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Natera Q2 Revenues Rise 18 Percent

NEW YORK – Natera reported after the close of the market on Wednesday that its second quarter revenues increased 18 percent, driven by sales of its Panorama noninvasive prenatal and Horizon carrier screening tests as well as a milestone and development payment by BGI.

The San Carlos, California firm reported $74.4 million in revenues for Q2, up from $63.1 million in Q2 of 2018 and beating the average Wall Street estimate of $66.8 million. Product revenues increased 8 percent to $65.1 million from $60.4 million, while licensing and other revenues more than tripled to $9.3 million from $2.7 million. Included in the latter are $5 million from BGI for the achievement of significant milestones and development work towards the commercial launch of the Signatera test in China.

Panorama revenues in Q2 were $36.5 million, up 2 percent from $35.7 million a year ago. Horizon revenues for the quarter were $24.3 million, a 14 percent increase over $21.4 million last year.

Overall, Natera processed 195,168 tests in Q2, up 20 percent from 162,807 tests in the same quarter last year. Of those, 133,300 were Panorama noninvasive prenatal tests, up 18 percent from 113,300 Panorama tests in Q2 of 2018. The company also accessioned approximately 53,100 Horizon carrier screening tests in the second quarter, up 27 percent from approximately 41,800 HCS tests in the year-ago quarter.

"Q2 was a strong quarter for Natera," CEO Steve Chapman said in a statement. "We saw strong volume growth and improved average selling price per test. We're hitting key milestones in our oncology and transplant businesses and we remain on track to achieve our goals this year."

On a conference call to discuss the earnings, Chapman said that Natera has submitted its Signatera test to Palmetto GBA for Medicare coverage in advanced colorectal cancer and expects a response late this year or early in 2020.

Natera has also received a favorable draft local coverage decision from its local Medicare contractor Noridian, he said, in line with the draft LCD from Palmetto GBA this spring.

The firm's Q2 R&D expenses totaled $12.1 million, up 1 percent from $11.9 million a year ago. SG&A expenses rose 26 percent to $47.0 million from 37.4 million last year. The increase in operating expenses was mainly driven by higher personnel-related costs from the firm's increased efforts in transplant monitoring and oncology, as well as by litigation costs.

Natera's net loss for the second quarter narrowed to $32.4 million, or $.48 per share, from $33.8 million, or $.62 per share, in Q2 of 2018. Analysts, on average, had predicted a net loss of $.58 per share.

Natera increased the top end of its revenue guidance for 2019 and now expects total revenues between $275 million and $305 million. This accounts for revenue from BGI and reduces expected reimbursement for average-risk NIPT in the second half of the year. Previously, the company had expected the American College of Obstetricians and Gynecologists to issue a positive guideline for average-risk NIPT, which might have led to increased reimbursement.

As of June 30, Natera held $29.9 million in cash and cash equivalents and $208.1 million in short-term investments.

In morning trading on the Nasdaq, Natera's stock was up 12 percent to $30.31 per share.