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Natera's Q1 2017 Revenues Drop 24 Percent

NEW YORK (GenomeWeb) – Natera reported after the market on Tuesday that its first quarter 2017 revenues declined 24 percent over the first quarter 2016.

The San Carlos, California-based molecular diagnostics firm recognized $46.9 million in Q1 revenues, down from $61.9 million in Q1 2016. It beat analysts' average estimate of $42.8 million.

Natera accessioned more than 114,000 tests in its laboratory, up from 105,000 accessioned in the year-ago quarter. Tests accessioned included more than 84,000 of its Panorama noninvasive prenatal test and 27,000 of its Horizon carrier screening test.

The company said that although the number of tests sold increased year over year, its revenues dropped due to moving tests in-network with certain payors and being reimbursed at a lower per-test rate.

During a conference call discussing the Q1 2017 performance, Natera CEO Matt Rabinowitz said that the firm now has "steady multi-year contracts with payors" representing around 200 million covered lives. Since those contracts have been in place for around one year or longer, he said, "the effect of going in network should no longer be a headwind" and going forward, he said that revenue growth would track with test volume growth.

In Q1 2017, the firm recognized a $36.0 million net loss, or a $.70 loss-per-share, compared to a net loss of $8.7 million, or $.17 per share, in Q1 2016. It missed the Wall Street consensus estimate for a loss of $.64 per share.

Natera's R&D costs in the quarter were $12.7 million, up from $8.8 million in the year-ago quarter. SG&A expenses were $37.6 million, up from $30.4 million.

Rabinowitz said that the company plans to reduce its cost of goods sold over this year and next in order to reach cash-flow break even. He added that the launch of version 3 of Panorama as well as introducing several automation steps in its Horizon carrier screening test in both Q4 2017 and Q1 2018 would help reduce the firm's COGS across all of its tests to the mid-$200 level by next year.

As of March 31, 2017, Natera held $9.1 million in cash and cash equivalents, $106.7 million in short-term investments, and $775,000 in restricted cash.

Mike Brophy, Natera's CFO, reiterated previous full-year revenue guidance of $210 million to $230 million, but said that the firm expects its cash burn to be less than previously anticipated, at $65 million to $75 million.

In Wednesday morning trade on the Nasdaq, shares of Natera were up around 10 percent at $10.05.