SAN CARLOS, Calif., May 6, 2020 /PRNewswire/ -- Natera, Inc. (NASDAQ:  NTRA), a pioneer and global leader in cell-free DNA testing, today reported financial results for the first quarter ended March 31, 2020 and provided an update on recent business progress.

Recent Accomplishments & Highlights

• Generated total revenues of $94.0 million in the first quarter of 2020 compared to $66.8 million in the first quarter of 2019, an increase of 41%.
• Processed approximately 235,500 tests in the first quarter of 2020, compared to approximately 200,200 tests processed in the first quarter of 2019 and 209,400 tests processed in the fourth quarter of 2019.
• Achieved cost of goods sold of $202 per test accessioned in Natera's laboratory; approaching the company's long-term target of $200 cost of goods sold per unit.
• Successfully enrolled the first 145 patients in the ProActive registry trial for Prospera^TM in kidney transplant rejection.
• Responded to COVID-19 by implementing safety protocols in the laboratory, scaling remote ordering capabilities for patients and physicians.
• Saw coverage for Panorama^® expanded during COVID-19 by greater than 20 million lives.
• Successfully issued convertible senior notes due 2027 for net proceeds of $278.9 million in April 2020.
• Repaid the obligations under its 2017 term loan with OrbiMed Advisors in April 2020.

"We were very pleased with our performance in the first quarter," said Steve Chapman, Natera's Chief Executive Officer. "We had a record quarter for both volumes and revenues, and drove cost of goods sold per unit to very near the long-term target we had set out previously. We responded aggressively to the COVID-19 outbreak to ensure no disruptions to our lab operations, demonstrated our ability to rapidly scale our mobile ordering platforms for patients and providers, and further strengthened our balance sheet with the financing."

First Quarter Ended March 31, 2020 Financial Results

Total revenues were $94.0 million in the first quarter of 2020 compared to $66.8 million for the first quarter of 2019, an increase of 41%. The increase in total revenues was driven primarily by sales of Natera's Panorama and Horizon tests. Natera processed 235,500 tests in the first quarter of 2020, including approximately 222,400 tests accessioned in its laboratory, compared to 200,200 tests processed in the first quarter of 2019, including approximately 186,500 tests accessioned in its laboratory.

In the three months ended March 31, 2020, Natera recognized revenue on approximately 221,500 tests for which results were reported to customers in the period (tests reported), including approximately 209,200 tests accessioned in its laboratory, compared to approximately 184,700 tests reported, including approximately 173,400 tests accessioned in its laboratory, in the first quarter of 2019, an overall increase of 20% for the quarter.

Gross profit for the three months ended March 31, 2020 and 2019 was $49.0 million and $23.5 million, respectively, representing a 52% and 35% gross margin, respectively. The company was able to achieve higher margins in Q1 2020 as a result of increases in both volume and average selling price as well as improved cost of goods sold per test. 

Total operating expenses, representing research and development expenses and selling, general and administrative expenses, for the first quarter of 2020 were $83.9 million, compared to $55.3 million in the same period of the prior year. The increases were primarily driven by headcount growth to support new product offerings.

Loss from operations for the first quarter of 2020 was $34.9 million compared to $31.7 million for the same period of the prior year. 

Net loss for the first quarter of 2020 was $35.4 million, or ($0.45) per diluted share, compared to net loss of $34.1 million, or ($0.54) per diluted share, for the same period in 2019. Weighted average shares outstanding were 78.3 million in the first quarter of 2020.

At March 31, 2020, Natera held $405.9 million in cash, cash equivalents, short-term investments and restricted cash, compared to $441.0 million as of December 31, 2019. As of March 31, 2020, Natera had a total outstanding debt balance of $123.0 million, comprised of $50.1 million with accrued interest under its $50.0 million line of credit with UBS at a variable interest rate of 30-day LIBOR plus 110 bps and a net carrying amount of $72.9 million under its debt agreement with OrbiMed Advisors.

