Natera, Inc.
For the period ended Dec 31, 2025. Filed Feb 27, 2026.
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FY2025 · Filed Feb 27, 2026
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Natera, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Natera, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
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| | | Product Revenue |
| Description of the Matter | | As described in Note 4 of the consolidated financial statements, product revenue is recognized in an amount equal to the total consideration expected to be received at a point in time when the genetic testing services are delivered. The Company disaggregated revenues by payor types, for which the Company recognized product revenues from insurance carriers and patients totaling $2,171.2 million and $31.8 million, respectively, during the year ended December 31, 2025. The Company used a portfolio of relevant historical data to estimate variable consideration. Consideration expected to be received for test results is estimated based on a variety of factors, including historical and current payment trends, as well as expectations of future collections.Auditing the measurement of product revenue related to genetic testing services performed on behalf of patients was complex due to the extent of the procedures required to assess management’s estimates of consideration expected to be received for genetic testing services. |
| How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls that address the risks of material misstatement relating to the measurement of revenue related to tests performed on behalf of patients. Our procedures included testing controls related to management’s review of the inputs and assumptions used in estimating the consideration expected to be received for tests performed on behalf of patients.We performed audit procedures that included, among others, assessing the methodologies used to estimate consideration expected to be received for tests performed on behalf of patients. We performed sensitivity analyses regarding the estimates of consideration expected to be received. Additionally, we tested the completeness and accuracy of the underlying data used by the Company in its analysis and management’s supporting calculations of product revenue recognition. We also performed an evaluation of actual cash collections versus expectations to assess the accuracy of estimates made in prior periods. |
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| | | Valuation of Developed Technology Intangible Asset Acquired in a Business Combination |
| Description of the Matter | | As described in Note 3 to the consolidated financial statements, on December 4, 2025, the Company completed its acquisition of Foresight Diagnostics, Inc. (“Foresight Diagnostics”). The transaction was accounted for as a business combination using the acquisition method of accounting. The acquisition date fair values of acquired assets consisted principally of a finite-lived developed technology intangible asset, which was valued to be $335.3 million. The developed technology intangible asset was valued using a multi-period excess earnings income approach that discounts expected future cash flows to present value.Auditing the acquisition date fair value of the developed technology intangible asset was complex due to the significant estimation required by management to determine the fair value of the developed technology intangible asset. The significant assumptions used to estimate the fair value of the developed technology intangible asset included the forecasted clinical revenue and related growth rate, which form the basis of the forecasted results used in the valuation approach. These significant assumptions were forward-looking and could be affected by expected future economic and market conditions. |
| How We Addressed the Matter in Our Audit | | We evaluated and tested the design and operating effectiveness of the Company’s internal controls over the determination of the estimated fair value of the acquired developed technology intangible asset. For example, we tested controls over management's review of the forecasted clinical revenue and related growth rate significant assumptions used to develop the fair value estimate of the developed technology intangible asset. We also tested management's controls to validate that the data used in the fair value estimate was complete and accurate.To test the Company’s estimated fair value of the acquired developed technology intangible asset, our audit procedures included, among others, evaluating the Company’s selection of the forecasted clinical revenue and related growth rate significant assumptions. We also tested the completeness and accuracy of the underlying data utilized in the valuation. For example, we compared the revenue projections to historical data for comparable products, current industry trends, and other relevant factors. We also performed sensitivity analyses over the forecasted clinical revenue and related growth rate significant assumptions to evaluate the impact that changes in these significant assumptions would have on the fair value of the acquired developed technology intangible asset. |
/s/Ernst & Young LLP
We have served as the Company’s auditor since 2012.
San Jose, California
February 26, 2026
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