8-K
Natera, Inc. (NTRA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):August 3, 2023
Natera, Inc.
(Exact name of registrant as specifiedin its charter)
| Delaware | 001-37478 | 01-0894487 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission<br><br> <br>File Number) | (IRS Employer<br><br> <br>Identification No.) |
13011 McCallen Pass Building A Suite 100
Austin, TX 78753
(Address of principal executive offices,including zip code)
(650
)
980-9190
(Registrant’s telephone number,including area code)
N/A
(Former name or former address, if changed sincelast report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the<br>Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the<br>Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b)<br>under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c)<br>under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange<br> on which registered |
|---|---|---|
| Common Stock, par value $0.0001 per share | NTRA | Nasdaq Stock Market LLC<br><br> <br>(Nasdaq Global Select Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On August 3, 2023, Natera, Inc. issued a press release announcing the results for its second quarter ended June 30, 2023 and provided a related investor presentation. A copy of the press release and a copy of the investor presentation are furnished herewith as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
The information in this Current Report on Form 8-K and the accompanying Exhibit 99.1 and Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, unless expressly incorporated by reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
|---|
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated August 3, 2023. |
| 99.2 | Investor Presentation. |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Natera, Inc. | |
|---|---|
| By: | /s/ Michael Brophy |
| Michael Brophy | |
| Chief Financial Officer<br> (Principal Financial and Accounting Officer) |
Dated: August 3, 2023
Exhibit 99.1
Natera Reports Second Quarter 2023Financial Results
AUSTIN, Texas, August 3, 2023 /PRNewswire/ — Natera, Inc. (NASDAQ: NTRA), a global leader in cell-free DNA testing, today reported financial results for the second quarter ended June 30, 2023.
Recent Strategic and Financial Highlights
| ● | Generated total revenues of $261.4 million in the second quarter of 2023, compared to $198.2 million in<br>the second quarter of 2022, an increase of 31.9%. Product revenues grew 32.7% over the same period. |
|---|---|
| ● | Processed approximately 617,200 tests in the second quarter of 2023, compared to approximately 499,900<br>tests in the second quarter of 2022, an increase of 23.5%. |
| --- | --- |
| ● | Performed 83,500 oncology tests in the second quarter of 2023, compared to approximately 44,200 oncology tests<br>in the second quarter of 2022, an increase of 88.9%. |
| --- | --- |
| ● | Achieved favorable results in a lawsuit against ArcherDX/Invitae Corp. with a damages award of<br> $19.35 million for lost profits and royalty on past sales and a finding that all three Natera patents at issue are valid, and a<br> lawsuit against CareDx, Inc. with a court reversal of jury findings, thereby reducing damages from $45 million to $0. |
| --- | --- |
| ● | Demonstrated continued data leadership: |
| --- | --- |
| o | Data was presented on the Company’s Signatera™ personalized and tumor-informed molecular residual disease (MRD) test at<br>the 2023 American Society of Clinical Oncology Annual Meeting, notably from the EMPower Lung-I and INTERCEPT trials.. |
| --- | --- |
| o | Data from the ProActive trial was presented at the American Transplant Congress 2023, reinforcing Natera’s Prospera™ kidney<br>test as an early indicator of transplant rejection. |
| --- | --- |
| o | A fourth paper was published from the Company’s SMART study on screening for sex chromosome aneuploidies with non-invasive<br>prenatal testing for more than 17,000 pregnancies. |
| --- | --- |
“We had another strong quarter in which we served over 600,000 patients, delivered significant year-over-year growth in volumes and revenues, drove improvements in gross margin and reduced our quarterly cash burn,” said Steve Chapman, Natera’s Chief Executive Officer. “With this excellent performance, we are raising our annual revenue guidance and believe we are well-positioned to meet our financial goals for the year. Looking ahead, we have a robust clinical pipeline, particularly in oncology, that we believe will further differentiate our products and change the standard of care for millions of patients.”
Second Quarter Ended June 30, 2023 Financial Results
Total revenues were $261.4 million in the second quarter of 2023, compared to $198.2 million for the second quarter of 2022, an increase of 31.9%. Product revenues were $258.3 million in the second quarter of 2023, compared to $194.6 million in the second quarter of 2022, an increase of 32.7%. The growth in product revenues was driven by an increase in test volumes compared to the second quarter of 2022.