Subsequent to March 31, 2020, Natera successfully issued seven-year convertible senior notes for net proceeds of $278.9 million, of which a portion was used to repay the obligations under the company's 2017 term loan with OrbiMed Advisors. As of March 31, 2020, pro forma for the notes issuance and repayment of the term loan, the company's cash, cash equivalents, short-term investments and restricted cash balance would have been $605.6 million.

2020 Financial Outlook

As previously disclosed, because of the highly dynamic situation and ongoing disruptions from COVID-19, the company has withdrawn its financial guidance for the 2020 fiscal year. At the present time, the company cannot predict the extent or duration of the impact of the COVID-19 outbreak on its financial and operating results.

About Natera

Natera is a global leader in cell-free DNA testing. The mission of the company is to change the management of disease worldwide with a focus on reproductive health, oncology, and organ transplantation. Natera operates an ISO 13485-certified and CAP-accredited laboratory certified under the Clinical Laboratory Improvement Amendments (CLIA) in San Carlos, Calif. It offers proprietary genetic testing services to inform obstetricians, transplant physicians, oncologists, and cancer researchers, including biopharmaceutical companies, and genetic laboratories through its cloud-based software platform.

Conference Call Information

A webcast replay will be available at investor.natera.com.

Forward-Looking Statements

This release contains forward-looking statements, including regarding the company's business operations in light of the COVID-19 pandemic. Any forward-looking statements contained in this release are based upon Natera's current plans, estimates, and expectations, as of the date of this release, and are not a representation that such plans, estimates, or expectations will be achieved. Subsequent events may cause these expectations to change, and Natera disclaims any obligation to update the forward-looking statements in the future.

These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially, including: we face numerous uncertainties and challenges in operating our business in light of the COVID-19 pandemic; we may be unable to further increase the use and adoption of Panorama and Horizon, through our direct sales efforts or through our laboratory partners, or to develop and successfully commercialize new products, including Signatera and Prospera; we have incurred losses since our inception and we anticipate that we will continue to incur losses for the foreseeable future; our quarterly results may fluctuate from period to period; our estimates of market opportunity and forecasts of market growth may prove to be inaccurate; we may be unable to compete successfully with existing or future products or services offered by our competitors; we may not be successful in commercializing our cloud-based distribution model; our products may not perform as expected; the results of our clinical studies may not be compelling to professional societies or payors as supporting the use of our tests, particularly in the average-risk pregnancy population or for microdeletions screening, or may not be able to be replicated in later studies required for regulatory approvals or clearances; if our sole CLIA-certified laboratory facility becomes inoperable, we will be unable to perform our tests and our business will be harmed; we rely on a limited number of suppliers or, in some cases, single suppliers, for some of our laboratory instruments and materials and may not be able to find replacements or immediately transition to alternative suppliers; if we are unable to successfully scale our operations, our business could suffer; the marketing, sale, and use of Panorama and our other products could result in substantial damages arising from product liability or professional liability claims that exceed our resources; we may be unable to expand third-party payer coverage and reimbursement for Panorama, Horizon and our other tests, and we may be required to refund reimbursements already received; third-party payers may withdraw coverage or provide lower levels of reimbursement due to changing policies, billing complexities or other factors, such as the increased focus by third-party payers on requiring that prior authorization be obtained prior to conducting a test; if the FDA were to begin actively regulating our tests, we could incur substantial costs and delays associated with trying to obtain premarket clearance or approval and incur costs associated with complying with post-market controls; litigation or other proceedings, resulting from either third party claims of intellectual property infringement or third party infringement of our technology, is costly, time-consuming and could limit our ability to commercialize our products or services; and any inability to effectively protect our proprietary technology could harm our competitive position or our brand.

Additional risks and uncertainties that could affect our financial results are included under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent filings on Forms 10-K and 10-Q and in other filings that we make with the SEC from time to time. These documents are available on our website at www.natera.com under the Investor Relations section and on the SEC's website at www.sec.gov

Natera assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.

Contacts

Natera, Inc.

Investor Relations
Mike Brophy, CFO, Natera, Inc., 650-249-9090

Media 
Paul Greenland, VP of Corporate Marketing, Natera, Inc., pr@natera.com

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SOURCE Natera, Inc.