Natera (NTRA) Canaccord Genuity 44th Annual Growth Conference & Private Company Showcase 2024 summary

Financial performance and guidance

• Q2 revenue reached $413 million, up 60% year-on-year, with volumes up 20% and gross margins rising to 59% (54% excluding one-time true-ups).

• Operating expenses grew in the single digits, supporting a second consecutive cash flow breakeven quarter.

• Revenue guidance for the year was raised to just above $1.5 billion, with gross margin guidance also increased and cash flow breakeven maintained.

• True-ups contributed $40 million in the quarter, but underlying organic growth was also strong, driven by higher realized pricing and improved Medicare reimbursement.

• Cash flow guidance remains cautious due to working capital and CapEx timing, despite higher revenues and margins.

Business drivers and operational highlights

• Signatera volumes are ramping, with 125,000 units in Q2 and a run rate of 500,000 annually.

• Growth in Signatera is driven by both new physician adoption and increased usage per physician, with 40% of U.S. oncologists ordering in the last quarter.

• Women's health remains a double-digit grower, aided by organic growth and the Invitae acquisition, which contributed over $20 million in incremental revenue.

• Product innovation includes the launch of Rhesus D testing in response to a RhoGAM shortage, with further rollouts expected in the second half of the year.

• NIPT share growth is expected from 22q testing, which is widely ordered but not yet reimbursed, and from superior test performance.

Reimbursement, pricing, and margin trends

• Signatera ASPs have risen from $800–$850 to around $1,050, with further improvements expected as Medicare Advantage reimbursement increases.

• Medicare Advantage reimbursement for covered tests improved from 20% to 60% due to administrative process enhancements.

• Long-term gross margin targets are set at 70%, achievable with further ASP increases and improved mix in both oncology and women's health.

• Commercial payer progress and biomarker legislation are expected to drive ASP growth in 2025 and 2026.