01—Abstract
Summary
Summary of the 10-Q filed November 12, 2024. Cited figures are marked; the original filing is the authoritative source.
Natera, Inc. reported a substantially improved third quarter and nine months of 2024 in this Form 10-Q filed November 12, 2024.
Total revenues were $439.8 milliona for the three months ended September 30, 2024, up from $268.3 million a year earlier, and $1.22 billion for the nine months, compared with $771.5 million. Product revenues were $1.21 billion for the nine months. The company's net loss narrowed to $31.6 million for the quarter from $109.0 million, and to $136.7 million for the nine months from $356.8 million.
Stock-based compensation was $202.5 millionb for the nine months. The filing notes that the quarterly results include $34.5 million of cash receipts for tests delivered in prior periods, which increased revenue, and the company's loss per share for the quarter was $0.26. The balance sheet shows cash, cash equivalents and restricted cash of $892.8 million and marketable securities of $29.5 million at September 30, 2024, against an $80.4 million Credit Line balance and $287.5 million of 2.25% Convertible Senior Notes principal.
Operating cash flow was positive at $82.8 millionc for the nine months, compared with an outflow of $189.4 million a year earlier. The company stated that existing cash and marketable securities are expected to be sufficient for at least 12 months after November 12, 2024. It also announced in July 2024 the redemption of all outstanding Convertible Notes, completed October 11, 2024, with $287.4 million converted into approximately 7.5 million common shares.
The filing also details ongoing litigation, including a $96.3 milliond jury award to the company against CareDx, a $57 million damages verdict against the company in the Ravgen case, and multiple securities and false advertising suits. The company states it does not believe these matters will have a material effect on its financial condition, though outcomes are uncertain.
02—Key points
Key Highlights
- Total revenues rose to $439.8 million in Q3 2024 from $268.3 million in Q3 2023, and to $1.22 billion for the nine months from $771.5 million.
- Net loss narrowed to $31.6 million in Q3 2024 from $109.0 million, and to $136.7 million for the nine months from $356.8 million.
- Q3 2024 revenue included $34.5 million of cash collected for tests delivered in prior periods, which lowered loss per share by $0.28.
- Operating cash flow was $82.8 million for the nine months 2024, versus cash used of $189.4 million in the prior-year period.
- Cash, cash equivalents and restricted cash totaled $892.8 million at September 30, 2024, and the company expects this and marketable securities to meet requirements for at least 12 months.
- All $287.5 million of 2.25% Convertible Notes were redeemed on October 11, 2024, with $287.4 million converted into about 7.5 million shares of common stock.
- Litigation includes a $96.3 million jury award to Natera against CareDx and a $57 million damages verdict against Natera in the Ravgen case.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 12, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $439.76M$268.31M | +63.9% |
| Gross Profit | $723.52M— | — |
| R&D Expenses | $96.93M$77.23M | +25.5% |
| SG&A Expenses | $214.15M$154.74M | +38.4% |
| Operating Expenses | $479.10M$379.29M | +26.3% |
| Operating Income | -$39.34M-$110.98M | +64.6% |
| Interest Expense | $3.14M$3.25M | −3.4% |
| Net Income | -$31.59M-$109.03M | +71.0% |
| EPS (Basic) | $-0.26$-0.95 | +72.6% |
| EPS (Diluted) | $-0.26$-0.95 | +72.6% |
| Shares Outstanding (Basic) | 123.78M115.17M | +7.5% |
| Shares Outstanding (Diluted) | 123.78M115.17M | +7.5% |
05—Questions
Frequently Asked Questions
Did Natera's financial performance improve in the third quarter of 2024?
Yes. Total revenues were $439.8 million, up 63.9% from $268.3 million, and the net loss narrowed to $31.6 million from $109.0 million. Product revenues increased $170.9 million, driven by higher test volumes, average selling price improvements and $34.5 million of prior-period collections.
How much cash does Natera have and is it sufficient?
At September 30, 2024, the company had $892.8 million in cash, cash equivalents and restricted cash and $29.5 million in short-term investments. It believes these are sufficient to meet anticipated cash requirements for at least 12 months after November 12, 2024. The filing also notes $80.4 million outstanding on its Credit Line and $20.0 million still available on it.
What happened to the Convertible Notes?
Natera elected to redeem all $287.5 million of its 2.25% Convertible Senior Notes due 2027 on October 11, 2024. The company chose physical settlement in shares, so $287.4 million of notes converted into approximately 7.5 million common shares, and the remaining notes were repaid in cash for $0.1 million.
What are the main litigation risks disclosed?
The company is involved in many patent, false advertising, securities and class action matters. Notable items include a January 2024 jury award of $96.3 million to Natera against CareDx, a January 2024 verdict against Natera in the Ravgen case with damages of $57 million, and a securities class action under the Exchange Act. The company says it does not believe these matters will have a material effect on its financial condition, but outcomes cannot be assured.
Is Natera still losing money on a cumulative basis?
Yes. The company reported a net loss of $136.7 million for the nine months ended September 30, 2024, and an accumulated deficit of $2.5 billion. It recorded a full valuation allowance against its net deferred tax assets, reflecting its history of cumulative operating losses.
06—Continue