Natera Revenues Fall in Q4 Despite Growth in Number of Tests

March 8, 2017
Natera Revenues Fall in Q4 Despite Growth in Number of Tests
Source: © ktsdesign/Fotolia

Natera yesterday reported a 6.8% year-over-year decline in fourth-quarter revenues, though revenues for all of 2016 rose 14% over 2015, and the company’s number of tests processed jumped last year.

The developer of molecular diagnostic tests reported Q4 revenues of $49.3 million, down from $52.9 million in the year-ago quarter. Natera blamed the drop on:

  • Reductions in the average selling price of its tests as the company transitions to in-network contracts with several large insurers;
  • A temporary delay in submitting an estimate in claims to payers due to its relocation of billing operations to Austin, TX; and
  • The timing of about $9.1 million in revenue from BioReference Laboratories, under a distribution agreement that Natera ended in January. Natera said it will record $1.8 million of that revenue in Q1 2017.

The revenue reduction helped keep the company in the red. Natera reported a fourth-quarter net loss of $37.9 million, up from $23 million in Q4 2015; and a 2016 full-year net loss of $95.8 million, surpassing 2015’s net loss of $70.3 million.

Despite the losses and the quarterly revenue drop, the company enjoyed growth in its full-year revenues, which rose in 2016 to $217.1 million from $190.4 million in 2015. Natera said the increase primarily reflected higher volumes of its tests, especially its noninvasive prenatal screening test (NIPT) Panorama and its carrier screening test Horizon™.

Natera processed 117,000 tests during Q4, up nearly 22% from 96,000 tests in Q4 2015; and processed more than 447,000 tests all of last year, about 41% higher than 2015’s 317,000 tests. Those figures include tests processed through Natera's Constellation software platform.

Most of Natera’s Q4 test volume came from two tests: more than 84,000 Panorama tests, up about 15% from 73,000 in the final three months of 2015; as well as 22,000 Horizon carrier screening tests, up almost 38% from 16,000.

Full-year test accessions from 2015 to 2016 jumped about 30% from approximately 255,000 to more than 331,000 Panorama tests; and nearly doubled from 42,000 to more than 80,000 Horizon tests.

Horizon is Natera’s test for 274 autosomal-recessive and X-linked genetic conditions, including cystic fibrosis, Fragile X, Duchenne muscular dystrophy, hemoglobinopathies, and spinal muscular atrophy.

During the fourth quarter, Natera launched version 3 of Panorama, which is designed to screen for common chromosomal anomalies in a fetus as early as nine weeks. Panorama analyzes placental DNA through a blood draw from the mother’s arm.

Also during Q4, Natera launched its Evercord cord blood and tissue banking service, designed to let expectant parents collect, store and retrieve their newborn's cord blood and tissue for potential therapeutic use in some 75 established diseases and numerous potential regenerative medicine applications. Natera says Evercord positions the company to generate the genome of an individual soon after birth.

Natera also issued 2017 guidance to investors that projected total revenue of between $210 million to $230 million; 2017 cost of product revenues of approximately 60% to 65% of revenue; selling, general and administrative costs of $135 million to $145 million; R&D costs of between $45 million to $50 million, and net cash burn of $85 million to $95 million.

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