Natera(NTRA) - 2025 Q2 - Quarterly Results

Company Overview Natera is a global leader in cell-free DNA and genetic testing, focusing on oncology, women's health, and organ health About Natera Natera is a global leader in cell-free DNA and genetic testing, integrating personalized diagnostics into standard care across oncology, women's, and organ health - Natera is a global leader in cell-free DNA and genetic testing, specializing in oncology, women's health, and organ health[13] - The company's mission is to make personalized genetic testing and diagnostics a standard part of care to facilitate earlier, more targeted interventions[13] - Natera's tests are validated by over 300 peer-reviewed publications and are processed in ISO 13485-certified and CAP-accredited CLIA laboratories in Austin, Texas, and San Carlos, California[13] Second Quarter 2025 Financial Performance Natera reported strong Q2 2025 financial results, driven by record Signatera growth and robust performance across all product lines Recent Financial Highlights Natera reported outstanding Q2 2025 results, driven by record Signatera growth and an increased 2025 annual revenue outlook - Natera delivered outstanding results in Q2 2025, with record Signatera growth and continued strength across women's health and organ health product lines[3] - The company is raising its 2025 annual revenue outlook by $80 million at the midpoint, from $1.94 billion - $2.02 billion to $2.02 billion - $2.10 billion[7] - Natera achieved positive cash flow of approximately $24.3 million in the second quarter of 2025[7] Detailed Financial Results Natera's Q2 2025 showed substantial revenue growth and improved gross margin, but increased operating expenses led to a higher net loss Revenue and Gross Profit Q2 2025 revenue and gross profit saw significant increases, driven by higher product volumes and improved average selling prices Q2 2025 vs Q2 2024 Revenue and Gross Profit | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :-------------------- | :------------------ | :------------------ | :--------- | | Total Revenues | $546.6 | $413.4 | 32.2% | | Product Revenues | $544.4 | $411.4 | 32.3% | | Gross Profit | $346.6 | $243.2 | 42.5% | | Gross Margin | 63.4% | 58.8% | +4.6 pp | - The increase in total revenues was primarily driven by a 32.3% increase in product revenues, attributed to higher volume, average selling price improvements, and cash receipts in excess of initial revenue estimates for prior quarters[3] - Higher gross margin in Q2 2025 was a result of increased revenues, continued progress in reducing cost of revenues, and incremental cash receipts[6] Operating Expenses and Net Loss Operating expenses significantly increased in Q2 2025 due to investments and legal accruals, leading to a substantial rise in net loss Q2 2025 vs Q2 2024 Operating Expenses and Net Loss | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :---------------------- | :------------------ | :------------------ | :--------- | | Total Operating Expenses| $457.0 | $287.1 | 59.2% | | Loss from Operations | ($110.4) | ($43.9) | 151.5% | | Net Loss | ($100.9) | ($37.5) | 169.1% | | Diluted EPS | ($0.74) | ($0.30) | 146.7% | - The significant increase in total operating expenses was primarily driven by higher salary and related compensation expenditures, including stock-based compensation, to support new product offerings, as well as increases in accruals for legal matters[6] - The net loss per diluted share of ($0.74) in Q2 2025 was impacted by legal accruals of approximately $19.8 million and a stock-based compensation expense change in estimate of approximately $9.2 million, contributing approximately ($0.21) per diluted share[9] Test Volume Summary Natera experienced strong operational growth in Q2 2025, with overall test volumes increasing and oncology tests showing particularly robust growth Q2 2025 vs Q2 2024 Test Volume Summary | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----------------- | :-------- | :-------- | :--------- | | Tests Processed | 853,100 | 760,300 | 12.2% | | Tests Accessioned | 839,300 | 744,000 | 12.8% | | Tests Reported | 812,900 | 725,200 | 12.1% | | Oncology Tests | 188,800 | 125,400 | 50.6% | - The increase in tests processed and reported reflects strong operational growth, with oncology tests showing particularly robust growth of 50.6% year-over-year[4][5][7] Liquidity and Capital Resources Natera maintained a strong liquidity position as of June 30, 2025, with over $1 billion in cash and investments and a low outstanding debt balance Cash and Debt Position | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :---------------------------------------------- | :----------------------- | :--------------------------- | | Cash, cash equivalents, short-term investments, and restricted cash | $1,016.0 | $968.3 | | Total Outstanding Debt Balance | $80.3 | N/A | - Natera's cash, cash equivalents, short-term investments, and restricted cash increased by $47.7 million from December 31, 2024, to June 30, 2025[10] - The company had a total outstanding debt balance of $80.3 million under its line of credit with UBS at a variable interest rate of 30-day SOFR plus 50 bps[10] Financial Outlook Natera has raised its 2025 total revenue guidance and provided estimates for key financial metrics, reflecting confidence in continued growth 2025 Guidance Natera raised its 2025 