NTRA Natera Inc

Natera, Inc. (NASDAQ: NTRA), a global leader in cell-free DNA and genetic testing, today reported its financial results for the third quarter ended September 30, 2024.

Recent Strategic and Financial Highlights

• Generated total revenues of $439.8 million in the third quarter of 2024, compared to $268.3 million in the third quarter of 2023, a record increase of 63.9%. Product revenues grew 64.4% over the same period.
• Generated a gross margin of 61.8% in the third quarter of 2024, compared to a gross margin of 45.1% in the third quarter of 2023.
• Processed approximately 775,800 tests in the third quarter of 2024, compared to approximately 626,000 tests in the third quarter of 2023, an increase of 23.9%.
• Performed approximately 137,100 oncology tests in the third quarter of 2024, compared to approximately 88,800 in the third quarter of 2023, an increase of 54.4%.
• Achieved positive cash flow of approximately $34.5 million1 in the third quarter of 2024.
• Raising annual guidance and now expecting 2024 total revenue of $1.61 billion to $1.64 billion, gross margin of 58% to 61%, and $50 million to $75 million in net cash inflow.
• Announced completion of study using SignateraTM from the CALGB (Alliance)/SWOG 80702 randomized, phase III clinical trial in colorectal cancer.
• Published first-of-its-kind colorectal cancer data from the GALAXY study in Nature Medicine and concurrently presented the data at the 2024 Congress of the European Society for Medical Oncology (ESMO).

“Our strong performance in the third quarter reflects our unwavering dedication to the patients we serve and the passion of our employees in each of our business areas,” said Steve Chapman, chief executive officer of Natera. “We grew volumes, revenue, gross margin, and cash flow in what continues to be a transformational year for Natera.”

Third Quarter Ended September 30, 2024 Financial Results

Total revenues were $439.8 million in the third quarter of 2024 compared to $268.3 million in the third quarter of 2023, an increase of 63.9%. The increase in total revenues was driven primarily by a 64.4% increase in product revenues, which were $436.1 million in the third quarter of 2024 compared to $265.2 million in the third quarter of 2023. The increase in product revenues was primarily driven by an increase in volume, average selling price improvements, as well as cash receipts that were collected during the quarter related to tests delivered in prior quarters that were fully collected.

Natera processed approximately 775,800 tests in the third quarter of 2024, including approximately 760,700 tests accessioned in its laboratory, compared to approximately 626,000 tests processed, including approximately 609,800 tests accessioned in its laboratory, in the third quarter of 2023.

In the third quarter of 2024, Natera recognized revenue on approximately 750,100 tests for which results were reported to customers in the period (tests reported), including approximately 735,900 tests reported from its laboratory, compared to approximately 590,000 tests reported, including approximately 575,000 tests reported from its laboratory, in the third quarter of 2023, an increase of 27.1% from the prior period.

Gross profit2 for the three months ended September 30, 2024 and September 30, 2023 was $271.7 million and $121.0 million, respectively, representing a gross margin of 61.8% and 45.1%, respectively. Natera had higher gross margin in the third quarter of 2024 primarily as a result of higher revenues, continued progress in reducing cost of revenues associated with tests processed, as well as incremental cash receipts during the quarter associated with tests delivered in prior periods that were fully collected. Total operating expenses, representing research and development expenses and selling, general and administrative expenses, for the third quarter of 2024 were $311.1 million, compared to $232.0 million in the same period of the prior year, an increase of 34.0%. The increase was primarily driven by headcount growth to support new product offerings as well as increases in consulting and legal expenses.

Loss from operations for the third quarter of 2024 was $39.3 million compared to $111.0 million for the same period of the prior year. Natera reported a net loss for the third quarter of 2024 of $31.6 million, or ($0.26) per diluted share, compared to a net loss of $109.0 million, or ($0.95) per diluted share, for the same period in 2023. Weighted average shares outstanding were approximately 123.3 million in the third quarter of 2024 compared to 115.2 million in the third quarter of the prior year.

At September 30, 2024, Natera held approximately $922.3 million in cash, cash equivalents, short-term investments and restricted cash, compared to $879.0 million as of December 31, 2023. As of September 30, 2024, Natera had a total outstanding debt balance of $367.0 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 50 bps and a net carrying amount of $286.6 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 September 30, 2024. All outstanding convertible senior notes were redeemed or converted on October 11, 2024.

Financial Outlook

Natera anticipates 2024 total revenue of $1.61 billion to $1.64 billion; 2024 gross margin to be approximately 58% to 61% of revenues; selling, general and administrative costs to be approximately $775 million to $825 million; research and development costs to be $375 million to $400 million; and net cash inflow to be $50 million to $75 million3.

Test Volume Summary

Unit

Q3 2024

   

Q3 2023

 

Definition

Tests processed

775,800

   

626,000

 

Tests accessioned in our laboratory plus units processed outside of our laboratory

Tests accessioned

760,700

   

609,800

 

Test accessioned in our laboratory

Tests reported

750,100

   

590,000

 

Total tests reported

Tests reported in our laboratory

735,900

   

575,000

 

Total tests reported in our laboratory less units reported outside of our laboratory

About Natera

Natera™ is a global leader in cell-free DNA and genetic 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 200 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 Third Quarter 2024 Financial Results Conference Call

Date:

Tuesday, November 12, 2024

Time:

1:30 p.m. PT (4:30 p.m. ET)

Live Dial-In:

1-888-770-7321 (Domestic) 1-929-201-7107 (International)

Conference ID:

7684785

Webcast Link:

https://events.q4inc.com/attendee/883846048

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 2024, its market opportunity, anticipated products and launch schedules, reimbursement coverage and product costs, commercial and strategic partnerships and acquisitions, user experience, clinical trials and studies, and its strategies, goals and general business and market conditions, 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 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 our 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; 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, if and when the FDA begins actively regulating our tests pursuant to recently enacted FDA regulations; litigation or other proceedings, resulting from either third party claims of intellectual property infringement or third party infringement of our technology, is costly, 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.

