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Natera's Q3 Revenues Climb 17 Percent

NEW YORK (GenomeWeb) – Natera reported after the close of the market on Thursday that its third quarter 2018 revenues rose 17 percent.

The San Carlos, California molecular diagnostics firm reported total revenues of $65.3 million, up from $55.9 million in Q3 2017, but missing analysts average estimate of $66.4 million.

The company processed 167,172 tests in Q3 2018, 28 percent more than the 130,400 tests it ran in Q3 2017. Of those, around 115,000 were its noninvasive prenatal test Panorama and 44,400 were its carrier screening test, Horizon, representing year-over-year volume growth rates of 26 percent and 36 percent, respectively.

Natera CEO Matt Rabinowitz said in a statement that the company also grew its pipeline of oncology studies with pharmaceutical companies and completed enrollment for its SMART trial for noninvasive prenatal fetal microdeletion testing.

"With core business growth, enrollment of the 20,000th patient in our SMART trial, progress along our planned reimbursement pathway in transplant, and new data to be released at the San Antonio Breast Cancer Symposium, we continue to make strong progress across the business," he said.

During a conference call with investors, Rabinowitz noted that Q3 revenues were negatively impacted by delays in reporting samples in late September, which the firm estimated cost it $1.2 million in revenue. In addition, he said there have also been delays in recognizing revenue from its cord blood and oncology businesses.

With regards to cord blood, Rabinowitz said that during the second half of 2018, the business has grown slower than expected and the "conversion between sale and sample receipt has been longer than anticipated."

Its oncology business is doing well, he said, with the "rate and uptake of Signatera higher than expected," but the process of launching trials and recognizing tests run as revenue has taken longer than originally anticipated. Rabinowitz said that by the end of the year, the firm expects to have signed $8 million worth of oncology deals with pharmaceutical companies to use its Signatera assay.

As a result of these headwinds, Natera narrowed its 2018 revenue guidance to between $250 million and $260 million, down from a previously anticipated range of $250 million to $275 million.

Natera's net loss for the quarter grew to $29.6 million, or $.49 per share, from $27.9 million, or $.52 per share, in Q3 2017, and missed Wall Street's average estimate for a loss per share of $.47.

Natera reduced its R&D expenses to $12.4 million from $12.6 million in Q3 2017, while SG&A expenses rose 11 percent to $38.4 million from $34.5 million in the prior-year period.

As of Sept. 30, 2018, Natera held $34.5 million in cash and cash equivalents, $4.2 million in restricted cash, and $130.9 million in short-term investments.

In Friday morning trading, Natera's stock was down 20 percent on the Nasdaq at $16.51.