Natera processed approximately 617,200 tests in the second quarter of 2023, including approximately 599,000 tests accessioned in its laboratory. This compares to approximately 499,900 tests processed in the second quarter of 2022, including approximately 484,000 tests accessioned in its laboratory, an increase of 23.5%.
In the three months ended June 30, 2023, Natera recognized revenue on approximately 594,900 tests for which results were reported to customers in the period (tests reported), including approximately 578,200 tests reported from its laboratory, compared to approximately 461,300 tests reported, including approximately 446,400 tests reported from its laboratory, in the second quarter of 2022, an increase of 29.0% for the quarter.
Gross profit* for the three months ended June 30, 2023 and June 30, 2022 was $118.3 million and $89.0 million, respectively, representing a gross margin of 45.2% and 44.9%. Natera had higher margins in the second quarter of 2023 compared to the second quarter of 2022 primarily as a result of increased revenues and continuous progress in cost of goods sold associated with tests processed.
Total operating expenses, representing research and development expenses and selling, general and administrative expenses, for the second quarter of 2023 were $230.7 million, compared to $232.0 million in the same period of the prior year, a decrease of 0.6%. The decrease was primarily driven by a reduction in payroll and related expenses due to headcount reduction; as well as reduction of in-process research and development expenses. Loss from operations for the second quarter of 2023 was $112.4 million, compared to $143.1 million for the same period of the prior year.
The Company reported a net loss for the second quarter of 2023 of $110.8 million, or ($0.97) per diluted share, compared to a net loss of $145.2 million, or ($1.50) per diluted share, for the same period in 2022. Weighted average shares outstanding were approximately 113.7 million in the second quarter of 2023, compared to 96.6 million in the second quarter of the prior year.
As of June 30, 2023, Natera held approximately $735.9 million in cash, cash equivalents, short-term investments and restricted cash, compared to $898.4 million as of December 31, 2022. As of June 30, 2023, Natera had a total outstanding debt balance of $362.7 million, comprised of $80.4 million including accrued interest under its line of credit with UBS at a variable interest rate of 30-day SOFR plus 121 basis points and a net carrying amount of $282.3 million under its seven-year convertible senior notes issued in April 2020. The gross principal balance outstanding for the convertible senior notes was $287.5 million as of June 30, 2023.
Financial Outlook
Natera is raising its expectations for 2023 total revenue from $995 million to $1.015 billion to a new range of $1.015 billion to $1.035 billion. The Company expects 2023 gross margin to be approximately 41% to 44% of revenues; selling, general and administrative costs to be approximately $540 million to $580 million; research and development costs to be approximately $325 million to $345 million; and net cash consumption to be approximately $300 million to $325 million**.
* Gross profit is calculated as GAAP total revenues less GAAP cost of revenues. Gross margin is calculated as gross profit divided by GAAP total revenues.
** Cash consumption is calculated as the sum of GAAP net cash used by operating activities (estimated for 2023 to be approximately $250 million to $275 million) and GAAP net purchases of property and equipment (estimated for 2023 to be approximately $50 million).
Test Volume Summary
| Tests | Q2 2023 | Q2 2022 | Definition |
|---|---|---|---|
| Tests processed | 617,200 | 499,900 | Tests accessioned in our laboratory plus tests processed outside of our laboratory |
| Tests accessioned | 599,000 | 484,000 | Test accessioned in our laboratory |
| Tests reported in our laboratory | 578,200 | 446,400 | Total tests reported in our laboratory less tests reported outside of our laboratory |
| Tests reported | 594,900 | 461,300 | Total tests reported |
About Natera
Natera™ is a global leader in cell-free DNA testing, dedicated to oncology, women’s health, and organ health. We aim to make personalized genetic testing and diagnostics part of the standard of care to protect health and enable earlier, more targeted interventions that help lead to longer, healthier lives. Natera’s tests are validated by more than 100 peer-reviewed publications that demonstrate high accuracy. Natera operates ISO 13485-certified and CAP-accredited laboratories certified under the Clinical Laboratory Improvement Amendments (CLIA) in Austin, Texas and San Carlos, California. For more information, visit www.natera.com.
