01—Abstract
Summary
Summary of the 10-Q filed May 10, 2024. Cited figures are marked; the original filing is the authoritative source.
Natera, Inc. reported a net loss of $67.6 milliona for the three months ended March 31, 2024, compared with a net loss of $136.9 million in the same period of 2023.
Total revenues rose to $367.7 millionb from $241.8 million, with product revenues of $364.7 million, up from $237.8 million. Loss from operations narrowed to $74.3 million from $138.3 million, while selling, general and administrative expenses increased to $194.3 million. The filing states that the company processed approximately 735,800 tests in the quarter, up from approximately 626,200, driven by growth in Signatera, Panorama and Horizon.
The company also noted that the Company increased revenue by a net $33.7 millionc from collections on tests delivered in prior periods, which contributed $0.28 to the improvement in loss per share. The balance sheet remained solid, with cash, cash equivalents and restricted cash of $813.8 million and $69.1 million in short-term investments as of March 31, 2024. Against this, the company carried $80.4 million outstanding on its UBS Credit Line, with $20.0 million remaining available, and $287.5 million of 2.25% Convertible Senior Notes due 2027.
Management stated that existing cash and marketable securities are expected to be sufficient to meet cash requirements for at least 12 months after May 9, 2024. Cash provided by operating activities was $27.0 milliond, compared with cash used of $81.1 million a year earlier. The filing also details significant litigation.
In January 2024, a jury found in the company's favor in its patent case against CareDx and awarded $96.3 million, while a jury verdict against the company in the Ravgen patent case set damages at $57 million, which the company intends to appeal. Other matters include a $19.35 million ArcherDX damages award, a pending Guardant trial scheduled for August 2024, and several securities and shareholder suits. The company's stock-based compensation expense was $64.4 million for the quarter, a significant contributor to its operating loss.
02—Key points
Key Highlights
- Total revenues were $367.7 million, up 52.1% from $241.8 million in the prior-year quarter, with product revenues at $364.7 million.
- Net loss narrowed to $67.6 million from $136.9 million, and the loss from operations decreased to $74.3 million from $138.3 million.
- Cash provided by operating activities was $27.0 million, versus cash used of $81.1 million in Q1 2023.
- Cash, cash equivalents and restricted cash totaled $813.8 million at March 31, 2024, plus $69.1 million in short-term investments.
- The company recognized a net $33.7 million revenue increase from collections on tests delivered in prior periods during the quarter.
- Debt includes $287.5 million of 2.25% Convertible Notes due 2027 and an $80.4 million Credit Line balance, with $20.0 million still available.
- Stock-based compensation was $64.4 million, and the company reported an accumulated deficit of $2.4 billion.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 10, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $367.74M$241.76M | +52.1% |
| R&D Expenses | $88.64M$82.31M | +7.7% |
| SG&A Expenses | $194.28M$149.63M | +29.8% |
| Operating Expenses | $442.06M$380.06M | +16.3% |
| Operating Income | -$74.31M-$138.30M | +46.3% |
| Interest Expense | $3.12M$3.06M | +2.1% |
| Net Income | -$67.60M-$136.94M | +50.6% |
| EPS (Basic) | $-0.56$-1.23 | +54.5% |
| EPS (Diluted) | $-0.56$-1.23 | +54.5% |
| Shares Outstanding (Basic) | 120.81M111.77M | +8.1% |
| Shares Outstanding (Diluted) | 120.81M111.77M | +8.1% |
05—Questions
Frequently Asked Questions
How did Natera's revenue and loss change compared with the first quarter of 2023?
Total revenues increased to $367.7 million from $241.8 million, and the net loss decreased to $67.6 million from $136.9 million. The filing attributes the volume growth to continued commercial growth of Signatera, Panorama and Horizon, and notes that product revenue also benefited from average selling price improvements.
Does Natera have enough cash to fund operations?
As of March 31, 2024, the company had $813.8 million in cash, cash equivalents and restricted cash and $69.1 million in marketable securities. Management believes these resources will be sufficient to meet anticipated cash requirements for at least 12 months after May 9, 2024, though it notes it may need to raise additional equity or debt financing.
What debt obligations does Natera carry?
The company had $287.5 million principal of 2.25% Convertible Senior Notes due May 2027 and an $80.4 million outstanding balance on its UBS Credit Line, including accrued interest. The Credit Line carries a variable rate of 30-day SOFR plus 0.5%, and $20.0 million remained available as of March 31, 2024.
What significant legal matters are disclosed in the filing?
The filing describes a January 2024 jury verdict in the company's favor against CareDx that awarded $96.3 million, and a January 2024 verdict against the company in the Ravgen case with damages of $57 million, which the company intends to appeal. It also discloses a $19.35 million damages award in the ArcherDX case, a Guardant trial scheduled for August 2024, and several securities and shareholder lawsuits.
What drove the improvement in reported revenue this quarter?
Product revenue increased by $126.9 million, primarily from higher test volumes and average selling price improvements. The company also increased revenue by a net $33.7 million for collections related to tests delivered in prior periods, which the filing notes increased revenue and reduced the net loss by a corresponding amount.
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