01—Abstract
Summary
Summary of the 10-Q filed August 9, 2024. Cited figures are marked; the original filing is the authoritative source.
Natera, Inc. reported a sharp improvement in its second-quarter 2024 results.
Total revenues were $413.4 milliona for the three months ended June 30, 2024, up from $261.4 million a year earlier, and $781.1 million for the six months, up from $503.2 million. Product revenues were $411.4 million for the quarter. Loss from operations narrowed to $43.9 million from $112.4 million, and the net loss narrowed to $37.5 million from $110.8 million.
For the six months, the net loss was $105.1 millionb versus $247.7 million a year earlier. Stock-based compensation was $131.9 million for the six months, and the company cited its accumulated deficit of $2.5 billion. Liquidity is described as adequate for at least 12 months after August 8, 2024.
At June 30, 2024 the company held $796.8 millionc in cash, cash equivalents and restricted cash and $90.3 million in short-term investments. Debt consisted of $80.4 million drawn on a UBS Credit Line, with $20.0 million remaining available, and $287.5 million of 2.25% Convertible Senior Notes due 2027. On July 19, 2024, Natera elected to redeem all of those notes on October 11, 2024, and stated it expects substantially all to convert into common stock, which would involve roughly 7.5 million shares.
The company said it does not expect a material effect on liquidity from this decision. The filing also details significant litigation. Natera won a January 2024 jury verdict against CareDx that awarded $96.3 milliond in lost profits and royalties.
It faces a $57 million jury damages finding in the Ravgen case, which it intends to appeal, and a number of securities and false advertising matters remain pending. The filing states the company does not believe any pending matters will have a material effect on its financial condition.
02—Key points
Key Highlights
- Total revenues rose to $413.4 million in Q2 2024 from $261.4 million in Q2 2023, and to $781.1 million for the six months from $503.2 million.
- Loss from operations narrowed to $43.9 million in Q2 2024 from $112.4 million, and net loss narrowed to $37.5 million from $110.8 million.
- Cash, cash equivalents and restricted cash totaled $796.8 million at June 30, 2024, plus $90.3 million in short-term investments.
- Natera elected to redeem all $287.5 million of its 2.25% Convertible Notes due 2027 on October 11, 2024, and expects substantially all to convert into common stock.
- Accounts receivable increased to $335.9 million from $278.3 million at year-end 2023, and $16.6 million of cash receipts remained unapplied due to the Change Healthcare network disruption.
- Stock-based compensation was $131.9 million for the six months ended June 30, 2024, compared with $84.8 million a year earlier.
- The company reported an accumulated deficit of $2.5 billion and a Ravgen jury damages finding of $57 million that it intends to appeal, while a CareDx verdict awarded $96.3 million to Natera.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 9, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $413.35M$261.40M | +58.1% |
| R&D Expenses | $89.11M$78.17M | +14.0% |
| SG&A Expenses | $197.97M$152.51M | +29.8% |
| Operating Expenses | $457.25M$373.83M | +22.3% |
| Operating Income | -$43.90M-$112.43M | +61.0% |
| Interest Expense | $3.13M$3.18M | −1.6% |
| Net Income | -$37.46M-$110.80M | +66.2% |
| EPS (Basic) | $-0.30$-0.97 | +69.1% |
| EPS (Diluted) | $-0.30$-0.97 | +69.1% |
| Shares Outstanding (Basic) | 122.85M113.69M | +8.1% |
| Shares Outstanding (Diluted) | 122.85M113.69M | +8.1% |
05—Questions
Frequently Asked Questions
How much cash and debt did Natera have at June 30, 2024?
Natera held $796.8 million in cash, cash equivalents and restricted cash and $90.3 million in marketable securities. It had $80.4 million outstanding on its UBS Credit Line, with $20.0 million remaining available, and $287.5 million of principal on its 2.25% Convertible Notes.
What is the impact of the convertible note redemption?
Natera elected on July 19, 2024 to redeem all $287.5 million of its 2.25% Convertible Notes due 2027 on October 11, 2024, at 100% of principal plus accrued interest. The company elected physical settlement in shares and expects substantially all notes to convert, which it says would not have a material effect on liquidity. Full conversion would issue about 7,534,000 shares.
Is Natera expected to have enough cash to fund operations?
The company believes its existing cash and marketable securities will be sufficient to meet anticipated cash requirements for at least 12 months after August 8, 2024. It also notes that revenues have not fully funded operations and that it may need to raise additional equity or debt.
What are the key pending legal matters?
The filing describes a $57 million jury damages finding in the Ravgen case, which Natera intends to appeal, and a $96.3 million jury award to Natera in its second CareDx patent case. It also lists CareDx false advertising claims, Guardant false advertising litigation with trial scheduled for November 2024, and securities class actions. The company states that none of the matters it has disclosed are expected to have a material effect on its financial condition.
What drove the increase in revenue and the reduced loss?
Product revenues grew 59.3% in Q2 2024, driven by test volume growth, average selling price improvements, and cash receipts for tests delivered in prior periods. Those prior-period collections added $39.9 million to revenue in the quarter. Selling, general and administrative expenses rose 29.8% in the quarter, largely due to higher compensation and stock-based compensation.
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