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Progenity Q3 Revenues Increase 38 Percent

NEW YORK — Women's health diagnostic firm Progenity announced after the close of the market on Monday a 38 percent year-over-year increase in third quarter revenues as test volumes ticked up 12 percent.

For the three-month period ended Sept. 30, Progenity reported $25.9 million in revenue, up from $18.8 million in the year-ago quarter but short of the consensus Wall Street estimate of $34.7 million.

The company performed 84,067 tests in Q3, up 12 percent from 75,017 tests in the second quarter, including COVID-19 testing volumes. Progenity began offering SARS-CoV-2 tests in May and increased its SARS-CoV-2 PCR testing capacity and supply chain access through a partnership with Thermo Fisher Scientific, the firm said in a statement. On a conference call to discuss the results, CEO and Chairman Harry Stylii said COVID-19 testing was driving volume increases and noted that in the company's view, test volumes were a better indicator of growth than revenues.

Stylii said revenues from the firm's noninvasive prenatal testing, its core business, will gradually improve as more payors expand NIPT coverage for average-risk patients. During the quarter, the American College of Obstetricians and Gynecologists recommended NIPT for all pregnancies, regardless of risk. Stylii added that most of the payors Progenity has spoken with have indicated the coverage of testing for average risk pregnancies is a permanent shift, and the firm expects broader demand for NIPT testing as more physicians accept the guidelines.

In September, Progenity expanded its carrier screening menu to conform more closely with payor coverage, Stylii said.

Next year, the firm expects to launch two new products: the next-generation Innatal 4 test, which Stylii said will allow much faster turnaround time than sequencing, and the preeclampsia rule-out test, called Preecludia. The firm demonstrated the ability to quantify fetal fraction in the Innatal 4 test, a key development milestone, Stylii said.

Preecludia has moved to the validation studies stage, which will begin next year, and Progenity already has the patient samples it will use for validation and expects commercialization of the test in the second half of 2021. Progenity also had a presubmission meeting with the US Food and Drug Administration for the in vitro diagnostic version of the Preecludia test, Stylii said.

As for the company's gastrointestinal pipeline, its PIL Dx ingestible test underwent a three-site study and was found to agree with gold-standard endoscopic and bacterial count results 94 percent of the time in patients with small intestinal bacterial overgrowth. A full function preclinical study is planned for the first half of 2021.

During the recently completed quarter, Progenity also received a $15.7 million refund under the Coronavirus Aid, Relief, and Economic Security Act, most of which was used to make payments under its settlement agreements with federal and state government agencies for legacy billing practices.

Progenity posted a Q3 net loss attributable to common shareholders of $47.1 million, or $1.01 per share, compared to the year-ago quarter's net loss of $97.9 million, or $19.85 per share. The consensus Wall Street estimate was a loss per share of $.72.

The San Diego-based company went public in June and used 46.6 million shares to calculate its per-share loss figure in the recently completed quarter compared to 4.9 million shares in Q3 2019.

The company's R&D spending in the quarter declined 24 percent to $13.0 million from $17.1 million year over year. The firm's selling, general, and administrative expenses ticked up 8 percent to $33.9 million from $31.5 million.

As of Sept. 30, Progenity had cash and cash equivalents totaling $60 million.

The company declined to share exact estimates for Q4, but CFO Eric d'Esparbas said Progenity expects to achieve revenues and volumes similar to Q3. He said there is usually a slowdown in testing volumes due to winter holidays, but recent demand has been encouraging.