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.

References

1. Positive cash flow for the quarter ended September 30, 2024, is derived from the GAAP Statement of Cash Flows as follows: net cash provided by operating activities of $51.8 million, net cash provided by financing activities of $1.7 million, offset by net cash used in investing activities for purchases of property and equipment, and investment in related party of $19.0 million.
2. 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.
3. Cash (outflow) inflow is calculated as the sum of GAAP net cash provided by (used in) operating activities, GAAP net cash provided by (used in) financing activities, and GAAP net cash provided by (used in) investing activities for purchases of property and equipment, investment in related party, and acquisition of assets.

Natera, Inc.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except shares)

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

2024

 

2023

 

 

 

 

 

(1)

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash

 

$

892,844

 

$

642,095

 

Short-term investments

 

 

29,490

 

 

236,882

 

Accounts receivable, net of allowance of $6,252 and $6,481 at September 30, 2024 and December 31, 2023, respectively

 

 

306,876

 

 

278,289

 

Inventory

 

 

48,724

 

 

40,759

 

Prepaid expenses and other current assets, net

 

 

44,631

 

 

60,524

 

Total current assets

 

 

1,322,565

 

 

1,258,549

 

Property and equipment, net

 

 

142,170

 

 

111,210

 

Operating lease right-of-use assets

 

 

87,856

 

 

56,537

 

Other assets

 

 

38,356

 

 

15,403

 

Total assets

 

$

1,590,947

 

$

1,441,699

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

27,834

 

$

14,998

 

Accrued compensation

 

 

49,051

 

 

45,857

 

Other accrued liabilities

 

 

126,176

 

 

149,405

 

Deferred revenue, current portion

 

 

17,886

 

 

16,612

 

Short-term debt financing

 

 

80,469

 

 

80,402

 

Total current liabilities

 

 

301,416

 

 

307,274

 

Long-term debt financing

 

 

286,549

 

 

282,945

 

Deferred revenue, long-term portion and other liabilities

 

 

25,504

 

 

19,128

 

Operating lease liabilities, long-term portion

 

 

98,953

 

 

67,025

 

Total liabilities

 

 

712,422

 

 

676,372

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock (2)

 

 

12

 

 

11

 

Additional paid-in capital

 

 

3,393,369

 

 

3,145,837

 

Accumulated deficit

 

 

(2,514,091)

 

 

(2,377,436)

 

Accumulated other comprehensive loss

 

 

(765)

 

 

(3,085)

 

Total stockholders’ equity

 

 

878,525

 

 

765,327

 

Total liabilities and stockholders’ equity

 

$

1,590,947

 

$

1,441,699

 

(1)

The consolidated balance sheet at December 31, 2023 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, 2023.

(2)

As of September 30, 2024 and December 31, 2023, there were approximately 124,137,000 and 119,581,000 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

Nine months ended

 

September 30,

September 30,

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

Product revenues

$

436,127

 

$

265,218

 

$

1,212,163

 

$

761,271

 

Licensing and other revenues

 

3,631

 

 

3,088

 

 

8,687

 

 

10,195

 

Total revenues

 

439,758

 

 

268,306

 

 

1,220,850

 

 

771,466

 

Cost and expenses

 

 

 

 

 

 

 

 

Cost of product revenues

 

167,657

 

 

146,962

 

 

496,340

 

 

437,524

 

Cost of licensing and other revenues

 

354

 

 

349

 

 

990

 

 

1,060

 

Research and development

 

96,931

 

 

77,235

 

 

274,677

 

 

237,714

 

Selling, general and administrative

 

214,154

 

 

154,742

 

 

606,397

 

 

456,877

 

Total cost and expenses

 

479,096

 

 

379,288

 

 

1,378,404

 

 

1,133,175

 

Loss from operations

 

(39,338

)

 

(110,982

)

 

(157,554

)

 

(361,709

)

Interest expense

 

(3,142

)

 

(3,252

)

 

(9,393

)

 

(9,490

)

Interest and other income, net

 

11,618

 

 

5,406

 

 

32,342

 

 

14,509

 

Loss before income taxes

 

(30,862

)

 

(108,828

)

 

(134,605

)

 

(356,690

)

Income tax expense

 

(730

)

 

(202

)

 

(2,050

)

 

(80

)

Net loss

$

(31,592

)

$

(109,030

)

$

(136,655

)

$

(356,770

)

Unrealized gain on available-for-sale securities, net of tax

 

593

 

 

3,807

 

 

2,320

 

 

10,966

 

Comprehensive loss

$

(30,999

)

$

(105,223

)

$

(134,335

)

$

(345,804

)

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

$

(0.26

)

$

(0.95

)

$

(1.12

)

$

(3.14

)

Weighted-average number of shares used in computing basic and diluted net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

123,775

 

 

115,171

 

 

122,486

 

 

113,559

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241112173566/en/

Investor Relations Mike Brophy, CFO, Natera, Inc., 510-826-2350

Media Lesley Bogdanow, VP of Corporate Communications, Natera, Inc., pr@natera.com