. CEO Steve Chapman highlighted that Signatera processed a record number of clinical MRD tests, driven by “groundbreaking clinical data combined with excellent customer experience,” as well as notable sequential improvements in average selling prices across major products. Women’s health and organ health segments also saw solid gains, supported by the recently launched Fetal Focus test. Management emphasized that operational investments in revenue cycle and cost controls led to improving gross margins, while research and development spending focused on clinical trial expansion and new product launches.

Looking ahead, Natera’s updated guidance is centered on continued momentum in oncology, expanded reimbursement coverage, and ongoing investments in early cancer detection. Management expects the upcoming expansion of the Fetal Focus panel to over 20 genes and strong evidence generation for Signatera to support broader clinical adoption and payer coverage. CFO Mike Brophy stated, “We expect to sustainably generate cash again next year as we continue to get scale with top line growth and improving margins,” while highlighting that operating expense growth will be focused on R&D and clinical trials. The company anticipates that new clinical data, further guideline inclusion, and technological advances in MRD and early detection will support revenue and margin expansion into next year.

Key Insights from Management’s Remarks

Management attributed the quarter’s outperformance to accelerating adoption of Signatera, commercial traction for new women’s health offerings, and improved gross margin performance driven by operational efficiencies and reimbursement progress.

• Signatera adoption accelerates: The oncology segment’s MRD test saw a record number of clinical tests performed, fueled by strong new patient starts and expanded use across tumor types. Management cited “Level 1A” evidence from the IMvigor011 bladder cancer study, published in the New England Journal of Medicine, as a major catalyst for broader adoption among oncologists, with CEO Steve Chapman noting increasing interest from both pharma companies and clinicians.
• Women’s health growth via Fetal Focus: The introduction of the Fetal Focus single-gene NIPT panel, initially covering five inherited conditions and soon to expand to 20 genes, drove new commercial activity and volume growth in the women’s health segment. Early feedback from clinicians has been positive, and the company’s proprietary LinkedSNP technology enables detection of challenging genetic scenarios, such as homozygous mutations.
• Gross margin improvement: Operational investments in revenue cycle management and cost of goods sold (COGS) efficiencies contributed to sequential improvement in gross margin, with management targeting further expansion as oncology becomes a larger share of the business. CFO Mike Brophy described the current 64.9% gross margin as a stepping stone towards a long-term goal above 70%.
• Reimbursement and payer progress: Natera reported progress with biomarker state reimbursement for Signatera, noting that wins in specific regions are beginning to influence broader coverage by national health plans. Management expects a “steady linear process” over the next two years as more commercial payers adopt coverage for MRD testing.
• Clinical trial and product pipeline investment: Increased research and development spending supported the launch of new products, such as Signatera Genome and tissue-free MRD (Latitude), and the advancement of major clinical studies in early cancer detection. Management underscored that these investments are designed to yield growth in future years, not just the current period.

Drivers of Future Performance

Natera’s outlook for next year is driven by sustained oncology adoption, payer coverage expansion, and targeted R&D investment, balanced by margin improvement and operational discipline.

• Oncology momentum and payer coverage: Management expects continued volume growth in Signatera MRD testing as more oncologists adopt the technology, fueled by new clinical evidence and the potential for inclusion in clinical guidelines. Broader reimbursement, particularly through biomarker state policies and pending MolDx submissions, is anticipated to drive average selling price (ASP) gains and support higher revenue.
• Expanded women’s health offerings: The launch and ongoing expansion of the Fetal Focus panel is expected to increase women’s health test volumes, especially as the panel’s coverage grows to include 20 genes. Management believes that leveraging existing commercial infrastructure will support broader adoption and competitive differentiation.
• Margin and cash flow discipline: The company is targeting further gross margin improvement as oncology’s higher-margin tests become a larger share of the mix, and operational expenses are projected to grow at a slower rate than revenue. Management projects “sustainable cash generation” in the coming year, even as R&D investments remain focused on clinical trials and product innovation.

Catalysts in Upcoming Quarters

Over the coming quarters, our analysts will monitor (1) the pace and breadth of commercial payer adoption for Signatera, (2) the clinical adoption and feedback on the expanded Fetal Focus panel in women’s health, and (3) progress on key clinical trials in early cancer detection, particularly FIND-CRC. Additional milestones include updates on guideline inclusion for Signatera and continued gross margin expansion.

Natera currently trades at $198, in line with $198.44 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).

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