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Natera Q4 Revenues Grow 54 Percent

NEW YORK – Natera reported after the close of the market on Thursday that its fourth quarter revenues rose 54 percent year over year.

For the three months ended Dec. 31, 2021, the cell-free DNA testing company logged $173.0 million in revenues compared to $112.4 million a year ago, beating analysts' consensus estimate of $168.6 million.

Product revenues in Q4 rose 51 percent to $160.9 million from $106.5 million a year ago, driven primarily by a year-over-year increase in test volumes. Natera processed about 438,000 tests in Q4, including approximately 424,200 tests accessioned in its laboratory, compared to about 295,000 tests and 281,000 accessioned in its lab in Q4 2020.

Natera's Q4 net loss swelled to $140.6 million, or $1.48 per share, from a net loss of $76.4 million, or $.89 per share, in Q4 2020. The company missed analysts' expectation of a loss per share of $1.31.

The firm's total operating expenses including R&D and general and administrative were $218.6 million in Q4, up 73 percent from $126.5 million in the same quarter a year ago. Natera said the increase was primarily driven by headcount growth to support new product offerings.

Some of that spending came from increased clinical trial investments for Prospera and Signatera. Natera spent $20 million on clinical trials in 2020 and anticipates spending $80 million in 2022.

Another major source of investment and capital expenditures has been scaling lab facilities to accommodate greater volume. For reference, Natera spent roughly $19 million on this effort in 2020 and expects to spend about $60 million over the course of this year. These costs, the company pointed out, are not recurring expenditures.

During the quarter, the company received final local coverage determination from the Centers for Medicare and Medicaid Services Molecular Diagnostics Services Program for pan-cancer immunotherapy monitoring using its Signatera test.

Natera anticipates that the relatively streamlined path to reimbursement through the CMS, along with the potential inclusion into National Comprehensive Cancer Network guidelines for colorectal cancer, will drive commercial coverage in CRC.

"We think the best strategy to take advantage of our lead into this era is to drive volume in multiple different cancers, even if this puts some modest pressure on gross margins in the immediate term," Mike Brophy, Natera's CFO, said during an investor call.

"We've now submitted additional indications to the MolDx program," added Solomon Moshkevich, general manager of oncology, "and we expect additional coverage decisions to come in in 2022 and 2023."

For full-year 2021, Natera reported $625.5 million in revenues, up 60 percent from $391.0 million in 2020 and beating the Wall Street estimate of $621.4 million. Full-year revenues exceeded previous company guidance of $615 million to $625 million.

In 2021, Natera processed approximately 1,570,000 tests including approximately 1,513,400 tests accessioned in its laboratory, compared to approximately 1,026,500 tests processed in 2020, including approximately 974,400 tests accessioned in its laboratory.

The firm's 2021 net loss was $471.7 million, or $5.21 per share, compared to a net loss of $229.7 million, or $2.84 per share, in 2020. Natera missed analysts' expectation of a full-year loss per share of $5.02.

Natera's 2021 R&D expenses more than doubled to $264.2 million from $100.0 million in 2020, while it's SG&A spending ballooned 68 percent to $511.0 million from $303.6 million.

As of Dec. 31, 2021, Natera held approximately $84.4 million in cash and cash equivalents, $228,000 in restricted cash, and $829.9 million in short-term investments.

Natera said it anticipates 2022 total revenue of $770 million to $790 million.

The company also expects to publish results from multiple ongoing studies over the coming year, providing momentum for continued growth.

"We have over 100 additional studies underway," said CEO Steve Chapman, "and it's possible we can publish more than 20 peer-reviewed papers in 2022 alone."

In Friday morning trading on Nasdaq, Natera's shares were down around 1 percent at $64.67.