Conference Call Information
| Event: | Natera's Second Quarter 2023 Financial Results Conference Call |
|---|---|
| Date: | Thursday, August 3, 2023 |
| Time: | 1:30 p.m. PT (4:30 p.m. ET) |
| Live Dial-In: | (888) 770-7321, Domestic |
| (929) 201-7107, International | |
| Conference ID: | 7684785 |
| Webcast Link: | https://events.q4inc.com/attendee/482848758 |
Forward-Looking Statements
This press release contains forward-looking statements under the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts, including the company’s financial guidance for fiscal 2022, its ability to continue to increase its revenues, its product development plans and its ability to maintain and grow its business operations in light of the COVID-19 pandemic, are forward-looking statements. Any forward-looking statements contained in this press release are based upon Natera’s current plans, estimates, and expectations, as of the date of this release, and are not a representation that such plans, estimates, or expectations will be achieved.
These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially, including: we face numerous uncertainties and challenges in achieving our financial projections and goals; we may be unable to further increase the use and adoption of our products through our direct sales efforts or through our laboratory partners; we have incurred losses since our inception and we anticipate that we will continue to incur losses for the foreseeable future; our quarterly results may fluctuate from period to period; our estimates of market opportunity and forecasts of market growth may prove to be inaccurate; we may be unable to compete successfully with existing or future products or services offered by our competitors; we may engage in acquisitions, dispositions or other strategic transactions that may not achieve our anticipated benefits and could otherwise disrupt our business, cause dilution to our stockholders or reduce our financial resources; we may need to raise additional capital to support our business plans, which may not be available when necessary or on favorable terms; we may not be successful in commercializing our cloud-based distribution model; our products may not perform as expected; the results of our clinical studies, including our SNP-based Microdeletion and Aneuploidy RegisTry, or SMART, Study, may not be compelling to professional societies or payors as supporting the use of our tests, particularly for microdeletions screening, or may not be able to be replicated in later studies required for regulatory approvals or clearances; if either of our primary CLIA-certified laboratories becomes inoperable, we will be unable to perform our tests and our business will be harmed; we rely on a limited number of suppliers or, in some cases, single suppliers, for some of our laboratory instruments and materials and may not be able to find replacements or immediately transition to alternative suppliers; if we are unable to successfully scale our operations, our business could suffer; the marketing, sale, and use of Panorama and our other products could result in substantial damages arising from product liability or professional liability claims that exceed our resources; we may be unable to expand, obtain or maintain third-party payer coverage and reimbursement for Panorama, Horizon and our other tests, and we may be required to refund reimbursements already received; third-party payers may withdraw coverage or provide lower levels of reimbursement due to changing policies, billing complexities or other factors; if the FDA were to begin actively regulating our tests, we could incur substantial costs and delays associated with trying to obtain premarket clearance or approval and incur costs associated with complying with post-market controls; litigation or other proceedings, including investigations, subpoenas, demands, disputes, litigation, requests for information and other regulatory or administrative actions or proceedings, or resulting from either third party claims of intellectual property infringement or asserting infringement by third parties of our technology, is costly, may result in substantial business and financial penalties, may be time-consuming and could limit our ability to commercialize our products or services; any inability to effectively protect our proprietary technology could harm our competitive position or our brand; and we cannot guarantee that we will be able to service and comply with our outstanding debt obligations or achieve our expectations regarding the conversion of our outstanding convertible notes.
Additional risks and uncertainties that could affect our financial results are included under the captions, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent filings on Forms 10-K and 10-Q and in other filings that we make with the SEC from time to time. These documents are available on our website at www.natera.com under the Investor Relations section and on the SEC’s website at www.sec.gov.
In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. Natera assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.
Contacts
Natera, Inc.
Investor Relations
Mike Brophy, CFO, Natera, Inc., 510-826-2350, investor@natera.com
Media
Lesley Bogdanow, VP of Corporate Communications, Natera, Inc., pr@natera.com
Natera, Inc.
