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Natera Q1 Revenues Grow 62 Percent

NEW YORK – Natera reported after the close of the market on Thursday that its first quarter revenues rose 62 percent year over year, driven by an increase in test volume and a non-recurring payment from Qiagen.

For the three months ended March 31, the genetic testing company reported total revenues of $152.3 million, up from $94.0 million during the same period a year ago and beating the average Wall Street estimate of $114.4 million.

Product revenues for the quarter rose to $118.4 million, up 36 percent from $87.0 million in Q1 2020, driven by an increase in test volumes, the company said. Licensing and other revenues grew almost fivefold to $33.9 million from $7.0 million in the prior-year quarter, mainly due to previously deferred revenue of about $28.6 million related to the terminated partnership with Qiagen to develop and distribute next-generation sequencing-based genetic tests.

"Q1 was yet another record quarter for Natera," CEO Steve Chapman said in a statement. "Our volumes continued to accelerate, we launched Panorama AI, and we expanded our market opportunity with positive new data in both organ health and oncology."

Natera processed approximately 348,200 tests in Q1, a 48 percent increase compared to the 235,500 tests the company processed in Q1 2020. About 333,400 tests were accessioned in the firm's laboratory, up from 222,400 in the first quarter of 2020. Natera recognized revenue on approximately 313,800 tests in Q1 for which results were reported to customers, including approximately 300,000 tests reported from its laboratory. This was an increase of 42 percent over the 221,500 tests for which the company recognized revenue in Q1 2020, including approximately 209,200 tests reported from its laboratory.

On a conference call with analysts following the release of the earnings, Chapman said the growth in testing came primarily from strength in the women's health business, but that Natera is also seeing positive growth trends in its oncology and organ health testing units.

He further highlighted a recent decision by Medicare Administrative Contractor Palmetto GBA to finalize a limited coverage decision for molecular tests to evaluate and manage solid organ transplant patients. The decision will positively affect reimbursement for the company's Prospera transplant rejection test in several organs, such as heart or lung, Chapman said.

He also noted recent news for the company's molecular residual disease test Signatera, such as Genentech's decision in March to use the test as a companion diagnostic in a Phase III trial of its PD-L1 inhibitor atezolizumab (Tecentriq) in bladder cancer.

At the upcoming American Society of Clinical Oncology's annual meeting in June, Chapman added, Natera also expects to present data showing positive early results for Signatera in multiple myeloma, addressing a "major unmet medical need." While MRD testing is already the standard of care for this cancer type, he said, bone marrow biopsies are required. Signatera could offer patients MRD testing through a simple blood draw instead.

Chapman also disclosed the first interim results of the company's prospective CIRCULATE-IDEA trial, which is studying clinical outcomes of colorectal cancer patients who received MRD testing with Signatera. The test delivered longitudinal sensitivity to relapse of greater than 93 percent, "which compares favorably to the 69 percent longitudinal sensitivity recently published by a tumor-naïve competitor," Guardant Health's Reveal test, he said.

Data from the first 400 patients in the trial will also be presented at the ASCO meeting.

The firm's Q1 net loss widened to $63.9 million, or $.74 per share, from $35.4 million, or $.45 per share, in Q1 2020, but it beat the analyst consensus expectation for a net loss of $1.02 per share.

Natera's Q1 R&D costs more than doubled to $40.2 million from $18.2 million in the year-ago quarter, and its SG&A expenses rose 65 percent to $108.3 million from $65.7 million.

The company ended the quarter with $65.1 million in cash and cash equivalents and $588.4 million in short-term investments.

As a result of its Q1 performance, Natera raised its 2021 revenue forecast by $50 million and now anticipates revenues of $550 million to $575 million for the year. Analysts, on average, had been expecting revenues of $514.7 million for 2021.

The company's shares rose nearly 7 percent to $102.87 in Friday morning trading on the Nasdaq.

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