Natera Reports First Quarter 2023 Financial Results

Natera Reports First Quarter 2023 Financial Results

AUSTIN, Texas, May 9, 2023

- Natera, Inc. (NASDAQ: NTRA), a global leader in cell-free DNA testing,

today reported financial results for the first quarter ended March 31, 2023.

Recent Strategic and Financial Highlights

"We are off to an excellent start in 2023,"

said Steve Chapman, Natera's Chief Executive Officer. "We published important new data sets in the women's health and

oncology settings, received the first commercial coverage policies for Signatera, and secured Medicare reimbursement for Prospera in

heart transplantation. Our performance demonstrates the strength of our technology, and we look forward to helping millions of additional

patients and advancing our mission to transform the management of disease."

First Quarter Ended March 31, 2023 Financial Results

Total revenues were $241.8 million in the first

quarter of 2023, compared to $194.1 million for the first quarter of 2022, an increase of 24.5%. Product revenues were $237.8 million

in the first quarter of 2023, compared to $190.0 million in the first quarter of 2022, an increase of 25.2%. The growth in product revenues

was driven by an increase in test volumes compared to the first quarter of 2022.

Natera processed approximately 626,200 tests

in the first quarter of 2023, including approximately 607,700 tests accessioned in its laboratory. This compares to approximately 489,300

tests processed in the first quarter of 2022, including approximately 473,200 tests accessioned in its laboratory, an increase of 28.0%.

In the three months ended March 31, 2023,

Natera recognized revenue on approximately 583,400 tests for which results were reported to customers in the period (tests reported),

including approximately 566,000 tests reported from its laboratory, compared to approximately 456,100 tests reported, including approximately

440,900 tests reported from its laboratory, in the first quarter of 2022, an increase of 27.9% for the quarter.

Gross profit* for the three months ended March 31,

2023 and 2022 was $93.6 million and $90.9 million, respectively, representing a gross margin of 38.7% and 46.8%. Natera had

lower margins in the first quarter of 2023 compared to the first quarter of 2022 primarily due to increased labor, overhead costs, and

third-party services driven by volume growth and product support.

Total operating expenses, representing research

and development expenses and selling, general and administrative expenses, for the first quarter of 2023 were $231.9 million, compared

to $228.0 million in the same period of the prior year, an increase of 1.7%. The increase was primarily driven by additional

headcount to support the Company's expansion, volume growth, and product development. Loss from operations for the first quarter

of 2023 was $138.3 million, compared to $137.1 million for the same period of the prior year.

The Company reported a net loss for the first

quarter of 2023 of $136.9 million, or ($1.23) per diluted share, compared to a net loss of $138.6 million, or ($1.45) per diluted share,

for the same period in 2022. Weighted average shares outstanding were approximately 111.8 million in the first quarter of 2023, compared

to 95.6 million in the first quarter of the prior year.

As of March 31, 2023, Natera held approximately

$812.0 million in cash, cash equivalents, short-term investments and restricted cash, compared to $898.4 million as of December 31,

2022. As of March 31, 2023, Natera had a total outstanding debt balance of $362.4 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 $282.0 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 March 31, 2023.

Natera is raising its expectations for 2023 total

revenue from $980 million to $1.0 billion to a new range of $995 million to $1.015 billion, and continues to expect 2023 gross margin

to be approximately 41% to 44% of revenues; selling, general and administrative costs to be approximately $510 million to $540 million;

research and development costs to be $325 million to $345 million, and net cash consumption to be approximately $300 million to $325

* 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).

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 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