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share amount)
| December 31, | |||||
|---|---|---|---|---|---|
| 2022 | |||||
| (1) | |||||
| Assets | |||||
| Current assets: | |||||
| Cash, cash equivalents and restricted cash | 381,113 | $ | 466,091 | ||
| Short-term investments | 354,828 | 432,301 | |||
| Accounts receivable, net of allowance of 5,580 and 3,830 at June 30, 2023 and December 31, 2022, respectively | 260,065 | 244,385 | |||
| Inventory | 42,688 | 35,406 | |||
| Prepaid expenses and other current assets, net | 26,818 | 33,634 | |||
| Total current assets | 1,065,512 | 1,211,817 | |||
| Property and equipment, net | 102,921 | 92,453 | |||
| Operating lease right-of-use assets | 61,942 | 71,874 | |||
| Other assets | 17,518 | 18,330 | |||
| Total assets | 1,247,893 | $ | 1,394,474 | ||
| Liabilities and Stockholders’ Equity | |||||
| Current liabilities: | |||||
| Accounts payable | 21,107 | $ | 31,148 | ||
| Accrued compensation | 34,174 | 44,010 | |||
| Other accrued liabilities | 125,513 | 144,214 | |||
| Deferred revenue, current portion | 15,644 | 10,777 | |||
| Short-term debt financing | 80,418 | 80,350 | |||
| Total current liabilities | 276,856 | 310,499 | |||
| Long-term debt financing | 282,295 | 281,653 | |||
| Deferred revenue, long-term portion | 21,502 | 20,001 | |||
| Operating lease liabilities, long-term portion | 71,093 | 76,577 | |||
| Total liabilities | 651,746 | 688,730 | |||
| Commitments and contingencies | |||||
| Stockholders’ equity: | |||||
| Common stock (2) | 11 | 11 | |||
| Additional paid-in capital | 2,795,714 | 2,664,730 | |||
| Accumulated deficit | (2,190,375 | ) | (1,942,635 | ) | |
| Accumulated other comprehensive loss | (9,203 | ) | (16,362 | ) | |
| Total stockholders’ equity | 596,147 | 705,744 | |||
| Total liabilities and stockholders’ equity | 1,247,893 | $ | 1,394,474 |
All values are in US Dollars.
| (1) | The consolidated balance sheet at December 31, 2022 has been derived from the audited consolidated<br>financial statements at that date included in the Company’s Annual Report on Form 10-K for the year ended December 31,<br>2022. |
|---|---|
| (2) | As of June 30, 2023 and December 31, 2022, there were approximately 114,051,000 and 111,255,000 shares<br>of common stock issued and outstanding, respectively. |
Natera, Inc.
Consolidated Statements of Operations and ComprehensiveLoss
(Unaudited)
(in thousands, except per share data)
| Three months ended | Six months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Revenues | ||||||||||||
| Product revenues | $ | 258,256 | $ | 194,582 | $ | 496,053 | $ | 384,584 | ||||
| Licensing and other revenues | 3,148 | 3,618 | 7,107 | 7,749 | ||||||||
| Total revenues | 261,404 | 198,200 | 503,160 | 392,333 | ||||||||
| Cost and expenses | ||||||||||||
| Cost of product revenues | 142,808 | 108,756 | 290,562 | 211,426 | ||||||||
| Cost of licensing and other revenues | 341 | 481 | 711 | 1,026 | ||||||||
| Research and development | 78,173 | 82,580 | 160,479 | 162,994 | ||||||||
| Selling, general and administrative | 152,508 | 149,468 | 302,135 | 297,102 | ||||||||
| Total cost and expenses | 373,830 | 341,285 | 753,887 | 672,548 | ||||||||
| Loss from operations | (112,426 | ) | (143,085 | ) | (250,727 | ) | (280,215 | ) | ||||
| Interest expense | (3,177 | ) | (2,150 | ) | (6,238 | ) | (4,237 | ) | ||||
| Interest and other income, net | 4,518 | 277 | 9,103 | 1,078 | ||||||||
| Loss before income taxes | (111,085 | ) | (144,958 | ) | (247,862 | ) | (283,374 | ) | ||||
| Income tax benefit (expense) | 282 | (193 | ) | 122 | (372 | ) | ||||||
| Net loss | $ | (110,803 | ) | $ | (145,151 | ) | $ | (247,740 | ) | $ | (283,746 | ) |
| Unrealized gain (loss) on available-for-sale securities, net of tax | 2,595 | (2,493 | ) | 7,159 | (14,110 | ) | ||||||
| Comprehensive loss | $ | (108,208 | ) | $ | (147,644 | ) | $ | (240,581 | ) | $ | (297,856 | ) |
| Net loss per share: | ||||||||||||
| Basic and diluted | $ | (0.97 | ) | $ | (1.50 | ) | $ | (2.20 | ) | $ | (2.95 | ) |
| Weighted-average number of shares used in computing basic and diluted net loss per share: | ||||||||||||
| Basic and diluted | 113,690 | 96,579 | 112,734 | 96,081 |
Exhibit 99.2
Natera, Inc. Investor presentation Second Quarter 2023 Earnings Call August 3, 2023
