Natera, Inc. (NASDAQ: NTRA), a global leader in cell-free DNA
testing, today reported financial results for the second quarter
ended June 30, 2023.
Recent Strategic and Financial Highlights
- Generated total revenues of $261.4 million in the second
quarter of 2023, compared to $198.2 million in the second quarter
of 2022, an increase of 31.9%. Product revenues grew 32.7% over the
same period.
- Processed approximately 617,200 tests in the second quarter of
2023, compared to approximately 499,900 tests in the second quarter
of 2022, an increase of 23.5%.
- Performed 83,500 oncology tests in the second quarter of 2023,
compared to approximately 44,200 oncology tests in the second
quarter of 2022, an increase of 88.9%.
- Achieved favorable results in a lawsuit against
ArcherDX/Invitae Corp. with a damages award of $19.35 million for
lost profits and royalty on past sales and a finding that all three
Natera patents at issue are valid, and a lawsuit against CareDx,
Inc. with a court reversal of jury findings, thereby reducing
damages from $45 million to $0.
- Demonstrated continued data leadership:
- Data was presented on the Company’s Signatera™ personalized and
tumor-informed molecular residual disease (MRD) test at the 2023
American Society of Clinical Oncology Annual Meeting, notably from
the EMPower Lung-I and INTERCEPT trials.
- Data from the ProActive trial was presented at the American
Transplant Congress 2023, reinforcing Natera’s Prospera™ kidney
test as an early indicator of transplant rejection.
- A fourth paper was published from the Company’s SMART study on
screening for sex chromosome aneuploidies with non-invasive
prenatal testing for more than 17,000 pregnancies.
“We had another strong quarter in which we served over 600,000
patients, delivered significant year-over-year growth in volumes
and revenues, drove improvements in gross margin and reduced our
quarterly cash burn,” said Steve Chapman, Natera’s Chief Executive
Officer. “With this excellent performance, we are raising our
annual revenue guidance and believe we are well-positioned to meet
our financial goals for the year. Looking ahead, we have a robust
clinical pipeline, particularly in oncology, that we believe will
further differentiate our products and change the standard of care
for millions of patients.”
Second Quarter Ended June 30, 2023 Financial Results
Total revenues were $261.4 million in the second quarter of
2023, compared to $198.2 million for the second quarter of 2022, an
increase of 31.9%. Product revenues were $258.3 million in the
second quarter of 2023, compared to $194.6 million in the second
quarter of 2022, an increase of 32.7%. The growth in product
revenues was driven by an increase in test volumes compared to the
second quarter of 2022.
Natera processed approximately 617,200 tests in the second
quarter of 2023, including approximately 599,000 tests accessioned
in its laboratory. This compares to approximately 499,900 tests
processed in the second quarter of 2022, including approximately
484,000 tests accessioned in its laboratory, an increase of
23.5%.
In the three months ended June 30, 2023, Natera recognized
revenue on approximately 594,900 tests for which results were
reported to customers in the period (tests reported), including
approximately 578,200 tests reported from its laboratory, compared
to approximately 461,300 tests reported, including approximately
446,400 tests reported from its laboratory, in the second quarter
of 2022, an increase of 29.0% for the quarter.
Gross profit* for the three months ended June 30, 2023 and June
30, 2022 was $118.3 million and $89.0 million, respectively,
representing a gross margin of 45.2% and 44.9%. Natera had higher
margins in the second quarter of 2023 compared to the second
quarter of 2022 primarily as a result of increased revenues and
continuous progress in cost of goods sold associated with tests
processed.
Total operating expenses, representing research and development
expenses and selling, general and administrative expenses, for the
second quarter of 2023 were $230.7 million, compared to $232.0
million in the same period of the prior year, a decrease of 0.6%.
The decrease was primarily driven by a reduction in payroll and
related expenses due to headcount reduction; as well as reduction
of in-process research and development expenses. Loss from
operations for the second quarter of 2023 was $112.4 million,
compared to $143.1 million for the same period of the prior
year.
The Company reported a net loss for the second quarter of 2023
of $110.8 million, or ($0.97) per diluted share, compared to a net
loss of $145.2 million, or ($1.50) per diluted share, for the same
period in 2022. Weighted average shares outstanding were
approximately 113.7 million in the second quarter of 2023, compared
to 96.6 million in the second quarter of the prior year.
As of June 30, 2023, Natera held approximately $735.9 million in
cash, cash equivalents, short-term investments and restricted cash,
compared to $898.4 million as of December 31, 2022. As of June 30,
2023, Natera had a total outstanding debt balance of $362.7
million, comprised of $80.4 million including accrued interest
under its line of credit with UBS at a variable interest rate of
30-day SOFR plus 121 basis points and a net carrying amount of
$282.3 million under its seven-year convertible senior notes issued
in April 2020. The gross principal balance outstanding for the
convertible senior notes was $287.5 million as of June 30,
2023.
