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Progenity Q2 Revenues Fall 70 Percent in First Earnings Report Since IPO

NEW YORK — Women's health diagnostic firm Progenity on Thursday announced a 70 percent drop in second quarter revenues, its first financial results since going public earlier this year.

For the three-month period ended June 30, Progenity reported $17.3 million in revenue, down from $57.2 million in the year-ago quarter. Second quarter revenues were impacted by "a $10.3 million accrual for refunds to government payors," the firm said in a statement.

Despite the decrease in revenues, Chairman and CEO Harry Stylli noted on a conference call to discuss the company's financial results that it ended the second quarter on an upward trajectory. He said Progenity anticipates accelerating sequential volume growth throughout the end of the year.

The company performed 75,017 tests, down slightly from 78,881 tests in the first quarter, which the firm said was the result of stay-at-home orders during the COVID-19 pandemic. Progenity began offering SARS-CoV-2 tests in May, which had an impact on revenues, although Stylli declined to share specific volumes. He said the company is evaluating opportunities to expand its SARS-CoV-2 testing more broadly in the second half of the year, especially considering that pregnant women are a high-risk target.

Progenity posted a Q2 net loss of $53.1 million, or $6.11 per share, compared to the year-ago Q2 net loss of $16.4 million, or $3.34 per share.

The firm is growing its in-network status and signed contracts with Aetna and Cigna to join their networks, which Stylli said will likely lead to a significant increase in the number of tests being reimbursed. Progenity has also invested in compliance and performed two third-party audits to ensure its billing and coding are compliant after a recent $35.8 million settlement with the US Department of Justice.

The company's R&D spending in the quarter declined to $12.2 million from $16.5 million year over year. R&D projects slowed due to the pandemic and weren't considered essential, according to Stylli.

Progenity is developing a preeclampsia rule-out test and planning to develop an in vitro diagnostic version of the test, which it expects to launch in the second half of 2021. The firm initiated analytical verification for the laboratory-developed test and filed for pre-submission with the US Food and Drug Administration with a meeting scheduled for October, Stylli said.

The firm's selling, general, and administrative expenses ticked up 3 percent to $29.9 million from $28.9 million. The decline is largely the result of savings due to COVID-19-related work from home policies, said CFO Eric d'Espabes.

As of June 30, Progenity had cash and cash equivalents totaling $113.6 million, made up largely of a $22.7 million tax refund received in June, as well as $88.7 million in net proceeds from the firm's initial public offering.

Progenity didn't offer full-year 2020 financial guidance.

In Friday morning trading on the Nasdaq, Progenity's share price was down 8 percent to $8.23.