Genetic testing company Natera (NASDAQ: NTRA) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 37.7% year on year to $752.8 million. The company’s full-year revenue guidance of $2.88 billion at the midpoint came in 3% above analysts’ estimates. Its GAAP loss of $0.47 per share was 8.1% above analysts’ consensus estimates.

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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

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Natera’s 39.9% annualized revenue growth over the last five years was incredible. 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 41.1% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

We can dig further into the company’s revenue dynamics by analyzing its number of tests processed, which reached 1.04 million in the latest quarter. Over the last two years, Natera’s tests processed averaged 19.3% 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 37.7%, and its $752.8 million of revenue exceeded Wall Street’s estimates by 13.6%.

Looking ahead, sell-side analysts expect revenue to grow 11.9% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is admirable and suggests the market is forecasting success for its products and services.

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Adjusted Operating Margin

Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses — everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt, and taxes.

Natera’s high expenses have contributed to an average adjusted operating margin of negative 11.1% 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 59.9 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 5.1 percentage points on a two-year basis. These data points are very encouraging and show momentum is on its side.

Natera’s adjusted operating margin was negative 10.1% this quarter.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

Although Natera’s full-year earnings are still negative, it reduced its losses and improved its EPS by 17.9% 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 of negative $0.47, up from negative $0.74 in the same quarter last year. This print beat analysts’ estimates by 8.1%. Over the next 12 months, Wall Street expects Natera to improve its earnings losses. Analysts forecast its full-year EPS will improve from negative $1.37 to negative $1.06.

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 exceeded Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 16.3% to $308 immediately after reporting.

Natera may have had a good quarter, but does that mean you should invest right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).