01—Abstract
Summary
Summary of the 10-K filed March 1, 2023. Cited figures are marked; the original filing is the authoritative source.
Natera, Inc. (Nasdaq: NTRA) reported total revenues of $820.2 milliona for 2022, up from $625.5 million in 2021 and $391.0 million in 2020, with product revenues of $797.3 million.
The company remains unprofitable, with a net loss of $547.8 millionb in 2022 (compared with $471.7 million in 2021 and $229.7 million in 2020) and an accumulated deficit of $1.9 billion. The company processed approximately 2.1 million tests in 2022. Panorama (non-invasive prenatal test) and Horizon (carrier screening) together represent a majority of revenues, and the filing describes Natera as a diagnostics company expanding into oncology (Signatera) and organ health (Prospera).
Liquidity was supported by a November 2022 equity offering of 13,144,500 shares at $35c per share, which generated net proceeds of $433.2 million. As of December 31, 2022, the company reported $466.1 million in cash, cash equivalents and restricted cash, $432.3 million in marketable securities, $287.5 million of 2.25% convertible senior notes due 2027, and $80.4 million drawn on a UBS credit line with $70.0 million still available. Management states that existing cash and marketable securities are sufficient to meet anticipated cash requirements for at least 12 months after March 1, 2023.
Net cash used in operating activities was $431.5 milliond in 2022. The filing highlights significant risks, including reimbursement pressure on microdeletions testing and the Horizon CPT code, dependence on Illumina as sole sequencer supplier, pending intellectual property and false advertising litigation (including a March 2022 jury verdict against the company of $44.9 million in damages to CareDx, which the company has challenged), and an independent committee's conclusion that allegations in a March 2022 short seller report were unfounded.
02—Key points
Key Highlights
- Total revenues rose 31.1% to $820.2 million in 2022 from $625.5 million in 2021; product revenues were $797.3 million.
- Net loss widened to $547.8 million in 2022 from $471.7 million in 2021; accumulated deficit reached $1.9 billion.
- Panorama and Horizon together represent a majority of revenues; the company processed approximately 2.1 million tests in 2022.
- Cash, cash equivalents and restricted cash of $466.1 million plus $432.3 million in marketable securities at year-end 2022.
- November 2022 equity offering of 13,144,500 shares at $35 per share raised net proceeds of $433.2 million.
- Debt includes $287.5 million of 2.25% convertible senior notes due 2027 and $80.4 million drawn on a UBS credit line.
- Management believes existing cash and marketable securities will meet cash requirements for at least 12 months after March 1, 2023.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed March 1, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $820.22M$625.49M | +31.1% |
| R&D Expenses | $316.42M$264.21M | +19.8% |
| SG&A Expenses | $588.59M$511.03M | +15.2% |
| Operating Expenses | $1.36B$1.09B | +24.5% |
| Operating Income | -$541.04M-$468.17M | −15.6% |
| Interest Expense | $9.32M$8.30M | +12.2% |
| Net Income | -$547.80M-$471.72M | −16.1% |
| EPS (Basic) | $-5.57$-5.21 | −6.9% |
| EPS (Diluted) | $-5.57$-5.21 | −6.9% |
| Shares Outstanding (Basic) | 98.41M90.56M | +8.7% |
| Shares Outstanding (Diluted) | 98.41M90.56M | +8.7% |
05—Questions
Frequently Asked Questions
Is Natera's revenue growing and is it profitable?
Revenue grew to $820.2 million in 2022 from $625.5 million in 2021, but the company reported a net loss of $547.8 million in 2022 and expects to continue incurring losses for the foreseeable future.
How much cash does Natera have and how is it funded?
At December 31, 2022, Natera had $466.1 million in cash, cash equivalents and restricted cash and $432.3 million in marketable securities. Funding came from equity offerings, including $433.2 million net proceeds in November 2022, and debt, including $287.5 million of convertible notes and $80.4 million drawn on a credit line.
What are the main reimbursement risks?
The filing states that third-party payers often decline to reimburse for microdeletions screening under the CPT code, resulting in low average reimbursement rates, and that the expanded carrier screening CPT code has reduced reimbursement rates for the broader Horizon panel.
What litigation is the company involved in?
Natera is involved in multiple patent and false advertising lawsuits, including a March 2022 jury verdict finding Natera liable to CareDx for $44.9 million in damages, which Natera has moved to set aside. The company also faces securities class actions and third-party payer matters.
What dependencies create operational risk?
The company relies on Illumina as its sole supplier of sequencers and related reagents for Panorama, Horizon, Signatera and Prospera, and on Streck as the sole supplier of blood collection tubes. It also operates two CLIA-certified laboratories in Austin, Texas and San Carlos, California.
06—Continue