Natera Raises Its Outlook and Changes Its Chief, but a Wider Loss Sinks the Stock

Natera raised its full-year outlook and named a new chief executive on Thursday, but its shares plunged after hours on a quarterly loss far wider than Wall Street expected.

The diagnostics company reported third-quarter revenue of $794.0 million, up 34.1% from $592.2 million a year earlier. That crushed the $708 million analysts expected, according to Investor's Business Daily. The loss told the other half of the story: $0.42 a share, far wider than the $0.29 loss analysts projected.

The reported net loss still narrowed to $59.9 million from $87.5 million a year earlier. The loss from operations narrowed to $68.3 million from $97.6 million. Spending is the tension: operating expenses rose 19.5% to $576.1 million as headcount and clinical-trial costs grew.

At September 30, Natera held about $1.1 billion in cash, cash equivalents and restricted cash, up about $5.7 million from June 30. Outstanding debt was $80.3 million, including accrued interest on its line of credit with UBS.

The testing engine is accelerating

Natera processed about 1.1 million tests in the quarter, up 22.3% year over year. Oncology tests rose about 61% to roughly 340,000. On the earnings call, management put clinical molecular residual disease volume at about 316,000 units, up 56% — those tests scan for traces of cancer left after treatment.

Gross margin was 64.7%, a shade below the 64.9% of a year earlier. The figure includes $32.3 million of revenue true-ups, upward revisions to earlier estimates of what tests will ultimately collect. Excluding those revisions, gross margin was 63.2%, up about 140 basis points from the second quarter, management said on the call.

A bigger year, and a longer target

Natera now expects 2026 revenue of $3.005 billion to $3.035 billion, up from $2.850 billion to $2.910 billion. The raise is $140 million at the midpoint (TickerGrove calculation). The company held its gross-margin outlook at 64% to 66% and still expects positive cash flow for the year. It also raised its spending ranges, to $1.225 billion to $1.300 billion for selling, general and administrative costs and $825 million to $925 million for research and development.

On the call, management set a goal of doubling revenue to $6 billion by 2029. The company said the target assumes only a limited contribution from early cancer screening. It is a goal stated by management, not formal guidance.

A handover at the top

Solomon Moshkevich became chief executive and joined the board, effective immediately. He joined Natera in 2011 and most recently ran clinical diagnostics. He was also the company's first general manager of oncology, the business now growing fastest.

Steve Chapman steps down as chief executive and stays on as a consultant and as an advisor to the board. Chapman said revenue grew roughly tenfold during his tenure. The board's executive chairman called the appointment the second internal promotion to the top job.

The sector sold first, then the stock

Natera shares had already fallen 7.0% in Thursday's regular session, closing at $363.76, as blood-testing stocks sold off after Grail's disappointing report late Wednesday. Extended trading deepened the fall: at 6:55 p.m. ET the stock traded at $299.74, down 17.6% from the close, according to MarketBeat's extended-hours feed. After-hours prices were still moving, and Friday's open will set the first settled verdict.

Rival Guardant Health fell too, despite beating sales expectations and raising its own outlook. Guardant lost 9% in the regular session and fell further after hours. The pattern suggests investors were repricing the whole blood-testing group, not only Natera's loss.

What remains unknown

The release does not isolate one cause for the wider-than-expected loss; the visible driver is spending, with operating expenses up about a fifth. Whether the after-hours drop holds at Friday's open is untested. Natera also has not said what, if anything, changes strategically under Moshkevich. The leadership release gives no compensation or consulting terms for either man; a detailed departure-and-appointment filing has not yet appeared.

The next tests for this story

Friday's open will show whether investors separate Natera's raise from the sector rout. The new chief's first public agenda, and the pace of spending against the positive cash-flow promise, will test the story next. True-ups are shrinking — $32.3 million this quarter, down from $55.1 million a year earlier — a sign collection estimates are converging with cash.