Not for reproduction or further distribution. This presentation contains forward - looking statements under the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this presentation, including statements regarding our market opportunities, our proposed products and launch schedules, our reimbu rse ment coverage and our product costs, our commercial partners and potential acquisitions, our user experience, our clinical trials and studies and related publications, including timelines, our financi al performance, our strategies, our anticipated revenue and financial outlook, our goals and general business and market conditions, are forward - looking statements. These forward - looking statements are subject to known and unknown risks and uncertainties that may cause actual results to diffe r materially, including: we face numerous uncertainties and challenges in achieving our financial projections and goals; we may be unable to further increase the use and adoption of our products t hro ugh our direct sales efforts or through our laboratory partners; we have incurred losses since our inception and we anticipate that we will continue to incur losses for the foreseeable future; our quarterly res ults may fluctuate from period to period; our estimates of market opportunity and forecasts of market growth may prove to be inaccurate; we may be unable to compete successfully with existing or future produ cts or services offered by our competitors; we may engage in acquisitions, dispositions or other strategic transactions that may not achieve our anticipated benefits and could otherwise disrupt our bu sin ess, cause dilution to our stockholders or reduce our financial resources; we may not be successful in commercializing our cloud - based distribution model; our products may not perform as expected; the results of ou r clinical studies, including our SNP - based Microdeletion and Aneuploidy Registry, or SMART, Study, may not be compelling to professional societies or payors as supporting the use of our tests, particularly f or microdeletions screening, or may not be able to be replicated in later studies required for regulatory approvals or clearances; if either of our primary CLIA - certified laboratories becomes inoperable, we will be unab le to perform our tests and our business will be harmed; we rely on a limited number of suppliers or, in some cases, single suppliers, for some of our laboratory instruments and materials and may not be able to fi nd replacements or immediately transition to alternative suppliers; if we are unable to successfully scale our operations, our business could suffer; the marketing, sale, and use of Panorama and our other products co uld result in substantial damages arising from product liability or professional liability claims that exceed our resources; we may be unable to expand, obtain or maintain third - party payer coverage and reimbu rsement for Panorama, Horizon and our other tests, and we may be required to refund reimbursements already received; third - party payers may withdraw coverage or provide lower levels of reimbursement due to changing policies, billing complexities or other factors; if the FDA were to begin actively regulating our tests, we could incur substantial costs and delays associated with trying to obtain premarket c lea rance or approval and incur costs associated with complying with post - market controls; litigation or other proceedings, resulting from either third party claims of intellectual property infringement or thi rd party infringement of our technology, is costly, time - consuming and could limit our ability to commercialize our products or services; any inability to effectively protect our proprietary technology could harm ou r competitive position or our brand; and we cannot guarantee that we will be able to service and comply with our outstanding debt obligations or achieve our expectations regarding the conversion of our outstand ing convertible notes. We discuss these and other risks and uncertainties in greater detail in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results o f O perations” in our periodic reports on Forms 10 - K and 10 - Q and in other filings we make with the SEC from time to time. Moreover, we operate in a very competitive and rapidly changing environment. New risks e mer ge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may ca use actual results to differ materially from those contained in any forward - looking statement. In light of these risks, uncertainties and assumptions, the forward - looking events and circumstances discussed in thi s presentation may not occur and our