BY: NATASHA SPENCER
On 28th February 2023, the US clinical genetic testing company released its full-year financial results for 2022, which include information on milestones achieved in 2022 and early 2023 and its financial statements.
Net loss increase
Natera’s net loss increased to over half a billion dollars, reaching $547.8 million for the full year in 2022, compared to a net loss of $471.7 million in 2021 and 229.7 million in 2020. On the newly-released earnings call, a spokesperson for Natera told Inside Reproductive Health: “The company reiterated its goal of hitting a cash flow breakeven quarter in 2024.”
Despite these losses, Natera reported cash reserves, cash equivalents, short-term investments and restricted cash totaling approximately $898.4 million at the end of 2022, compared to $914.5 million at the end of 2021.
As of 31st December 2022, the company had a total outstanding debt balance of $362 million. The amount comprises $80.4 million including accrued interest from its credit line with investment bank, UBS, along with a gross outstanding balance of $287.5 million under its seven-year convertible senior notes, which it received in April 2020.
Total revenue projections
In 2023, Natera’s total revenue guidance is between $980 million- $1 billion. If Natera reaches this projected revenue, it is expected to reduce cash burn—the rate a company loses money—by approximately $150 million in 2023.
“Our guidance for 2023 reflects our expectations for robust top-line growth as we reduce operating expenses and continue to position the company for ongoing success,” said Natera’s CEO, Steve Chapman. The company’s increased operating expenses were primarily due to growing its headcount, it reports, to support new product offerings.
Natera’s total operating expenses increased by 16.7% in 2022 year-on-year, amid its changing product portfolio, increased labor, and overhead costs. In 2023, Natera will focus on lowering these total operating expenses to achieve its projected targets.
The company anticipates its 2023 gross margin to be approximately 41% to 44% of revenues. Natera’s selling, general and administrative costs are estimated to reach approximately $510-$540 million in 2023; research and development (R&D) costs are projected at $325-$345 million, and net cash consumption is expected to be between $300-$325 million.
Revenue is up, gross profit margin is down
Speaking to Inside Reproductive Health, Natera provided information on the company’s revenue breakdown. Natera generated total revenues over the last three years of $820.2 million in 2022, $625.5 million in 2021, and $391.0 million in 2020.
The company’s gross profit equaled $364.0 million in 2022, $307.1 million in 2021, and $187.4 million in 2020, representing a gross margin of 44.4%, 49.1%, and 48%, respectively. While Natera’s gross revenue and gross profit are up, the company’s gross margin has dropped by 4.7% year-on-year.
In 2022, medical device provider for women’s healthcare, Cooper Surgical, also saw a drop in its gross margin, decreasing from 67% in the fiscal year 2021 to 65% in 2022. The company stated that this was driven mainly by currency.
It was also a similar story at science and technology company Merck, which saw its gross margin decline from 72.0% in 2021 to 70.6% in 2022. Merck said this decrease is primarily due to higher amortization of intangible assets, along with increased sales of the oral antiviral medicine Lagevrio and revenue from third-party manufacturing arrangements, both of which have lower gross margins.
Natera cited its changing product mix, increased labor, and overhead costs as the primary reasons behind its lower margins in 2022. Volume growth and customer support drove these, as well as one-time revenue of £28.6 million recognized from its Qiagen arrangement in 2021. Natera saw a year-over-year volume improvement of 31.6% in 2022, the company’s spokesperson shares.
No fertility services breakdown
When asked, Natera was unable to detail how much of the revenue and net income comes from fertility-related services. “We don’t break out revenues or other financials by product,” Natera’s spokesperson confirmed.
Currently, the company’s fertility-related product portfolio includes Spectrum, a preimplantation genetic test, Anora, a miscarriage test, and Horizon, a carrier screening test.
New board member
Natera announced that Ruth E. Williams-Brinkley is joining its board of directors, growing its total board members to ten, effective in the position from 2nd March 2023.
As the current president of Kaiser Permanente Health Plan of the Mid-Atlantic States (KPMAS), a position Williams-Brinkley will continue to hold, the healthcare executive oversees the company’s care delivery and health plan operations.
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