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Natera Q3 Revenues Grow 64 Percent

NEW YORK – Natera reported after the close of market Tuesday a year-over-year revenue growth of nearly 64 percent for the third quarter of 2024, prompting the firm to raise its full-year financial guidance.

The Austin, Texas-based company finished the three months ending Sept. 30 with $439.8 million in total revenues compared to $268.3 million for the same quarter in 2023, driven by a 64 percent year-over-year growth in product revenues. The top-line result beat analysts' average estimate of approximately $361.5 million.

The company processed approximately 775,800 tests in the third quarter of this year, marking a 24 percent increase compared to the same quarter last year. Approximately 137,100 of those were oncology tests, a 54 percent rise over 88,800 oncology tests processed in the same quarter last year.

In a call with investors, Natera CEO Steve Chapman credited positive results from large clinical trials involving the firm's Signatera ctDNA-based test for minimal residual disease for improving confidence in oncologists and providing some lift to sales. He noted, however, that plenty of room to continue growing remains.

"We think about 40 percent of oncologists are using Signatera today, and so there's still a long way to go," Chapman said. "The market is very under-penetrated."

He added that the company is also seeing strong demand for its recently-launched fetal RhD test. "We launched our fetal rht test at a time of critical need in the prenatal community," Chapman said.

Natera's Q3 net loss was $31.6 million, or $.26 per share, compared to a net loss of $109.0 million, or $95 per share, in Q3 of last year. On average, analysts had predicted a loss of $.57 per share.

Natera's R&D spending rose almost 26 percent to $96.9 million from $77.2 million in the same quarter last year. Its SG&A expenses rose around 38 percent to about $214.2 million compared to $154.7 million in Q3 of 2023.

On the call, Signatera CFO Mike Brophy attributed at least part of the increase in SG&A costs "to litigation expenses and non-cash charges related to stock-based" compensation.

Brophy said that other large expenditures had to do with integrating Invitae's women's health sales team, which Natera acquired early this year, and to investments in commercial operations related to Signatera.

Despite these investments, Brophy noted that as of this quarter, the firm is "effectively debt-free," having secured a substantial line of credit from Swiss bank UBS with its own cash, which Brophy said now earns roughly the same as the cost of capital.

Natera ended the quarter with nearly $892.8 million in cash, cash equivalents, and restricted cash and $29.5 million in short-term investments.

The company raised its 2024 revenue guidance to between $1.61 billion and $1.64 billion from a previous range of between $1.49 billion and $1.52 billion.

Natera's shares were up approximately 18 percent, at $159 per share, in early morning trading Wednesday on the Nasdaq.