actual results could differ materially and adversely from those anticipated or implied. As a result, you should not place undue reliance on our forward - looking statements. Except as required by law, we undertake no obligation to update publicly any forward - looking statements for any reason after the date of this presentation to conform these statements to actual results or t o changes in our expectations. We file reports, proxy statements, and other information with the SEC. Such reports, proxy statements, and other information concerning us is available at http:// www.sec.gov . Requests for copies of such documents should be directed to our Investor Relations department at Natera , Inc., 13011 McCallen Pass, Building A Suite 100, Austin, TX 78753. Our telephone number is (650) 980 - 9190. 2 Safe harbor statement
Not for reproduction or further distribution. Recent highlights Strong Q2’23 Financial Results Data Leadership Corporate Updates • ProActive study reinforces Prospera as early indicator of kidney rejection • Largest, prospective clinical validation of screening for sex chromosome aneuploidies with NIPT published in Genetics in Medicine • EMPower Lung - 1 read out at ASCO demonstrates clinical utility of Signatera in lung cancer • INTERCEPT colorectal cancer (CRC) read out at ASCO shows real - world clinical actionability of Signatera • Completed enrollment in randomized, Ph III ALTAIR study on CRC • ~32 % YoY growth in revenues (total revenues of $261M); ~8% growth as compared to Q1’23 • Gross margin of ~ 45.2% • ~ 23.5% YoY growth in processed tests (617K tests processed) • ~84K oncology tests performed • Raising 2023 revenue guidance to $1.015B – $1.035B • O n track to reduce cash burn ~$150M YoY • Announced two favorable legal wins: (1) A jury's March 2022 findings were reversed in a final Court decision in July 2023, thereby reducing damages from $45M to $0. (2) A jury in May 2023 awarded Natera lost profits and a royalty on past sales of 10% (totaling $19.35M in damages); the jury also found that all 3 Natera patents at issue are valid. 3
Not for reproduction or further distribution. Quarterly volumes demonstrate continued momentum Core Volume Drivers • Serving large, underpenetrated markets • Differentiated technology backed by strong evidence Strategic Volume Initiatives • NIPT growth in CA • Market share gains due to competitor carrier screening exits • Growth in Signatera clinical as margin profile matures 195K 234K 376K 500K 617K 0K 100K 200K 300K 400K 500K 600K 700K Q2'19 Q2'20 Q2'21 Q2'22 Q2'23 4
Not for reproduction or further distribution. Oncology continues to generate strong volume growth Signatera and Altera quarterly unit volumes • >30% of US oncologists ordered Signatera in the quarter with continued increases in new accounts • Growth driven by both new patients and recurrence monitoring • Strong clinical volume growth in Q2 • Increase in utilization across indications 5 35K 44K 53K 64K 71K 84K 25K 35K 45K 55K 65K 75K 85K 95K Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23
Not for reproduction or further distribution. 194M 198M 211M 217M 242M 261M 150M 170M 190M 210M 230M 250M 270M Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Strong sequential revenue growth in Q2 • ~32% revenue growth over Q2’22 • Strong gross margin improvement • Significant growth in Signatera ASP Total revenues: year on year trend ($ in millions) 2 % 7 % 3 % 12 % 8 % 6
Not for reproduction or further distribution. Fourth paper published from SMART study • Largest, prospective clinical validation of screening for sex chromosome aneuploidies with NIPT published in Genetics in Medicine 1 . • Latest dataset from landmark SMART study shows strong results with SNP - based NIPT for >17K pregnancies with confirmed outcomes. 7 Highlights in Women’s Health 1. Martin K et al. Performance of prenatal cfDNA screening for sex chromosomes, Genetics in Medicine , Volume 25, Issue 8, 2023. 20K+ 21 100 % PATIENTS SITES OUTCOMES studied global centers of patients included in analysis had genetic confirmation Largest prospective NIPT study Support for clinical utility of carrier screening • FDA recently approved the first gene therapy for treatment of patients (ages 4 - 5) with Duchenne muscular dystrophy (DMD) and a confirmed mutation in the DMD gene. • This approval reinforces the clinical utility of carrier screening and the importance of early diagnosis to help improve outcomes for conditions like DMD.
