Natera Reports First Quarter 2024 Financial Results

Natera Reports First Quarter 2024

AUSTIN, Texas, May 9, 2024 /PRNewswire/ - Natera, Inc.

(NASDAQ: NTRA), a global leader in cell-free DNA and genetic testing, today reported

its financial results for the first quarter ended March 31, 2024.

Recent Strategic and Financial Highlights

"We had an excellent start to the year,

driving robust volume, revenue and margin growth and achieving cash flow breakeven earlier than expected," said Steve Chapman, chief

executive officer of Natera. "We continued to deliver on our mission to transform disease management with the launch of a highly

differentiated product in women's health and the publication of practice-changing data in oncology and organ health."

First Quarter Ended March 31, 2024 Financial

Total revenues were $367.7 million in the first

quarter of 2024 compared to $241.8 million in the first quarter of 2023, an increase of 52.1%. The increase in total revenues was driven

primarily by a 53.4% increase in product revenues, which were $364.7 million in the first quarter of 2024 compared to $237.8 million in

the first quarter of 2023. The increase in product revenues was primarily driven by an increase in volume, as well as average selling

Natera processed approximately 735,800 tests in

the first quarter of 2024, including approximately 718,700 tests accessioned in its laboratory, compared to approximately 626,200 tests

processed, including approximately 607,700 tests accessioned in its laboratory, in the first quarter of 2023.

In the first quarter of 2024, Natera recognized

revenue on approximately 679,400 tests for which results were reported to customers in the period (tests reported), including approximately

663,500 tests reported from its laboratory, compared to approximately 583,400 tests reported, including approximately 566,000 tests reported

from its laboratory, in the first quarter of 2023, an overall increase of 16.5% from the prior period.

Gross profit2 for the three months

ended March 31, 2024 and 2023 was $208.6 million and $93.6 million, respectively, representing a gross margin of 56.7% and 38.7%,

respectively. Natera had higher gross margin in the first quarter of 2024 primarily as a result of higher revenues and continuous progress

in reducing cost of goods sold associated with tests processed. Total operating expenses, representing research and development expenses

and selling, general and administrative expenses, for the first quarter of 2024 were $282.9 million, compared to $231.9 million in the

same period of the prior year, an increase of 22.0%. The increase was primarily driven by headcount growth to support new product offerings

as well as increases in consulting and legal expenses.

Loss from operations for the first quarter of

2024 was $74.3 million compared to $138.3 million for the same period of the prior year.

Natera reported a net loss for the first quarter

of 2024 of $67.6 million, or ($0.56) per diluted share, compared to a net loss of $136.9 million, or ($1.23) per diluted share, for the

same period in 2023. Weighted average shares outstanding were approximately 120.8 million in the first quarter of 2024 compared to 111.8

million in the first quarter of the prior year.

At March 31, 2024, Natera held approximately

$882.9 million in cash, cash equivalents, short-term investments and restricted cash, compared to $879.0 million as of December 31,

2023. As of March 31, 2024, Natera had a total outstanding debt balance of $363.7 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 50 bps and a net carrying amount of $283.3

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 March 31, 2024.

Natera anticipates 2024 total revenue of $1.42

billion to $1.45 billion; 2024 gross margin to be approximately 53% to 55% of revenues; selling, general and administrative costs to be

approximately $700 million to $750 million; research and development costs to be $350 million to $375 million, and net cash inflow (consumption)

to be ($25) million to $25 million3.

is a global leader in cell-free DNA and genetic 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 200 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 2024, its market opportunity, anticipated products and launch schedules, reimbursement

coverage and product costs, commercial and strategic partnerships and acquisitions, user experience, clinical trials and studies, and

its strategies, goals and general business and market conditions, 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 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 our

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; 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, if and when

the FDA begins actively regulating our tests pursuant to recently enacted FDA regulations; 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

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.

Mike Brophy, CFO, Natera, Inc., 510-826-2350

Lesley Bogdanow, VP of Corporate Communications, Natera, Inc., pr@natera.com

Consolidated Balance Sheets

(in thousands, except shares)

Consolidated Statements of Operations and Comprehensive