01—Abstract
Summary
Summary of the 10-K filed February 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Natera, Inc. reported total revenues of $1,082.6 milliona for 2023, up from $820.2 million in 2022 and $625.5 million in 2021, with product revenues of $1,068.5 million.
The company's net loss narrowed to $434.8 millionb in 2023 from $547.8 million in 2022, though it still carries an accumulated deficit of $2.4 billion. Panorama, Horizon, and Signatera together represent the significant majority of revenues, and the company processed approximately 2,496,100 tests in 2023. The company ended 2023 with $642.1 million in cash, cash equivalents and restricted cash and $236.9 million in marketable securities.
Offsetting this are $287.5 millionc of 2.25% Convertible Senior Notes due 2027 and $80.4 million drawn on a UBS Credit Line, with $20.0 million remaining available. Management states that existing cash and marketable securities are sufficient to meet anticipated cash requirements for at least 12 months after February 28, 2024.
Net cash used in operating activities was $247.0 milliond in 2023, compared with $431.5 million in 2022. Key risks highlighted include limited third-party payer reimbursement for microdeletions screening, sole-source dependence on Illumina sequencers and Streck blood collection tubes, a proposed FDA rule that would classify laboratory-developed tests as medical devices, and ongoing patent and false advertising litigation, including a January 2024 jury verdict of $57 million in the Ravgen case and a $96.3 million jury award to the company in its case against CareDx.
02—Key points
Key Highlights
- Total revenues rose to $1,082.6 million in 2023, a $262.3 million increase over 2022, with product revenues of $1,068.5 million making up 99% of total revenues.
- Net loss narrowed to $434.8 million in 2023 from $547.8 million in 2022; the company has an accumulated deficit of $2.4 billion.
- Net cash used in operating activities was $247.0 million in 2023, compared with $431.5 million in 2022.
- Year-end 2023 liquidity included $642.1 million in cash, cash equivalents and restricted cash and $236.9 million in marketable securities.
- Debt consisted of $287.5 million of 2.25% Convertible Senior Notes due 2027 and $80.4 million drawn on the UBS Credit Line, with $20.0 million still available.
- Panorama, Horizon and Signatera together represent the significant majority of revenues; 2023 test processing reached approximately 2,496,100 tests.
- The FDA has proposed a rule that would classify laboratory-developed tests as medical devices, and the company's sole-source sequencer and tube suppliers add supply and regulatory risk.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 29, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $1.08B$820.22M | +32.0% |
| R&D Expenses | $320.68M$316.42M | +1.3% |
| SG&A Expenses | $618.31M$588.59M | +5.0% |
| Operating Expenses | $1.53B$1.36B | +12.3% |
| Operating Income | -$446.25M-$541.04M | +17.5% |
| Interest Expense | $12.64M$9.32M | +35.6% |
| Net Income | -$434.80M-$547.80M | +20.6% |
| EPS (Basic) | $-3.78$-5.57 | +32.1% |
| EPS (Diluted) | $-3.78$-5.57 | +32.1% |
| Shares Outstanding (Basic) | 115.00M98.41M | +16.9% |
| Shares Outstanding (Diluted) | 115.00M98.41M | +16.9% |
05—Questions
Frequently Asked Questions
How did Natera's revenue and losses trend in 2023?
Total revenues grew to $1,082.6 million in 2023 from $820.2 million in 2022, a $262.3 million increase. The net loss fell to $434.8 million from $547.8 million, and stock-based compensation expense was $191.8 million for the year.
Is Natera well funded for the next year?
Management believes existing cash and marketable securities will meet anticipated cash requirements for at least 12 months after February 28, 2024. Year-end 2023 cash, cash equivalents and restricted cash totaled $642.1 million, with $236.9 million in marketable securities.
What debt obligations does Natera carry?
The company has $287.5 million principal of 2.25% Convertible Senior Notes due May 2027 and $80.4 million outstanding on a UBS Credit Line, which is secured by its UBS-held investments and carries a requirement to keep at least $150.0 million in those accounts.
What are the biggest reimbursement risks?
Many third-party payers do not reimburse for microdeletions screening, and the CPT code for microdeletions has produced low average reimbursement. Horizon reimbursement has also declined since a 2019 expanded carrier screening code, and the Medicare Part B CLFS rate for Panorama lacks a national coverage determination.
What regulatory and litigation issues could affect the business?
The FDA has proposed classifying laboratory-developed tests as medical devices and plans to finalize the rule in the second quarter of 2024, though timing is uncertain. In January 2024 a jury awarded $57 million against the company in a Ravgen patent case, and the company is appealing certain rulings.
06—Continue