Business Combination

12 Months Ended

Dec. 31, 2025

Business Combination

Business Combination

3.    Business Combination

Foresight Diagnostics, Inc.

On December 4, 2025, the Company completed the acquisition of Foresight Diagnostics, Inc. (“Foresight Diagnostics”), a leader in ultrasensitive molecular residual disease (“MRD”) detection. Foresight Diagnostics is a cancer diagnostics company and CLIA-registered laboratory. Their circulating tumor DNA (ctDNA)-based MRD tests leverage its patented PhasED-Seq™ technology, targeting phased variants. The acquisition was completed primarily to expand Natera’s intellectual property portfolio for tumor-informed and personalized MRD products including in phased variants and to build on Foresight’s clinical research momentum in B-cell lymphomas.

The total purchase consideration for the acquisition of Foresight Diagnostics was $424.5 million, which included the issuance of 1,127,982 shares of common stock, par value of $0.0001 per share, at a fair value based on the acquisition date closing price of $242.06 per share of Natera common stock. Former Foresight Diagnostics shareholders received 0.0280 shares of Natera common stock for each share of Foresight Diagnostics capital stock issued and outstanding as of immediately prior to the closing of the acquisition. Additionally, the Company assumed outstanding stock options of Foresight Diagnostics (“Assumed Options”). Each Assumed Option was converted into an option to purchase shares of the Company’s common stock based on the exchange ratio specified in the acquisition agreement. The Assumed Options generally retained their original vesting conditions, contractual terms, and expiration dates in effect immediately prior to the acquisition. In accordance with ASC 805, Business Combinations, and ASC 718, Compensation—Stock Compensation, the total fair value of the Assumed Options was allocated between pre-combination and post-combination service. The portion of the fair value attributable to pre-combination service was included in the total purchase consideration. The portion attributable to post-combination service was excluded from purchase consideration and will be recognized as stock-based compensation expense over the remaining requisite service period. Other components of purchase consideration included the fair value of contingent consideration of $118.4 million, cash paid at closing to settle Foresight Diagnostics’ existing debt of $6.0 million and seller transaction costs paid by the Company on behalf of Foresight Diagnostics of $7.2 million. The Company also assumed promised stock options to eligible Foresight’s employees which were converted, based on the exchange ratio specified in the acquisition agreement, to Natera common stock RSUs and granted upon closing the acquisition. These equity awards were not included in the total purchase consideration.

Certain former Foresight Diagnostics employees are entitled to receive contingent consideration in the form of additional shares of Natera’s common stock in the aggregate amount of up to $175.0 million, based on the achievement of certain specified milestones. The Company measured the fair value of the contingent consideration obligation on the acquisition date to be $118.4 million, for which the Company recorded $21.6 million and $96.8 million as a current liability and noncurrent liability, respectively. The Company determined the estimated fair value of (i) certain milestone payments using a Monte Carlo simulation, which requires the use of projected financial information and discount rates, and (ii) certain other milestone payments based on a probability weighted expected return method. The fair value of the contingent consideration will be remeasured each reporting period until the contingencies are settled, with changes in the fair value recognized within selling, general and administrative expenses on the consolidated statements of operations and comprehensive loss.

In connection with the acquisition, the Company deposited 9,505 shares having an aggregate value of $2.3 million in the escrow account for purchase price adjustments and deposited $1.0 million in an expense account for purposes of reimbursing the stockholder representative for expenses incurred related to the acquisition. Acquisition-related costs of $3.9 million were recorded in selling, general and administrative expenses on the consolidated statements of operations and $0.1 million were recorded in additional paid in capital on the consolidated balance sheets during the year ended December 31, 2025.

The acquisition of Foresight Diagnostics has been accounted for using the acquisition method of accounting in accordance with authoritative guidance for business combinations, with Natera treated as the accounting acquirer, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their fair value on the acquisition date.

The following table summarizes the fair value of consideration transferred and the fair values of the assets acquired and liabilities assumed:

		(in thousands)
Fair value of common stock issued to Foresight Diagnostics shareholders	$	273,038
Pre-combination portion of Natera replacement equity awards		12,088
Fair value of contingent consideration		118,360
Estimated fair value of the adjustment escrow shares		2,300
Stockholder representative allocable expenses		1,000
Foresight Diagnostics’ transaction expenses settled by the Company		7,232
Foresight Diagnostics’ indebtedness settled by the Company		5,974
Settlement of preexisting relationships		4,542
Cash payment for fractional shares		2
Total Foresight Diagnostics consideration	$	424,536
Cash and cash equivalents	$	2,727
Current assets		8,126
Property and equipment, net		7,224
Goodwill		141,070
Developed technology intangible asset		335,300
Customer relationships intangible asset		900
Trademarks / trade names intangible asset		500
Operating lease right-of-use assets		11,261
Other assets		1,291
Liabilities assumed		(22,397)
Deferred tax liability		(61,466)
Total purchase price	$	424,536

Certain working capital and tax accounts are subject to potential adjustment as the Company obtains additional information during the measurement period regarding new information obtained related to facts and circumstances that

existed as of the acquisition date, not to exceed one year from the date of acquisition. After the measurement period, any subsequent adjustments will be reflected in the consolidated statements of operations.

The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed was recorded as goodwill. Goodwill represents Foresight Diagnostics' assembled workforce and expected synergies the Company believes will result from the acquisition. Goodwill is not deductible for tax purposes. The fair value of the finite-lived acquired developed technology intangible asset was determined using the multi-period excess earnings income approach. This approach determines fair value based on estimated cash flow projections which are discounted to present value using a risk-adjusted rate of return. Management’s estimated cash flow projections include significant assumptions, including forecasted clinical revenue and related growth rate. The discount rate used to determine the fair value of the developed technology was 12%.

The assumed settlement of pre-existing relationships was determined based on the contractual amounts of payables and receivables between the parties as such amounts approximate fair value.

Pro forma information and results of Foresight Diagnostics since acquisition date have not been presented, as the results of Foresight Diagnostics are not material in relation to the consolidated financial statements of the Company.