Financial Outlook
Natera is raising its expectations for 2023 total revenue from
$995 million to $1.015 billion to a new range of $1.015 billion to
$1.035 billion. The Company expects 2023 gross margin to be
approximately 41% to 44% of revenues; selling, general and
administrative costs to be approximately $540 million to $580
million; research and development costs to be approximately $325
million to $345 million; and net cash consumption to be
approximately $300 million to $325 million**.
* Gross profit is calculated as GAAP total revenues less GAAP
cost of revenues. Gross margin is calculated as gross profit
divided by GAAP total revenues.
** Cash consumption is calculated as the sum of GAAP net cash
used by operating activities (estimated for 2023 to be
approximately $250 million to $275 million) and GAAP net purchases
of property and equipment (estimated for 2023 to be approximately
$50 million).
Test Volume Summary
Tests
Q2 2023
Q2 2022
Definition
Tests processed
617,200
499,900
Tests accessioned in our laboratory plus
tests processed outside of our laboratory
Tests accessioned
599,000
484,000
Test accessioned in our laboratory
Tests reported in our laboratory
578,200
446,400
Total tests reported in our laboratory
less tests reported outside of our laboratory
Tests reported
594,900
461,300
Total tests reported
About Natera
Natera™ is a global leader in cell-free DNA testing, dedicated
to oncology, women’s health, and organ health. We aim to make
personalized genetic testing and diagnostics part of the standard
of care to protect health and enable earlier, more targeted
interventions that help lead to longer, healthier lives. Natera’s
tests are validated by more than 100 peer-reviewed publications
that demonstrate high accuracy. Natera operates ISO 13485-certified
and CAP-accredited laboratories certified under the Clinical
Laboratory Improvement Amendments (CLIA) in Austin, Texas and San
Carlos, California. For more information, visit www.natera.com.
Conference Call Information
Event:
Natera's Second Quarter 2023
Financial Results Conference Call
Date:
Thursday, August 3, 2023
Time:
1:30 p.m. PT (4:30 p.m. ET)
Live Dial-In:
(888) 770-7321, Domestic
(929) 201-7107, International
Conference ID:
7684785
Webcast Link:
https://events.q4inc.com/attendee/482848758
Forward-Looking Statements
This press release contains forward-looking statements under the
meaning of the Private Securities Litigation Reform Act of 1995.
All statements other than statements of historical facts, including
the company’s financial guidance for fiscal 2022, its ability to
continue to increase its revenues, its product development plans
and its ability to maintain and grow its business operations in
light of the COVID-19 pandemic, are forward-looking statements. Any
forward-looking statements contained in this press release are
based upon Natera’s current plans, estimates, and expectations, as
of the date of this release, and are not a representation that such
plans, estimates, or expectations will be achieved.
These forward-looking statements are subject to known and
unknown risks and uncertainties that may cause actual results to
differ materially, including: we face numerous uncertainties and
challenges in achieving our financial projections and goals; we may
be unable to further increase the use and adoption of our products
through our direct sales efforts or through our laboratory
partners; we have incurred losses since our inception and we
anticipate that we will continue to incur losses for the
foreseeable future; our quarterly results may fluctuate from period
to period; our estimates of market opportunity and forecasts of
market growth may prove to be inaccurate; we may be unable to
compete successfully with existing or future products or services
offered by our competitors; we may engage in acquisitions,
dispositions or other strategic transactions that may not achieve
our anticipated benefits and could otherwise disrupt our business,
cause dilution to our stockholders or reduce our financial
resources; we may need to raise additional capital to support our
business plans, which may not be available when necessary or on
favorable terms; we may not be successful in commercializing our
cloud-based distribution model; our products may not perform as
expected; the results of our clinical studies, including our
SNP-based Microdeletion and Aneuploidy RegisTry, or SMART, Study,
may not be compelling to professional societies or payors as
supporting the use of our tests, particularly for microdeletions
screening, or may not be able to be replicated in later studies
required for regulatory approvals or clearances; if either of our
primary CLIA-certified laboratories becomes inoperable, we will be
unable to perform our tests and our business will be harmed; we
rely on a limited number of suppliers or, in some cases, single
suppliers, for some of our laboratory instruments and materials and
may not be able to find replacements or immediately transition to
alternative suppliers; if we are unable to successfully scale our
operations, our business could suffer; the marketing, sale, and use
of Panorama and our other products could result in substantial
damages arising from product liability or professional liability
claims that exceed our resources; we may be unable to expand,
obtain or maintain third-party payer coverage and reimbursement for
Panorama, Horizon and our other tests, and we may be required to
refund reimbursements already received; third-party payers may
withdraw coverage or provide lower levels of reimbursement due to
changing policies, billing complexities or other factors; if the
FDA were to begin actively regulating our tests, we could incur
substantial costs and delays associated with trying to obtain
premarket clearance or approval and incur costs associated with
complying with post-market controls; litigation or other
proceedings, including investigations, subpoenas, demands,
disputes, litigation, requests for information and other regulatory
or administrative actions or proceedings, or resulting from either
third party claims of intellectual property infringement or
asserting infringement by third parties of our technology, is
costly, may result in substantial business and financial penalties,
may be time-consuming and could limit our ability to commercialize
our products or services; any inability to effectively protect our
proprietary technology could harm our competitive position or our
brand; and we cannot guarantee that we will be able to service and
comply with our outstanding debt obligations or achieve our
expectations regarding the conversion of our outstanding
convertible notes.
