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Natera's Q2 Revenues Climb 26 Percent

This article has been updated with additional comments from Natera management.

NEW YORK (GenomeWeb) – Natera reported after the close of the market on Wednesday that its second quarter 2015 revenues climbed 26 percent over the second quarter 2014.

The San Carlos, California-based molecular diagnostic company reported total revenue of $45.1 million in Q2, up from $35.8 million in Q2 2014. It beat analysts' average estimate of $42.7 million.

During the quarter, Natera accessioned around 69,000 tests, 28 percent more than the 54,000 it ran in Q2 2014. The company offers a noninvasive prenatal test, Panorama, as well as a carrier screening test, Horizon. It did not break out volumes of each test. However, it noted that revenues from Panorama increased $7.5 million year over year in Q2, while revenues from all other products increased $1.8 million.

During a conference call discussing the company's second quarter earnings, Natera's CEO Matthew Rabinowitz said the company has three main components to its strategy: to lead women's health genetic testing in the US, to tap into the oncology market, and to make genetic testing "ubiquitous" by enabling laboratories to use Natera's proprietary algorithms through its cloud service, Constellation.

As part of its strategy, the company is looking to bring its Panorama Microdeletions panel through US Food and Drug Administration clearance, and recently launched a clinical trial that will evaluate a cohort of 10,000 pregnant women, Steve Chapman, SVP of commercial operations, said during the call.

In July, Natera completed an initial public offering, resulting in $178.5 million in net proceeds, including $15.1 million from the exercise of the underwriters' overallotment option.

The company reported a net loss of $19.7 million, or $3.58 per share, up from $514,000, or $.11 per share, in Q2 2014. In a follow-up email, Natera management noted that the reported loss per share was based on available common shares before its IPO. However, its post-IPO loss per share, which is based on 49.4 million outstanding common shares, is $.40. On average, analysts had expected a loss per share of $.45.

Natera noted that its net loss included non-cash expenses of approximately $3 million related to a change in the fair market value of warrants and approximately $300,000 related to a change in the fair value of long-term debt. Without these adjustments, net loss would be $16.4 million. The company did not provide an adjusted loss-per-share figure.

Natera's R&D expenses were $6.7 million, up 63 percent year over year from $4.1 million. SG&A costs more than doubled in the quarter to $28.1 million from $13.9 million in the previous year's quarter. In a statement, Natera said that over the last year, it has hired 218 employees and contractors, which has driven up its SG&A expenses. The company now  employs 685 people.

Natera ended the quarter with $62.2 million in cash.

As previously announced, Natera expects full-year 2015 revenue in the range of $175 million to $190 million, and full-year 2016 revenues in the range of $220 million to $240 million. CFO Herm Rosenman said during the call that the company expects to enter into in-network contracts with certain payors late this year, which may adversely impact revenue, but will have "long-term strategic benefits."