Trial background • Prospective, donor - derived cell - free DNA study in kidney transplant recipients. • Kidney transplant patients enrolled from 54 participating centers. • Publication expected end of 2023 / early 2024. First read - out: interim analyses on the first 1.6K patients with 18 months follow up • As presented at the American Transplant Congress in June 2023, Prospera TM predicted antibody - mediated rejection (ABMR) up to four months and T cell - mediated rejection (TCMR) up to two months in advance of biopsy - proven rejection 1 . • Underscores the value of Prospera as a proven leading indicator of allograft rejection. ProActive study reinforces Prospera as early indicator of kidney transplant rejection 1. Bromberg, et al. “Increases in Donor - Derived Cell - Free DNA Prior to Biopsy Proven Rejection in Kidney Transplant,” American T ransplant Congress, June 2023, San Diego. 8
Not for reproduction or further distribution. • Trial Background: Phase 3 registrational trial for Regeneron’s Cemiplimab IO (n = 175 ctDNA cohort). Signatera used to monitor ctDNA levels at baseline, week 3, and week 9. ctDNA correlated with clinical outcomes (RECIST response; Overall Survival). 1 • Results: Week 3 & 9 ctDNA dynamics were predictive of OS. ctDNA increase measured with Signatera was associated with the highest risk of death, while clearance and a >90% decrease in ctDNA were associated with significantly improved overall survival. 1 Estimated TAM >150K patients per year 2 EMPower Lung - 1: immunotherapy response monitoring in NSCLC 1. Vokes N, Gandara D, et al. Circulating Tumor DNA (ctDNA) Dynamics and Survival Outcomes in Patients with Advanced NSCLC and High (> 50 %) PD - L1 Expression, Randomized to Cemiplimab vs Chemotherapy. Presented at ASCO Annual Meeting, Chicago, IL, June 2023. 2. Internal company estimates based on publicly available data. ASCO 2023 Poster Discussion 9
Not for reproduction or further distribution. INTERCEPT: clinical utility of routine surveillance in CRC Trial Background Surgery +/ – Neoadjuvant Therapy Adjuvant Therapy Surveillance • 184 patients were ctDNA+ during surveillance for disease recurrence. • 49% (90/184) of patients who were ctDNA+ during surveillance were found to have radiographically detectable disease, many of which required escalated imaging. • Of the patients who were ctDNA+ during surveillance and had no radiographic evidence of disease, 59% (55/94) were enrolled into clinical trials to treat on MRD. Highlights clinical utility of surveillance with Signatera in routine clinical practice. ASCO 2023 Poster 1 Discussion Results and Implications • MD Anderson’s independent program using Signatera testing in routine clinical care for stage II - III and resectable stage IV CRC patients. • 1,115 CRC patients (3,744 plasma time points) treated with curative intent were evaluated using Signatera over 14 months. 1. Dasari A et al. Positive ctDNA - based Minimal Residual Disease Assays During Surveillance Are Associated with High Rates of Undiagnosed Concomitant Radiographic Recurrences in Colorectal Cancer (CRC): Results from the MD Anderson INTERCEPT Program. ASCO, Chicago, IL. June 2 - 6, 2023. 10
Completion of enrollment in randomized ALTAIR trial 11 Study objective Proving the utility of extended adjuvant therapy and treatment on molecular recurrence for ctDNA+ patients Estimated read - out Mid - 2024
Not for reproduction or further distribution. Prospective/randomized CRC study pipeline in progress CRC commercial experience study (NR) Est. submission for publication (H2 23) Clinical experience of ~13,500 patients Est. presentation of GALAXY data (Q4 23) 24 - month outcomes data on >2K CRC patients; expansion of the Nature Medicine paper published in Jan. ‘24 Est. planned submission (2024) Enrollment complete, ~400 patients now have ~2 years of follow up Est. readout (mid - 2024) , publication thereafter Escalation/treatment on molecular recurrence study Est. readout (2026) De - escalation to observation Est. readout on first ~800 patients (2026) Escalation cohort BESPOKE CRC study (NR) ALTAIR study (RCT) VEGA study (RCT) CIRCULATE - US (NRG 008 study) (RCT) GALAXY 24 - month follow up (NR) 2024 2025 2026 2023 NOTE: RCT refers to randomized controlled trial (prospective or retrospective). NR refers to non - randomized. All publication/pre sentation timeframes are estimates. 12
