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Natera Expects 35 Percent Rise in Q1 Revenues, Proposes $250M Senior Notes Offering

NEW YORK – Natera said on Monday that it expects about a 35 percent year-over–year increase in first quarter revenues, based on preliminary results.

The company is also withdrawing its previous financial guidance for 2020, saying that it cannot predict the extent or duration of the impact of the COVID-19 pandemic.

Separately, the firm said it plans to offer $250 million of convertible senior notes.

For the quarter ended March 31, Natera expects to report between $89 million and $91 million in revenues, up from $66.8 million in Q1 of 2019. The company processed approximately 235,000 tests during the quarter and said that its operating losses were "generally consistent" with Q4 2019.

According to Natera, revenue and testing volume in Q1 represented a new record and "quarterly unit growth was the largest in company history despite the impact from COVID-19." However, testing volumes declined about 15 percent in the last two weeks of March to the average weekly volumes of Q4 2019, driven by declines in the New York area and from in vitro fertilization channels.

The firm has implemented safety protocols for its employees and labs and has expanded its remote capabilities.

"We are very pleased with our performance in the second half of March given the pandemic, and before seeing the extent of the impact of our recent remote initiatives," said CEO Steve Chapman in a statement. "Customers and patients have begun to take advantage of our remote access platforms in record numbers, and we are encouraged to see the recent expansion in average-risk NIPT covered lives that occurred in late March."

Separately, Natera said that it plans to offer $250 million aggregate principal amount of convertible senior notes due 2027 to qualified institutional buyers, subject to market conditions and other factors. The initial buyers will also have a 13-day option to purchase up to an additional $37.5 million aggregate principal amount of the notes.

Natera still needs to determine the interest rate, initial conversion rate, offering price, and other terms in negotiations with the initial purchasers.

The company plans to use a portion of the net proceeds to repay its obligations under its 2017 term loan with OrbiMed. The remainder will be used for working capital and general corporate purposes, as well as for continued investments in research and development of its core technology and new products. In addition, some of the proceeds may go toward acquisitions of complementary businesses, technologies, or assets.

Natera's shares were down about 10 percent, at $28.94, in morning trading on the Nasdaq.

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