Genetic testing company Natera (NASDAQ: NTRA) reported Q3 2026 results exceeding the market’s revenue expectations, with revenue up 34.1% year on year to $794 million. The company’s full-year revenue guidance of $3.02 billion at the midpoint came in 3.8% above analysts’ consensus estimates. Its GAAP loss of $0.42 per share was 56.4% below analysts’ consensus estimates.

For more on Natera, read our free full research report.

Revenue growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Natera’s revenue grew at a strong 38.8% compounded annual growth rate over the last five years. Its growth surpassed the average healthcare company and shows its offerings resonate with customers.

Long-term growth matters most, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Natera’s annualized revenue growth of 37.8% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

The number of tests processed offers more detail on the company’s revenue dynamics and reached 1.09 million in the latest quarter. Over the last two years, Natera’s tests processed averaged 19% year-on-year growth. Revenue growth outpaced this metric, indicating that price increases contributed to growth.

This quarter, Natera reported year-on-year revenue growth of 34.1%, and its $794 million of revenue exceeded Wall Street’s consensus estimates by 11.9%.

Looking ahead, sell-side analysts expect revenue to grow 14.1% over the next 12 months, according to S&P, a deceleration versus the last two years. Despite the slowdown, this projection remains strong and implies the market is forecasting success for its products and services.

Adjusted operating margin

Adjusted operating margin is a key measure of profitability. Think of it as net income (the bottom line) excluding the impact of non-recurring expenses, taxes and interest on debt – items less connected to business fundamentals.

Natera’s high expenses have contributed to an average adjusted operating margin of negative 8.3% over the last five years. Unprofitable healthcare companies require extra attention because they can be vulnerable when business conditions deteriorate.

On the positive side, Natera’s adjusted operating margin rose by 51.5 percentage points over the last five years, as its revenue growth provided operating leverage. Still, it will take much more for the company to reach long-term profitability.

This quarter, Natera generated a negative 8.6% adjusted operating margin.

Earnings per share

Long-term changes in earnings per share, or EPS, matter 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 24.2% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability.

In Q3, Natera reported EPS of negative $0.42, up from negative $0.64 in the same quarter last year. Despite the year-on-year improvement, EPS missed analysts’ consensus estimates. Over the next 12 months, Wall Street expects Natera to narrow its losses. Analysts forecast its full-year EPS will improve from negative $1.15 to negative $0.61, according to S&P.

Key takeaways from Natera’s Q3 results

A sizable beat on analysts’ consensus revenue estimates and full-year revenue guidance above Wall Street’s consensus gave Natera’s quarter some clear positives, but EPS missed estimates. Investors were likely hoping for more, and shares plunged 19.7% to $292.19 immediately after the report.

To assess Natera at its current price, the latest quarter is only one piece of the longer-term business quality picture. Quality, combined with valuation, can help determine whether the stock is a buy. For more on these factors, read the full research report here (it’s free).