NTRA Q1 Earnings Call: Growth in Oncology and Women's Health Drives Guidance Increase

Genetic testing company Natera (NASDAQ: NTRA). reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 36.5% year on year to $501.8 million. The company’s full-year revenue guidance of $1.98 billion at the midpoint came in 4% above analysts’ estimates. Its non-GAAP loss of $0.50 per share was 24.2% above analysts’ consensus estimates.

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StockStory’s Take

Natera’s first quarter results were driven by significant growth in its oncology and women’s health testing businesses. Management highlighted that volumes for Signatera, the company’s minimal residual disease (MRD) test, grew 52% year-over-year, supported by expanded clinical utility and broad adoption among oncologists. CEO Steve Chapman attributed the robust performance to strong demand for Natera’s technology and the rollout of new data supporting its clinical applications. Additionally, the women’s health segment delivered exceptional sequential growth, extending positive momentum from the prior year. CFO Michael Brophy noted that improvements in reimbursement operations further contributed to margin expansion, with gross margins rising due to higher average selling prices (ASPs) across all segments.

Looking ahead, management’s guidance is underpinned by expectations for continued gains in test reimbursement and new clinical data releases, particularly for Signatera. Steve Chapman emphasized the importance of upcoming data readouts from studies in breast, colorectal, and other cancers, which Natera believes will support broader adoption and potentially higher ASPs. Brophy cautioned that while gross margin guidance remains unchanged, the company plans to invest heavily in clinical trials and commercial capacity to support long-term growth. As Chapman stated, “2025 is a crucial investment year for us, particularly around Signatera, as we see a path to more than $5 billion in annual revenue over time.”

Key Insights from Management’s Remarks

Management attributed the quarter’s outperformance to both higher testing volumes and improved reimbursement rates, supported by new data and wider clinical adoption.

• Signatera volume surge: Clinical use of Signatera rose sharply, with more than 45% of U.S. oncologists ordering the test. This growth was attributed to new data validating its effectiveness across multiple cancer types and increased physician confidence in its clinical utility.
• Women’s health expansion: The women’s health segment, including non-invasive prenatal testing (NIPT) and carrier screening, experienced strong sequential growth. Management pointed to ongoing rollout of peer-reviewed clinical data and successful integration of acquired accounts as key drivers.
• Reimbursement and ASP improvements: Company-wide average selling prices increased, especially for Signatera, due to enhanced Medicare Advantage reimbursement and early wins with commercial payers. Management expects further ASP growth as additional guideline endorsements and payer coverage are secured.
• Margin expansion from scale and efficiency: Gross margins improved to 63%, supported by operational efficiencies and scale benefits. CFO Michael Brophy noted that ongoing cost-of-goods-sold (COGS) initiatives and volume leverage will continue to benefit margins.
• Data pipeline and new product launches: Natera highlighted a robust data pipeline, with over 25 presentations scheduled at major oncology conferences. The launch of Signatera Genome, a whole-genome ctDNA test, expands the product portfolio and supports deeper clinical engagement.

Drivers of Future Performance

Management projects that further revenue and margin gains will hinge on clinical adoption, payer coverage, and ongoing investment in new indications.

• Clinical trial readouts: Multiple upcoming studies—including the I-SPY 2 and PROCEED trials—could influence adoption in breast and colorectal cancer, potentially unlocking new reimbursement pathways and expanding test usage.
• Reimbursement and guideline progress: Management is focused on securing broader reimbursement for existing and new tests, including guideline endorsements in the U.S. and Japan. Achieving higher ASPs, particularly for Signatera, is seen as a major lever for future growth.
• Investment in scale and R&D: Natera is increasing investment in both commercial operations and clinical research, especially for oncology and women’s health. Management believes this will drive long-term volume growth and position the company to capture emerging opportunities in pan-cancer minimal residual disease testing.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will closely monitor (1) the impact of clinical trial readouts—especially in breast and colorectal cancer—on test adoption and reimbursement, (2) progress on payer coverage expansions and guideline endorsements for Signatera and women’s health offerings, and (3) the execution of scale and efficiency initiatives supporting gross margin improvement. The pace of new product launches and the evolution of the competitive landscape will also be key indicators of Natera’s ability to sustain its growth trajectory.

Natera currently trades at a forward price-to-sales ratio of 10.8×. At this valuation, is it a buy or sell post earnings? The answer lies in our full research report (it’s free).

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