Additional risks and uncertainties that could affect our
financial results are included under the captions, “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in our most recent filings on Forms 10-K
and 10-Q and in other filings that we make with the SEC from time
to time. These documents are available on our website at
www.natera.com under the Investor Relations section and on the
SEC’s website at www.sec.gov.
In light of the significant uncertainties in these
forward-looking statements, you should not regard these statements
as a representation or warranty by us or any other person that we
will achieve our objectives and plans in any specified time frame,
or at all. Natera assumes no obligation to, and does not currently
intend to, update any such forward-looking statements after the
date of this release.
Natera, Inc.
Consolidated Balance
Sheets
(Unaudited)
(in thousands, except share
amount)
June 30,
December 31,
2023
2022
(1)
Assets
Current assets:
Cash, cash equivalents and restricted
cash
$
381,113
$
466,091
Short-term investments
354,828
432,301
Accounts receivable, net of allowance of
$5,580 and $3,830 at June 30, 2023 and December 31, 2022,
respectively
260,065
244,385
Inventory
42,688
35,406
Prepaid expenses and other current assets,
net
26,818
33,634
Total current assets
1,065,512
1,211,817
Property and equipment, net
102,921
92,453
Operating lease right-of-use assets
61,942
71,874
Other assets
17,518
18,330
Total assets
$
1,247,893
$
1,394,474
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
21,107
$
31,148
Accrued compensation
34,174
44,010
Other accrued liabilities
125,513
144,214
Deferred revenue, current portion
15,644
10,777
Short-term debt financing
80,418
80,350
Total current liabilities
276,856
310,499
Long-term debt financing
282,295
281,653
Deferred revenue, long-term portion
21,502
20,001
Operating lease liabilities, long-term
portion
71,093
76,577
Total liabilities
651,746
688,730
Commitments and contingencies
Stockholders’ equity:
Common stock (2)
11
11
Additional paid-in capital
2,795,714
2,664,730
Accumulated deficit
(2,190,375
)
(1,942,635
)
Accumulated other comprehensive loss
(9,203
)
(16,362
)
Total stockholders’ equity
596,147
705,744
Total liabilities and stockholders’
equity
$
1,247,893
$
1,394,474
(1)
The consolidated balance sheet at December
31, 2022 has been derived from the audited consolidated financial
statements at that date included in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2022.
(2)
As of June 30, 2023 and December 31, 2022,
there were approximately 114,051,000 and 111,255,000 shares of
common stock issued and outstanding, respectively.
Natera, Inc.
Consolidated Statements of
Operations and Comprehensive Loss
(Unaudited)
(in thousands, except per share
data)
Three months ended
Six months ended
June 30,
June 30,
2023
2022
2023
2022
Revenues
Product revenues
$
258,256
$
194,582
$
496,053
$
384,584
Licensing and other revenues
3,148
3,618
7,107
7,749
Total revenues
261,404
198,200
503,160
392,333
Cost and expenses
Cost of product revenues
142,808
108,756
290,562
211,426
Cost of licensing and other revenues
341
481
711
1,026
Research and development
78,173
82,580
160,479
162,994
Selling, general and administrative
152,508
149,468
302,135
297,102
Total cost and expenses
373,830
341,285
753,887
672,548
Loss from operations
(112,426
)
(143,085
)
(250,727
)
(280,215
)
Interest expense
(3,177
)
(2,150
)
(6,238
)
(4,237
)
Interest and other income, net
4,518
277
9,103
1,078
Loss before income taxes
(111,085
)
(144,958
)
(247,862
)
(283,374
)
Income tax benefit (expense)
282
(193
)
122
(372
)
Net loss
$
(110,803
)
$
(145,151
)
$
(247,740
)
$
(283,746
)
Unrealized gain (loss) on
available-for-sale securities, net of tax
2,595
(2,493
)
7,159
(14,110
)
Comprehensive loss
$
(108,208
)
$
(147,644
)
$
(240,581
)
$
(297,856
)
Net loss per share:
Basic and diluted
$
(0.97
)
$
(1.50
)
$
(2.20
)
$
(2.95
)
Weighted-average number of shares used in
computing basic and diluted net loss per share:
Basic and diluted
113,690
96,579
112,734
96,081
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803772059/en/
Natera, Inc. Investor
Relations Mike Brophy, CFO, Natera, Inc., 510-826-2350,
investor@natera.com
Media Lesley Bogdanow, VP of
Corporate Communications, Natera, Inc., pr@natera.com
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