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Natera Reports First Quarter 2024 Financial Results

Natera, Inc. (NASDAQ: NTRA), a global leader in cell-free DNA and genetic testing, today reported its financial results for the first quarter ended March 31, 2024.

Recent Strategic and Financial Highlights

  • Achieved positive cash flow of approximately $3.0 million1 in the first quarter of 2024.
  • Generated total revenues of $367.7 million in the first quarter of 2024, compared to $241.8 million in the first quarter of 2023, an increase of 52.1%. Product revenues grew 53.4% over the same period.
  • Generated gross margins of 56.7% in the first quarter of 2024, compared to gross margins of 38.7% in the first quarter of 2023.
  • Processed approximately 735,800 tests in the first quarter of 2024, compared to approximately 626,200 tests in the first quarter of 2023, an increase of 17.5%.
  • Performed approximately 114,800 oncology tests in the first quarter of 2024, compared to approximately 71,000 in the first quarter of 2023, an increase of 61.7%.
  • Launched fetal RhD NIPT test backed by excellent performance in clinical validation study.
  • Announced updated guidelines from a leading medical society in nephrology that support genetic testing in patients with chronic kidney disease to establish cause of disease.
  • Published largest, prospective, donor-derived cfDNA study in kidney transplantation.
  • Released analysis from randomized, phase III IMvigor011 trial in bladder cancer demonstrating that patients with undetectable circulating tumor DNA on serial Signatera testing may be able to forgo treatment.
  • Published key data in breast cancer and uterine cancer.

“We had an excellent start to the year, driving robust volume, revenue and margin growth and achieving cash flow breakeven earlier than expected,” said Steve Chapman, chief executive officer of Natera. “We continued to deliver on our mission to transform disease management with the launch of a highly differentiated product in women’s health and the publication of practice-changing data in oncology and organ health.”

First Quarter Ended March 31, 2024 Financial Results

Total revenues were $367.7 million in the first quarter of 2024 compared to $241.8 million in the first quarter of 2023, an increase of 52.1%. The increase in total revenues was driven primarily by a 53.4% increase in product revenues, which were $364.7 million in the first quarter of 2024 compared to $237.8 million in the first quarter of 2023. The increase in product revenues was primarily driven by an increase in volume, as well as average selling price improvements.

Natera processed approximately 735,800 tests in the first quarter of 2024, including approximately 718,700 tests accessioned in its laboratory, compared to approximately 626,200 tests processed, including approximately 607,700 tests accessioned in its laboratory, in the first quarter of 2023.

In the first quarter of 2024, Natera recognized revenue on approximately 679,400 tests for which results were reported to customers in the period (tests reported), including approximately 663,500 tests reported from its laboratory, compared to approximately 583,400 tests reported, including approximately 566,000 tests reported from its laboratory, in the first quarter of 2023, an overall increase of 16.5% from the prior period.

Gross profit2 for the three months ended March 31, 2024 and 2023 was $208.6 million and $93.6 million, respectively, representing a gross margin of 56.7% and 38.7%, respectively. Natera had higher gross margin in the first quarter of 2024 primarily as a result of higher revenues and continuous progress in reducing cost of goods sold associated with tests processed. Total operating expenses, representing research and development expenses and selling, general and administrative expenses, for the first quarter of 2024 were $282.9 million, compared to $231.9 million in the same period of the prior year, an increase of 22.0%. 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 first quarter of 2024 was $74.3 million compared to $138.3 million for the same period of the prior year.

Natera reported a net loss for the first quarter of 2024 of $67.6 million, or ($0.56) per diluted share, compared to a net loss of $136.9 million, or ($1.23) per diluted share, for the same period in 2023. Weighted average shares outstanding were approximately 120.8 million in the first quarter of 2024 compared to 111.8 million in the first quarter of the prior year.

At March 31, 2024, Natera held approximately $882.9 million in cash, cash equivalents, short-term investments and restricted cash, compared to $879.0 million as of December 31, 2023. As of March 31, 2024, Natera had a total outstanding debt balance of $363.7 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 50 bps and a net carrying amount of $283.3 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 March 31, 2024.

Financial Outlook

Natera anticipates 2024 total revenue of $1.42 billion to $1.45 billion; 2024 gross margin to be approximately 53% to 55% of revenues; selling, general and administrative costs to be approximately $700 million to $750 million; research and development costs to be $350 million to $375 million, and net cash inflow (consumption) to be ($25) million to $25 million3.

