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Natera Reports 52 Percent Spike in Q1 Revenues, Raises Full-Year Guidance

NEW YORK – Natera reported after the close of the market on Thursday a 52 percent year-over-year spike in its first quarter revenues on increased testing volumes and improvements in average test selling price.

The Austin, Texas-based molecular diagnostics company also beat analysts' estimates on the top and bottom lines and increased its full-year revenue guidance.

For the three months ended March 31, the company tallied $367.7 million in revenues compared to $241.8 million a year ago. On average, analysts had expected Q1 revenues of $316.3 million.

"We had an excellent quarter across the board, and I'm very pleased to share that we met a major milestone in the life cycle of the company reaching cash flow breakeven in Q1 significantly ahead of schedule," Natera CEO Steve Chapman said in a conference call recapping the company's financial performance.

The majority of Natera's Q1 revenues were from product sales, which increased to $364.7 million from $237.8 million a year ago. Licensing and other revenues dipped slightly to $3.1 million from $4.0 million a year ago.

Natera processed approximately 735,800 tests in Q1, a nearly 18 percent increase from 626,200 tests a year ago, with record volumes in oncology, organ health, and women's health. In particular, the company processed 114,800 oncology tests, up 62 percent from 71,000 such tests a year ago.

During the quarter, Natera launched a fetal RhD noninvasive prenatal test (NIPT) designed to support Ob/Gyn physicians and patients during a nationwide shortage of Rho(D) immune globulin therapy (RhIG). This test can be performed as early as nine weeks gestation and determines fetal RhD status from the blood of a pregnant patient, including complex pseudogene and RhD-CE-D hybrid variants.

The launch is "a major advancement in prenatal care, and one that really differentiates Natera," Solomon Moshkevich, Natera's president of clinical diagnostics, said during the call. The test is designed to be performed alongside the company's Panorama prenatal screening test, he added, and is "particularly timely right now as Ob/Gyns are currently facing limited supplies of medication that [is] traditionally given to RhD-negative women to prevent potential complications during pregnancy."

Moshkevich also noted that the US Food and Drug Administration warned about the medication shortage earlier this year, which prompted the American College of Obstetricians and Gynecologists to issue a statement in April supporting the use of NIPT for fetal RhD testing to help conserve medication supply.

The test is backed by a validation study that included fetal RhD status confirmed via newborn serology in more than 650 RhD-negative pregnancies — roughly 10 times more patients with confirmed outcomes than validation studies from other laboratories, Natera noted. In this study, the test had 100 percent sensitivity with greater than 99 percent specificity.

On the organ health front, Natera noted that in Q1 the organization Kidney Disease Improving Global Outcomes (KDIGO), a leading medical society in nephrology, published updated clinical practice guidelines for the evaluation and management of chronic kidney disease (CKD), which included a consensus statement supporting the use of genetic testing to establish the cause of CKD for a majority of patients with the condition.

Meanwhile, Natera noted that in April researchers from the company and academic collaborators published a study in the journal Transplantation supporting the use of the Prospera Kidney donor-derived cell-free DNA (dd-cfDNA) test as a leading indicator of kidney transplant rejection.

Natera's Q1 R&D spending grew 8 percent to $88.6 million from $82.3 million a year ago, while its SG&A expenses ballooned 30 percent to $194.3 million from $149.6 million. These operating expense increases were primarily driven by headcount growth to support new product offerings as well as increases in consulting and legal expenses, the company said.

The firm narrowed its Q1 net loss to $67.6 million, or $.56 per share, from a net loss of $136.9 million, or $1.23 per share, a year ago. On average, analysts had expected a loss per share of $.70.

Natera finished the quarter with $813.8 million in cash, cash equivalents, and restricted cash, and $69.1 million in short-term investments.

The company increased its 2024 revenue guidance to a range of $1.42 billion to $1.45 billion from a previous range of $1.32 billion to $1.35 billion, citing factors such as continued test volume growth and strong contributions from its oncology business.