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Invitae Q4 2019 Revenues Increase 47 Percent

NEW YORK – Invitae reported after the close of the market Wednesday that its fourth quarter 2019 revenues increased 47 percent from the prior year.

For the three months ended Dec. 31, 2019, Invitae reported $66.3 million in revenues compared to $45.4 million in Q4 2018, falling short of the consensus Wall Street estimate of $68.1 million. Invitae reported testing revenue of $65.1 million for the quarter, as well as $1.2 million in other revenue.

Invitae accessioned around 148,000 samples in Q4 2019 compared to more than 87,000 samples in Q4 2018.

"We expanded our customer base and saw strong reorder rates among new accounts," said Invitae CEO Sean George in a statement. "We also made it easier to access our testing, both through traditional payors and via unique partnership programs."

Its R&D spending in Q4 was $51.3 million, up threefold from $16.6 million in the year-ago period. Meanwhile, its SG&A costs went up 71 percent year over year to $57.3 million from $33.5 million.

Invitae's net loss for the quarter was $76.9 million, or $.79 per share, compared to a net loss of $29.8 million, or $.40 per share, in Q4 2018. On an adjusted basis, its net loss for Q4 2019 was 61.3 million, or $.63 per share, beating analysts' average estimate for a loss per share of $.65.

For full-year 2019, Invitae's revenues increased 47 percent to $216.8 million compared to $147.7 million in 2018, and below analysts' consensus estimate of $219.3 million. During the year, its testing revenue was $212.5 million and other revenues amounted to $4.4 million.  Invitae CFO Shelly Guyer reminded analysts during a call that in 2018 the company recognized around $4.3 million in additional revenue from Medicare payments for certain tests, excluding which 2019 revenues would have increased by 51 percent year over year.

The firm accessioned more than 482,000 samples in 2019 compared to 303,000 samples in 2018, a 60 percent increase year over year. In reporting Q3 2019 revenues, the company had projected accessioning more than 500,000 samples during year and generating more than $220 million in revenue, but in January lowered its expectations for the year.

Invitae’s net loss for FY 2019 was $242.0 million, or $2.66 per share, compared to a net loss of $129.4 million, or $1.94 per share, in 2018. Its non-GAAP net loss for FY 2019 was $206.8 million, or $2.28 per share, beating analysts' average estimate for a loss of $2.35 per share.

Invitae reported R&D costs of $141.5 million in 2019 compared to $63.5 million in 2018, while SG&A spending rose to $201.3 million in 2019 from $126.7 million in 2018. Guyer noted that during the year, Invitae spent its cash primarily on growing its sales force to support product launches and grow test volumes, and on marketing and branding for its direct channel.

But, during the year Invitae also acquired three companies: single-molecule, cell-free DNA analysis firm Singular Bio, artificial intelligence-based variant interpretation firm Jungla, and genetic counseling software services provider Clear Genetics. Going forward, the company plans to invest in further automation and interpretation improvements to further drive down its per-test costs, Guyer said.

During 2019, Invitae increased its engagement with drug companies via its testing programs for rare conditions, George said during the call. The firm now has more than 80 agreements with more than 45 companies.

The company's position with payors also continued to improve, according to company executives. Last year, around 70 percent of the company's revenues came from third-party payors and under 30 percent were from institutions, pharma partners, and patients. Payments from third-party payors increased by 5 percent year over year, because more tests are under contract with insurers and due to improvements in billing and collections processes. 

One analyst wondered whether Invitae was experiencing the same cash collections difficulties that competitor Myriad Genetics had recently recounted in the prenatal testing space and cited as the reason for lower than expected quarterly revenues. George said that the company had in fact experienced "steady and stable billing" collections processes and the company's revenues reflect that.

"This is where the difference in business models become central to the conversation," he said. "We actually don't have accrual headwinds, [because] we are the price leaders. The headwinds are coming as payors are, finally, after years of negotiating and talking about pricing with them … are indeed starting to move toward value."

Until last year, the company had a goal that by 2020, it would accession more than 1 million samples and net $500 million in revenues. However, at the start of this year, the company lowered its expectation for the year and said it would accession more than 725,000 samples and bring in more than $330 million in revenue. Analysts, on average, have predicted revenues of $321.7 million for FY 2020.

Invitae ended the year with $398.0 million in cash, cash equivalents, and marketable securities.

In Thursday morning trading on the Nasdaq, Invitae's stock price was down around 13 percent at $23.98.