Test Volume Summary

 

Unit

Q1 2024

Q1 2023

Definition

Tests processed

735,800

 

626,200

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

Tests accessioned

718,700

 

607,700

Test accessioned in our laboratory

Tests reported

679,400

 

583,400

Total tests reported

Tests reported in our laboratory

663,500

 

566,000

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 First Quarter 2024 Financial Results Conference Call

Date:

Thursday, May 9, 2024

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/575350879

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 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.

References

  1. Positive cash flow for the quarter ended March 31, 2024, is derived from the GAAP Statement of Cash Flows as follows: net cash provided by operating activities of $27.0 million, net cash provided by financing activities of $6.5 million, offset by net cash used in investing activities for purchases of property and equipment and acquisition of an asset of $30.8 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 inflow (consumption) 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 and acquisition of assets.

Natera, Inc.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except shares)

 

March 31,

December 31,

2024

2023

(1)

Assets

 

 

Current assets:

 

 

Cash, cash equivalents and restricted cash

$

813,817

 

 

$

642,095

 

Short-term investments

 

69,121

 

 

 

236,882

 

Accounts receivable, net of allowance of $7,252 and $6,481 at March 31, 2024 and December 31, 2023, respectively

 

288,748

 

 

 

278,289

 

Inventory

 

43,024

 

 

 

40,759

 

Prepaid expenses and other current assets, net

 

46,734

 

 

 

60,524

 

Total current assets

 

1,261,444

 

 

 

1,258,549

 

Property and equipment, net

 

125,791

 

 

 

111,210

 

Operating lease right-of-use assets

 

54,553

 

 

 

56,537

 

Other assets

 

26,417

 

 

 

15,403

 

Total assets

$

1,468,205

 

 

$

1,441,699

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

26,038

 

 

$

14,998

 

Accrued compensation

 

39,577

 

 

 

45,857

 

Other accrued liabilities

 

142,228

 

 

 

149,405

 

Deferred revenue, current portion

 

17,705

 

 

 

16,612

 

Short-term debt financing

 

80,401

 

 

 

80,402

 

Total current liabilities

 

305,949

 

 

 

307,274

 

Long-term debt financing

 

283,273

 

 

 

282,945

 

Deferred revenue, long-term portion and other liabilities

 

20,712

 

 

 

19,128

 

Operating lease liabilities, long-term portion

 

64,160

 

 

 

67,025

 

Total liabilities

 

674,094

 

 

 

676,372

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

Common stock (2)

 

12

 

 

 

11

 

Additional paid-in capital

 

3,241,326

 

 

 

3,145,837

 

Accumulated deficit

 

(2,445,035

)

 

 

(2,377,436

)

Accumulated other comprehensive loss

 

(2,192

)

 

 

(3,085

)

Total stockholders’ equity

 

794,111

 

 

 

765,327

 

Total liabilities and stockholders’ equity

$

1,468,205

 

 

$

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 March 31, 2024 and December 31, 2023, there were approximately 122,234,000 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

 

 

March 31,

 

 

2024

 

2023

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

Product revenues

 

$

364,672

 

 

$

237,797

 

Licensing and other revenues

 

 

3,069

 

 

 

3,959

 

Total revenues

 

 

367,741

 

 

 

241,756

 

Cost and expenses

 

 

 

 

 

 

Cost of product revenues

 

 

158,833

 

 

 

147,754

 

Cost of licensing and other revenues

 

 

307

 

 

 

370

 

Research and development

 

 

88,637

 

 

 

82,306

 

Selling, general and administrative

 

 

194,278

 

 

 

149,627

 

Total cost and expenses

 

 

442,055

 

 

 

380,057

 

Loss from operations

 

 

(74,314

)

 

 

(138,301

)

Interest expense

 

 

(3,124

)

 

 

(3,061

)

Interest and other income, net

 

 

10,267

 

 

 

4,585

 

Loss before income taxes

 

 

(67,171

)

 

 

(136,777

)

Income tax expense

 

 

(428

)

 

 

(160

)

Net loss

 

$

(67,599

)

 

$

(136,937

)

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

 

 

893

 

 

 

4,564

 

Comprehensive loss

 

$

(66,706

)

 

$

(132,373

)

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

Basic and diluted

 

$

(0.56

)

 

$

(1.23

)

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

 

 

 

 

 

 

Basic and diluted

 

 

120,814

 

 

 

111,767

 

 

Contacts

Investor Relations

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

Media

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

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