Natera Reports Second Quarter 2023 Financial Results

Original from: business wire

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).

Source: Natera Reports Second Quarter 2023 Financial Results