Natera Reports First Quarter 2022 Financial Results

Natera Reports First Quarter 2022 Financial Results

Texas, May 5, 2022 /PRNewswire/ - Natera, Inc. (NASDAQ: NTRA), a global

leader in cell-free DNA testing, today reported financial results for the first quarter ended March 31, 2022 and provided

an update on recent business progress and financial outlook.

Recent Accomplishments & Highlights

"Given the strong traction we experienced in Q1 across the business,

we are raising our 2022 revenue forecast by $20 million," said Steve Chapman, Natera's Chief Executive Officer. "We

saw strong volume growth in the quarter with an even higher increase in product revenue, especially in our Signatera clinical volumes.

We are rapidly gaining scale on the investment in our oncology and transplant commercial channels, and we believe we have a clear path

to reaching cash flow breakeven."

First Quarter Ended March 31, 2022 Financial Results

revenues were $194.1 million in the first quarter of 2022 compared to $152.3 million for the first quarter of 2021, an increase of 27.5%.

Total revenues, excluding the Qiagen revenue of $28.6 million in the first quarter of 2021, increased by 56.9% in the first quarter of

2022 compared to the first quarter of 2021. The increase in total revenues was driven primarily by an increase in product revenues compared

to the first quarter of 2021. Product revenues were $190.0 million in the first quarter of 2022 compared to $120.4 million in the first

quarter of 2021, an increase of 57.8%. The increase in product revenues was driven by an increase in test volumes compared to the first

quarter of 2021. Natera processed approximately 489,300 tests in the first quarter of 2022, including approximately 473,200 tests accessioned

in its laboratory, compared to approximately 348,200 tests processed, including approximately 333,400 tests accessioned in its laboratory,

in the first quarter of 2021.

the three months ended March 31, 2022, Natera recognized revenue on approximately 456,100 tests for which results were reported

to customers in the period (tests reported), including approximately 440,900 tests reported from its laboratory, compared to approximately

313,800 tests reported, including approximately 300,000 tests reported from its laboratory, in the first quarter of 2021, an overall increase

of 45.3% for the quarter.

Gross profit* for the three months ended March 31,

2022 and 2021 was $90.9 million and $85.5 million, respectively, representing a gross margin of 46.8% and 56.1%, respectively.

Natera had lower margins in the first quarter of 2022 compared to the first quarter 2021 primarily due to the revenue recognition

of approximately $28.6 million in the first quarter of 2021 as a result of the conclusion of its collaboration with Qiagen.

Total operating expenses, representing research

and development expenses and selling, general and administrative expenses, for the first quarter of 2022 were $228.0 million, compared

to $148.5 million in the same period of the prior year, an increase of 53.5%. The increases were primarily driven by headcount

growth to support the Company's expansion, volume growth, and product development.

Loss from operations for the first quarter of

2022 was $137.1 million compared to $63.0 million for the same period of the prior year.

Net loss for the first quarter of 2022 was $138.6

million, or ($1.45) per diluted share, compared to net loss of $63.9 million, or ($0.74) per diluted share, for the same period in 2021.

Weighted average shares outstanding were approximately 95.6 million in the first quarter of 2022 compared to 86.7 million in the first

quarter of the prior year.

March 31, 2022, Natera held approximately $752.2 million in cash, cash equivalents, short-term investments and restricted cash, compared

to $653.7 million as of March 31, 2021. As of March 31, 2022, Natera had a total outstanding debt balance of $330.7 million,

comprised of $50.1 million including accrued interest under its line of credit with UBS at a variable interest rate of 30-day LIBOR plus

110 bps and a net carrying amount of $280.7 million under its seven-year convertible senior notes. The convertible senior notes were issued

in April 2020 for net proceeds of $278.3 million. The gross principal balance outstanding for the convertible senior notes was $287.5

million as of March 31, 2022.

Natera anticipates 2022 total revenue of $790 million to $810 million;

2022 gross margin to be approximately 46% to 48% of revenues; selling, general and administrative costs to be approximately $560 million

to $590 million; research and development costs to be $340 million to $360 million, and net cash consumption to be $370 million to $400

* 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 2022 to be between $310 million and $340 million) and GAAP net purchases of property and equipment

(estimated for 2022 to be approximately $60 million).

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

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 maintain our business and operations as planned due

to disruptions and economic uncertainty caused by the COVID-19 pandemic; we may be unable to further increase the use and adoption of

Panorama and Horizon through our direct sales efforts or through our laboratory partners; we may be unable to develop and successfully

commercialize new products, including Signatera and Prospera; 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 in the average-risk pregnancy population or 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

laboratory facilities 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,

such as the increased focus by third-party payers on requiring that prior authorization be obtained prior to conducting a test; 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, resulting

from either third party claims of intellectual property infringement or third 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 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