NEW YORK – Invitae reported after the close of the market on Tuesday that its second quarter revenues tumbled 12 percent year over year due to the previously disclosed elimination of non-core businesses and geographies that contributed to year-ago revenues.
For the three months ended June 30, the San Francisco-based medical genetics company reported revenues of $120.5 million compared to $136.6 million a year ago, and essentially in line with analysts' average estimate of $120.2 million.
On a pro forma basis, after removing about $17.5 million of revenue related to these exited businesses and geographies from the year-ago quarter, Q2 revenue grew approximately 1 percent. The company experienced lower-than-expected average payments for hereditary cancer tests and weaker fee-for-service revenue, tempered by double-digit revenue growth in rare disease, women's health, and its data business.
In the recently completed quarter, test revenue dropped 13 percent to $115.9 million from $133.2 million a year ago, while other revenue grew 35 percent to $4.6 million from $3.4 million.
In an after-market conference call with investors, CEO Ken Knight explained that headwinds in payer reimbursement for hereditary cancer testing and lower sales and fee-for-service significantly impacted test revenues.
Invitae's other businesses continued to see growth, however, explained Hoki Luk, VP of investor relations and corporate development.
Women's health grew by 18 percent year-over-year, led by the firm's carrier testing panel, as well as better reimbursement and billing practices. Rare disease business grew 32 percent year-over-year, driven by cardio, neurological disorder, and pediatric testing panels, as well as enhanced reimbursement and continued billing and revenue management efforts. The company's data business rose approximately 17 percent on continued growth of outpatient identification programs and partnership contracts for genetic data products.
Invitae significantly narrowed its Q2 net loss to $206.5 million, or $.78 per share, from $2.5 billion, or $10.87 per share, a year ago. Net loss in the year-ago period included a $2.3 billion goodwill and in-process R&D charge, Invitae said. The firm reported an adjusted Q2 loss per share of $.30, outperforming the Wall Street estimate of a $.37 loss per share.
Invitae's Q2 R&D spending fell 45 percent to $63.8 million from $115.1 million a year ago, and SG&A expenses edged up 1 percent to $114.7 million from $113.6 million.
The company lowered its full-year revenue guidance to a range of $480 million to $500 million from a previous guidance of more than $500 million.
"Looking ahead to the second half, our efforts are focused on expanding our hereditary cancer customer base, improving overall customer experience, expanding adoption of our product offerings, and continuing our push to improve payment rates and average payment per test," Invitae President and CEO Ken Knight said in a statement. "We are committed to establishing durable paths for profitable growth and creating the capacity to pursue innovation and investment in our future."
Invitae ended the quarter with $222.8 million in cash and cash equivalents, $102.4 million in marketable securities, and $10.5 million in restricted cash.