total revenue guidance and provided estimates for gross margin, operating expenses, and positive cash flow 2025 Financial Outlook | Metric | 2025 Guidance (Range) | | :----------------------------------- | :-------------------- | | Total Revenue | $2.02 billion - $2.10 billion | | Gross Margin (as % of revenues) | 61% - 64% | | Selling, General and Administrative | $0.975 billion - $1.05 billion | | Research and Development | $550 million - $590 million | | Net Cash Inflow | Positive | - The company maintains its current outlook for operating expenses while raising the revenue guidance[7][11] Consolidated Financial Statements This section presents Natera's consolidated financial statements, including balance sheets and statements of operations, for the reported periods Consolidated Balance Sheets Natera's balance sheet as of June 30, 2025, shows increased total assets, liabilities, and stockholders' equity, driven by higher cash and equivalents Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total Current Assets | $1,431,596 | $1,375,820 | | Total Assets | $1,757,066 | $1,660,735 | | Total Current Liabilities | $384,836 | $344,045 | | Total Liabilities | $510,884 | $465,315 | | Total Stockholders' Equity | $1,246,182 | $1,195,420 | - Cash, cash equivalents, and restricted cash increased from $945,587 thousand at December 31, 2024, to $1,000,021 thousand at June 30, 2025[22] - Outstanding common stock shares increased from approximately 132.6 million at December 31, 2024, to 136.8 million at June 30, 2025[23] Consolidated Statements of Operations and Comprehensive Loss Natera's Q2 and YTD June 2025 statements show strong revenue growth but also significantly increased operating expenses, leading to higher net losses Consolidated Statements of Operations Highlights (in thousands) | Metric (Three months ended June 30) | 2025 | 2024 | Change (%) | | :---------------------------------- | :---------- | :---------- | :--------- | | Total Revenues | $546,600 | $413,351 | 32.2% | | Cost of Product Revenues | $199,531 | $169,850 | 17.5% | | Research and Development | $146,427 | $89,109 | 64.3% | | Selling, General and Administrative | $310,549 | $197,965 | 56.9% | | Loss from Operations | ($110,372) | ($43,902) | 151.4% | | Net Loss | ($100,938) | ($37,464) | 169.4% | | Basic and Diluted Net Loss Per Share| ($0.74) | ($0.30) | 146.7% | Consolidated Statements of Operations Highlights (Six months ended June 30) | Metric (Six months ended June 30) | 2025 | 2024 | Change (%) | | :---------------------------------- | :------------ | :------------ | :--------- | | Total Revenues | $1,048,431 | $781,092 | 34.2% | | Cost of Product Revenues | $384,143 | $328,683 | 16.9% | | Research and Development | $275,504 | $177,746 | 55.0% | | Selling, General and Administrative | $577,414 | $392,243 | 47.2% | | Loss from Operations | ($189,547) | ($118,216) | 60.3% | | Net Loss | ($167,874) | ($105,063) | 59.8% | | Basic and Diluted Net Loss Per Share| ($1.24) | ($0.86) | 44.2% | - Weighted-average shares used in computing basic and diluted net loss per share increased to 136,388 thousand for Q2 2025 from 122,853 thousand for Q2 2024[26] Supplementary Information This section provides details for the Q2 2025 conference call, forward-looking statements, and definitions of key financial metrics Conference Call Details Details for Natera's Second Quarter 2025 Financial Results Conference Call, including date, time, and access information, are provided Conference Call Information | Event | Natera's Second Quarter 2025 Financial Results Conference Call | | :------------ | :------------------------------------------------------------- | | Date | Thursday, August 7, 2025 | | Time | 1:30 p.m. PT (4:30 p.m. ET) | | Live Dial-In | 1-888-770-7321 (Domestic), 1-929-201-7107 (International) | | Conference ID | 7684785 | | Webcast Link | https://events.q4inc.com/attendee/169947359 | Forward-Looking Statements Natera's forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially - The press release contains forward-looking statements regarding market opportunity, anticipated products, reimbursement, partnerships, clinical trials, and business strategies, based on current plans and expectations[15] - These statements are subject to known and unknown risks and uncertainties, including challenges in achieving financial projections, competition, product performance, regulatory compliance (e.g., FDA regulations for LDTs), and litigation, which could cause actual results to differ materially[16] - Natera advises against undue reliance on forward-looking statements and undertakes no obligation to update them publicly, except as required by law[18] Definitions and Contacts This section provides definitions for key financial metrics and contact information for investor relations and media inquiries - Positive cash flow for the quarter ended June 30, 2025, is derived from GAAP net cash provided by operating activities ($37.6 million) and financing activities ($12.6 million), offset by net cash used in investing activities for property and equipment purchases ($25.9 million)[19] - Gross profit is calculated as GAAP total revenues less GAAP cost of revenues, and gross margin is gross profit divided by GAAP total revenues[20] - Contact information for Investor Relations (Mike Brophy, CFO) and Media (Lesley Bogdanow, VP of Corporate Communications) is provided[20]