Genetic testing company Natera (NASDAQ: NTRA). reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 32.2% year on year to $546.6 million. The company’s full-year revenue guidance of $2.06 billion at the midpoint came in 4.2% above analysts’ estimates. Its GAAP loss of $0.74 per share was 19.3% below analysts’ consensus estimates.

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“We delivered outstanding results in the second quarter, with record Signatera growth and continued strength across our women’s health and organ health product lines,” said Steve Chapman, chief executive officer of Natera.

Company Overview

Founded in 2003 as Gene Security Network before rebranding in 2012, Natera (NASDAQ: NTRA) develops and commercializes genetic tests for prenatal screening, cancer detection, and organ transplant monitoring using its proprietary cell-free DNA technology.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Natera’s sales grew at an incredible 41.9% compounded annual growth rate over the last five years. Its growth surpassed the average healthcare company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Natera’s annualized revenue growth of 45.2% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

Natera also reports its number of tests processed, which reached 799,900 in the latest quarter. Over the last two years, Natera’s tests processed averaged 21% year-on-year growth. Because this number is lower than its revenue growth, we can see the company benefited from price increases.

This quarter, Natera reported wonderful year-on-year revenue growth of 32.2%, and its $546.6 million of revenue exceeded Wall Street’s estimates by 14.7%.

Looking ahead, sell-side analysts expect revenue to grow 9% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is commendable and indicates the market is baking in success for its products and services.

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Adjusted Operating Margin

Natera’s high expenses have contributed to an average adjusted operating margin of negative 21.3% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out.

On the plus side, Natera’s adjusted operating margin rose by 42.3 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 33.9 percentage points on a two-year basis. These data points are very encouraging and show momentum is on its side.

In Q2, Natera generated a negative 20.2% adjusted operating margin.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Although Natera’s full-year earnings are still negative, it reduced its losses and improved its EPS by 2.7% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability. We hope to see an inflection point soon.

In Q2, Natera reported EPS at negative $0.74, down from negative $0.30 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Natera to perform poorly. Analysts forecast its full-year EPS of negative $1.91 will tumble to negative $1.98.

Key Takeaways from Natera’s Q2 Results

We were impressed by how significantly Natera blew past analysts’ revenue expectations this quarter. We were also glad its full-year revenue guidance trumped Wall Street’s estimates. On the other hand, its EPS missed. Zooming out, we think this was a solid print. The stock traded up 12.6% to $159.28 immediately following the results.

Natera put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.