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Progenity Q4 Revenues Fall 30 Percent on COVID-19 Effect

This story has been updated with information from the company's earnings call.

NEW YORK — Women's health diagnostic firm Progenity announced after the close of the market on Thursday a 30 percent year-over-year decrease in fourth quarter revenues.

For the three-month period ended Dec. 31, 2020 Progenity reported $14.3 million in revenues, down from $20.5 million in the year-ago quarter and short of the consensus Wall Street estimate of $24.7 million. The Q4 2020 revenues include a $10.7 million accrual as a reserve for potential payor settlements, the company said in a statement. The decrease in revenues was largely due to a decrease in test volumes as a result of the COVID-19 pandemic.

The company did not provide year-over year comparisons for Q4 but said it performed 81,640 tests in Q4, down 3 percent from 84,067 tests in the third quarter. In the recently completed quarter 56,000 core molecular tests were performed along with 26,000 COVID-19 tests, the San Diego-based company said. 

Progenity CEO Harry Stylli noted on a conference call to discuss the firm's financial results that although the firm launched its COVID-19 testing nationally in January, its women's health business was still the priority and COVID-19 testing was a "transient opportunity." The company is preparing to launch Preecludia, its preeclampsia rule-out test, in the second half of 2021.

Progenity posted a Q4 net loss attributable to common shareholders of $75.5 million, or $1.53 per share, compared to the year-ago quarter's net loss of $86.8 million, or $17.46 per share. The consensus Wall Street estimate was a loss per share of $.82.

The firm calculated its per-share loss figure for Q4 2020 based on almost 49.3 million common shares outstanding compared to a little less than 5 million shares outstanding in Q4 2019. Progenity went public in June 2020.

Stylli said that Progenity is stabilizing its core revenue process and making revenue cycle improvements, as well as continuing in-network expansions with commercial payors for its tests. He added that the firm is advancing its discussions with insurer Anthem and is hoping to be in network with Anthem in the next couple of quarters.

During Q4 2020, Progenity issued $168.5 million principal amount of 7.25 percent convertible senior notes due 2025 for proceeds of approximately $90 million. It issued an additional $78.5 million principal amount of notes in exchange for the discharge of amounts outstanding under an existing credit and security agreement.

The firm also completed a concurrent underwritten secondary offering of common, issuing 8.8 million shares for proceeds of approximately $28.8 million.

Progenity added 60 million in-network covered lives from its MultiPlan national contract, as well as 1 million lives from regional payors. Stylli said the firm expects its non-invasive prenatal testing revenue will "gradually improve" as more payors begin to reimburse for average risk NIPT in light of a recommendation from the American College of Obstetricians and Gynecologists to cover NIPT for average-risk patients.

Approximately two-thirds of Progenity's testing volume is for NIPT, and 62 percent of its NIPT testing is for average-risk patients, Stylli said. As payment increases for these tests, the company could see up to $19 million in revenue growth as a result, he added.

The company's R&D spending in the quarter declined 23 percent to $11.2 million from $14.6 million year over year. The firm's SG&A expenses ticked up 10 percent to $33 million from $30.0 million.

For full-year 2020, Progenity recorded $74.3 million in revenues, down 48 percent from $144 million in 2019 and short of the consensus Wall Street estimate of $84.9 million.

Progenity said the decrease in test volumes due to the pandemic was also the main driver of the revenue drop.

Progenity CFO Eric d'Esparbas said on the call that the company expects revenues to remain relatively flat in the first quarter of 2021, due partially to the winter storms across the US that shut down many laboratories.

R&D spending for the full year was $47.7 million, down 25 percent from $63.4 million the previous year. SG&A spending was $128.3 million, up 7 percent from $120.2 million in 2019.

Net loss attributable to common stockholders was $192.8 million for 2020, or $7.01 per share, down from $228.8 million, or $46.87, the previous year. The consensus Wall Street estimate was for a loss of $6.24 per share.

The firm used 27.5 million shares to calculate its per-share loss figure in 2020 compared to 4.9 million shares for its 2019 figure.

As of Dec 31, 2020 Progenity had cash and cash equivalents totaling $92.1 million.

The company did not change its previous revenues guidance for full-year 2021 of between $130 million and $145 million.