Natera(US:NTRA)2022-11-08 16:00PART I — FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) This section presents Natera, Inc.'s unaudited condensed consolidated financial statements for the quarter ended September 30, 2022, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows, along with detailed notes on business description, significant accounting policies, revenue recognition, fair value measurements, financial instruments, balance sheet components, leases, commitments and contingencies, stock-based compensation, debt, income taxes, net loss per share, and subsequent events Condensed Consolidated Balance Sheets This section provides a snapshot of Natera's financial position, detailing assets, liabilities, and stockholders' equity at specific points in time | Metric | September 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Assets | | | | Cash and cash equivalents | $57,042 | $84,386 | | Short-term investments | $464,112 | $829,896 | | Accounts receivable, net | $236,362 | $122,074 | | Total current assets | $829,629 | $1,093,138 | | Total assets | $1,009,112 | $1,236,487 | | Liabilities | | | | Total current liabilities | $267,281 | $218,956 | | Long-term debt financing | $281,336 | $280,394 | | Total liabilities | $647,491 | $583,183 | | Stockholders' Equity | | | | Accumulated deficit | $(1,800,062) | $(1,394,836) | | Total stockholders' equity | $361,621 | $653,304 | Condensed Consolidated Statements of Operations and Comprehensive Loss This section outlines Natera's financial performance over specific periods, detailing revenues, expenses, and net loss | Metric | Three months ended Sep 30, 2022 (in thousands) | Three months ended Sep 30, 2021 (in thousands) | Nine months ended Sep 30, 2022 (in thousands) | Nine months ended Sep 30, 2021 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Product revenues | $199,831 | $153,940 | $584,415 | $413,971 | | Licensing and other revenues | $10,806 | $4,176 | $18,555 | $38,487 | | Total revenues | $210,637 | $158,116 | $602,970 | $452,458 | | Cost of product revenues | $115,436 | $80,511 | $326,862 | $221,870 | | Research and development | $65,510 | $98,457 | $228,504 | $192,397 | | Selling, general and administrative | $147,667 | $128,485 | $444,769 | $364,273 | | Loss from operations | $(119,052) | $(150,197) | $(399,267) | $(328,508) | | Net loss | $(121,480) | $(151,273) | $(405,226) | $(331,152) | | Basic and diluted net loss per share | $(1.25) | $(1.63) | $(4.20) | $(3.72) | Condensed Consolidated Statements of Stockholders' Equity This section details changes in Natera's stockholders' equity, reflecting the impact of net losses, unrealized gains/losses, and equity transactions - Total stockholders' equity decreased from $653.3 million at December 31, 2021, to $361.6 million at September 30, 2022, primarily due to a net loss of $405.2 million and unrealized losses on available-for-sale securities of $17.3 million, partially offset by increases from stock-based compensation and common stock issuances24 Condensed Consolidated Statements of Cash Flows This section summarizes Natera's cash inflows and outflows from operating, investing, and financing activities over specific periods | Cash Flow Activity | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Cash used in operating activities | $(350,374) | $(236,500) | | Cash provided by (used in) investing activities | $308,421 | $(284,697) | | Cash provided by financing activities | $14,467 | $567,673 | | Net increase in cash, cash equivalents and restricted cash | $(27,486) | $46,476 | | Cash, cash equivalents and restricted cash, end of period | $57,128 | $95,331 | Notes to Unaudited Interim Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the unaudited interim condensed consolidated financial statements 1. Description of Business This note describes Natera, Inc.'s core business as a diagnostics company leveraging cell-free DNA technology across women's health, oncology, and organ health markets - Natera, Inc. is a diagnostics company utilizing proprietary cell-free DNA (cfDNA) technology and bioinformatics for disease management2930 - Initially focused on women's health (e.g., Panorama NIPT, Horizon Carrier Screening), the company has expanded into oncology (Signatera) and organ health (Prospera) markets2930 - It operates CLIA-certified laboratories and offers a cloud-based distribution model, Constellation, for laboratory partners2930 2. Summary of Significant Accounting Policies This note outlines the key accounting principles and estimates used in preparing Natera's financial statements, including going concern considerations - The company's financial statements are prepared in conformity with U.S. GAAP for interim financial information, with no material changes to significant accounting policies during the nine months ended September 30, 2022313245 - Key estimates include allowance for doubtful accounts, average selling price from insurance payors, operating lease assets/liabilities, deferred revenues, stock-based compensation, and income tax uncertainties313245 - Natera has incurred net losses since inception, with a $405.2 million net loss for the nine months ended September 30, 2022, and an accumulated deficit of $1.8 billion3638 - The company anticipates continued losses and negative operating cash flows, requiring additional equity or debt financing to fund operations and growth3638 - The company believes its existing cash and marketable securities ($57.1 million cash, $464.1 million investments as of September 30, 2022) will be sufficient for at least 12 months after November 8, 20223643 3. Revenue Recognition This note details Natera's policies for recognizing revenue from product sales and licensing agreements, including variable consideration and disaggregation by payer and geography - Product revenues are primarily from prenatal genetic tests, oncology testing, and are recognized when test results are delivered85879395 - Licensing and other revenues come from the Constellation cloud-based platform and strategic