Not for reproduction or further distribution. 13 Clinical roadmap in breast cancer across subtypes and settings PH III Prospective/Retrospective Trial 2024 2025 2026 PH III Prospective Trial PH II Prospective Trial PH III Prospective/Retrospective Trial PH II Prospective Trial DARE (PH II Prospective Trial) LEADER (PH II Prospective Trial) 2023 PH III Prospective/Retrospective Trial PH II Prospective Trial 2027 PH III Prospective Trial EBLIS Expanded Cohort (Prospective/ Retrospective Trial) PH III Prospective Trial 2028 PH I Prospective Trial NOTE: Estimated trial timelines based on currently available information. Longer - term studies will have interim readouts All subtypes ER+/HER2 - ER+/HER2 - ER+/HER2 - All subtypes ER+/HER2 - ER+/HER2 - All subtypes ER+/HER2 - ER+/HER2 - HER2+/TNBC ER+/HER2 -
14 Not for reproduction or further distribution. Q2 23 Financial Overview ($ in millions, except for per share data) Balance sheet June 30, 2023 Dec 31, 2022 Change Q/Q Cash & investments 1 $735.9 $898.4 ($162.5) UBS line of credit $80.4 $80.4 $ — Convertible senior notes 2 $282.3 $281.7 $0.6 P&L Q2’23 Q2’22 Change Y/Y Product revenues $258.3 $194.6 $63.7 Licensing and other revenues $3.1 $3.6 ($0.5) Total revenues $261.4 $198.2 $63.2 Gross margin% 45.2% 44.9% 30 bps R&D $78.2 $82.6 ($4.4) SG&A $152.5 $149.5 $3.0 Net loss per diluted share ($0.97) ($1.50) $0.53 1. Cash and investments also include cash equivalents and restricted cash. 2. This balance reflects net carrying value for the Convertible Senior Notes under ASC 470 - 20 while the gross principal amounts out standing is $287.5 million as of June 30, 2023.
Not for reproduction or further distribution. Cash burn reduction target on track • Expected cash burn reduction compared to 2022 of ~$150M on continued revenue growth and reduction in operating expenses. • Cash burn reductions will fluctuate quarter to quarter based on working capital dynamics. • Improved trends on DSOs and Signatera ASPs driven by broader coverage, reimbursement execution. • Strong sequential growth in Q2 on stable commercial footprint. ~$110M ~$78M Q2'22 Q2'23 Quarterly cash burn 1 : year on year trend ($ in millions) 1. Cash burn for the period ended June 30, 2022, is derived from the GAAP Statement of Cash Flows as follows: net cash used in o per ating activities of $110.8 million, cash used in investing activities for purchases of property and equipment of $7.8 million, offset by cash provided in financing activities of $8.9 million. Cash burn for the period ended June 30, 2023, is derived from the GAAP Statement of Cash Flows as follows: net cash used in operating activities of $78.4 million, cash used in investing activities for purchases of property and equipment of $9.0 million, offset by cash provided in financing activities of $9.3 million. 15
Not for reproduction or further distribution. Guide ($ millions) Original Q1 23 Current Key drivers Revenue $ 980 – $ 1,000 $ 995 – $ 1,015 $1,015 – $1,035 Continued volume growth, conservative ASPs, strong oncology contribution Gross margin % revenue 4 1 % – 4 4 % 4 1 % – 4 4 % 4 1 % – 4 4 % Conservative ASP assumptions, strong oncology growth, completing key COGS improvement projects in 2023 for future leverage SG&A $5 10 – $5 40 $5 10 – $5 40 $5 40 – $5 80 Modest reduction in spend vs. 2022 on mature commercial platforms R&D $3 25 – $3 45 $3 25 – $3 45 $3 25 – $3 45 Focused investments in COGS reduction projects, clinical trials intended to drive guideline adoption Cash burn $3 00 – $ 325 $3 00 – $ 325 $3 00 – $ 325 ~$150M reduction vs. 2022 cash burn 2023 guidance 16
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