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Natera Q3 Revenues Grow 61 Percent

NEW YORK – Natera reported after the close of the market on Thursday that its third quarter revenues rose 61 percent year over year, driven by an increase in test volume and product revenues.

For the three months ended Sept. 30, the genetic testing company reported total revenues of $158.1 million, up from $98.1 million during the same period a year ago and beating the average Wall Street estimate of $151.4 million.

Product revenues for the quarter rose 62 percent to $150.7 million from $93.3 million in Q3 2020, driven by an increase in test volume, the company said. Licensing and other revenues rose 53 percent to $7.5 million from $4.9 million in the prior-year quarter.

Natera processed approximately 407,300 tests in Q3, a 55 percent increase compared to the 262,000 tests processed in Q3 2020. About 394,200 tests were accessioned in the firm's laboratory, up from 249,300 in the third quarter of 2020. Natera recognized revenue on approximately 373,100 tests in Q3 for which results were reported to customers, including approximately 360,700 tests reported from its laboratory. This was an increase of 56 percent over the 238,600 tests for which the company recognized revenue in Q3 2020, including approximately 226,700 tests reported from its laboratory.

On a conference call with analysts following the release of the earnings, Natera CEO Steve Chapman said the increase in testing volume was driven by strong growth in the company's women's health products and big contributions from oncology and transplant products.

"Those products are now large enough to shift our growth rates upward," he said. "We heard a lot in the market during the quarter about the impact that the Delta variant was having on the healthcare businesses. But as you can see from our Q3 volume, we were able to blow through any headwinds COVID-19 presented."

Chapman also highlighted the progress the company has made with its Prospera transplant rejection assessment test to evaluate the risk of rejection of a transplanted kidney. It's been a little more than a year since Natera was awarded a local coverage decision for the assay, and it subsequently started the test's commercial launch in earnest, he said. Since then, 45 of the top 100 transplant centers have implemented Prospera routinely into their practice.

"This level of adoption among top centers just a little more than a year into the launch gives us confidence that our commercial plan is working," he added.

The firm's Q3 net loss widened to $151.3 million, or $1.63 per share, from $58.3 million, or $.72 per share, in Q3 2020, missing the analyst consensus expectation for a net loss of $1.27 per share.

Natera's Q3 R&D costs almost quadrupled to $98.5 million from $26.4 million in the year-ago quarter, and its SG&A expenses rose 70 percent to $128.5 million from $75.7 million. On the call, CFO Michael Brophy said the increases in R&D and SG&A spending reflected significant upfront investments the company has been making in its oncology business.

The company ended the quarter with $95.1 million in cash and cash equivalents, $228,000 in restricted cash, and $928.6 million in short-term investments.

Natera raised its 2021 revenue forecast and now anticipates revenues of $615 million to $625 million, up from its previous forecast of $600 million to $620 million for the year. Analysts, on average, expect revenues of $614.7 million for 2021.

The firm's shares rose more than 8 percent to $119.89 in Friday morning trading on the Nasdaq.