Natera Reports Fourth Quarter and Full Year 2023 Financial Results

Natera Reports Fourth Quarter and Full Year 2023 Financial Results

AUSTIN, Texas, February 28, 2024 /PRNewswire/ - Natera, Inc.

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

results for the fourth quarter and year ended December 31, 2023.

Recent Strategic and Financial Highlights

"We are really pleased with our performance

in the quarter and with the continued positive impact we make on patient care," said Steve Chapman, chief executive officer of Natera.

"We believe we are in an excellent position to continue this momentum into 2024."

Fourth Quarter and Year Ended December 31, 2023 Financial Results

Total revenues were $311.1 million in the fourth

quarter of 2023 compared to $217.3 million in the fourth quarter of 2022, an increase of 43.2%. The increase in total revenues was driven

primarily by a 44.3% increase in product revenues, which were $307.3 million in the fourth quarter of 2023 compared to $212.9 million

in the fourth quarter of 2022. The increase in product revenues was driven by average selling price improvements as well as an increase

in test volumes. Natera processed approximately 626,800 tests in the fourth quarter of 2023, including approximately 610,100 tests accessioned

in its laboratory, compared to approximately 559,700 tests processed, including approximately 543,900 tests accessioned in its laboratory,

in the fourth quarter of 2022.

In the fourth quarter of 2023, Natera recognized

revenue on approximately 619,800 tests for which results were reported to customers in the period (tests reported), including approximately

604,200 tests reported from its laboratory, compared to approximately 519,200 tests reported, including approximately 504,500 tests reported

from its laboratory, in the fourth quarter of 2022, an overall increase of 19.4% from the prior period.

Total revenues in 2023 were approximately $1,082.6

million compared to $820.2 million in 2022, which represents an increase of 32.0%. The increase in total revenues was driven primarily

by a 34.0% increase in product revenues, which were $1,068.5 million in the full year 2023 compared to $797.3 million in 2022. The increase

in product revenues was driven by an increase in test volumes as well as average selling price improvements compared to 2022. For the

full year 2023, Natera processed approximately 2,496,100 tests, including approximately 2,426,500 tests accessioned in its laboratory,

compared to approximately 2,066,500 tests processed in 2022, including approximately 2,004,000 tests accessioned in its laboratory.

For the full year 2023, Natera recognized revenue

on approximately 2,388,200 tests reported, including approximately 2,323,400 tests reported from its laboratory, compared to approximately

1,919,600 tests reported, including approximately 1,861,000 tests reported from its laboratory, in 2022, an overall increase of 24.4%.

Gross profit* for the three months ended December 31,

2023 and 2022 was $159.9 million and $90.0 million, respectively, representing a gross margin of 51.4% and 41.4%, respectively. Gross

profit for the year ended December 31, 2023 and 2022 was $492.7 million and $364.0 million, respectively, representing a gross margin

of 45.5% and 44.4%, respectively. Natera had higher gross margin in the fourth quarter of 2023 and for the full year 2023 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 fourth quarter of 2023 were $244.4

million, compared to $231.7 million in the same period of the prior year, an increase of 5.5%. Total operating expenses for the full year

2023 were $939.0 million, compared to $905.0 million in 2022, an increase of 3.8%. The increases for both periods were primarily driven

by headcount growth to support new product offerings.

Loss from operations for the fourth quarter of

2023 was $84.5 million compared to $141.8 million for the same period of the prior year. Loss from operations for the full year 2023 was

$446.2 million compared to $541.0 million in 2022.

Natera reported a net loss for the fourth quarter

of 2023 of $78.0 million, or ($0.65) per diluted share, compared to a net loss of $142.6 million, or ($1.37) per diluted share, for the

same period in 2022. Weighted average shares outstanding were approximately 119.3 million in the fourth quarter of 2023 compared to 104.3

million in the fourth quarter of the prior year. Natera's net loss for the full year 2023 was $434.8 million, or ($3.78) per diluted

share, compared to a net loss of $547.8 million, or ($5.57) per diluted share, in 2022. Weighted average shares outstanding were 115.0

million in 2023 compared to 98.4 million in 2022.

At December 31, 2023, Natera held approximately

$879.0 million in cash, cash equivalents, short-term investments and restricted cash, compared to $898.4 million as of December 31,

2022. As of December 31, 2023, Natera had a total outstanding debt balance of $363.3 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

$282.9 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 December 31, 2023.

Natera anticipates 2024 total revenue of $1.32

billion to $1.35 billion; 2024 gross margin to be approximately 50% to 53% of revenues; selling, general and administrative costs to be

approximately $630 million to $650 million; research and development costs to be $325 million to $345 million, and net cash consumption

to be $50 million to $75 million**.

* 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 2024 to be up to $25 million) and GAAP net purchases of property and equipment

(estimated for 2024 to be up to $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 150 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; 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