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Invitae Reports Second Quarter 2023 Financial Results

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Rhea-AI Summary
Invitae reports Q2 2023 revenue of $120.5 million, a 12% YoY decrease due to exited businesses and geographies. Pro forma revenue is slightly up YoY. GAAP gross margin is 27.4% and non-GAAP gross margin is 49.8%. Ongoing cash burn annual guidance improves to $220-$245 million. 2023 revenue guidance adjusted to $480-$500 million.
Positive
  • Pro forma revenue is slightly up YoY.
  • Non-GAAP gross margin improves for eight consecutive quarters.
  • Ongoing cash burn annual guidance improves to $220-$245 million.
Negative
  • Reported revenue decreases by 12% YoY.
  • Adjusted 2023 revenue guidance to $480-$500 million from over $500 million previously.

– Reported revenue of $120.5 million, a 12% year-over-year decrease due to exited businesses and geographies; pro forma revenue up slightly year-over-year –

 – GAAP gross margin was 27.4% and non-GAAP gross margin was 49.8%; continued improvement in non-GAAP gross margin for eight consecutive quarters –

– Company improves ongoing cash burn annual guidance to $220-$245 million; adjusts 2023 revenue guidance to $480-$500 million from over $500 million previously –

– Conference call and webcast today at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time –

SAN FRANCISCO, Aug. 8, 2023 /PRNewswire/ -- Invitae (NYSE: NVTA), a leading medical genetics company, today announced financial and operating results for the second quarter ended June 30, 2023.

"In the second quarter, we continued our steady march toward becoming a profitable business while continuing to serve our patients and clients. We performed well in non-GAAP gross margin and cash burn trajectory as both continued to show meaningful improvements. On a pro forma basis, total revenue was up approximately 1% year-over-year. Rare disease, women's health and our data business all posted strong double-digit revenue growth during the same period. Despite solid volume growth in our hereditary cancer tests, oncology sales were impacted by lower-than-expected insurance payments and lower fee-for-service revenue," said Ken Knight, president and chief executive officer of Invitae.

Mr. Knight continued, "Looking ahead to the second half, our efforts are focused on expanding our hereditary cancer customer base, improving overall customer experience, expanding adoption of our product offerings and continuing our push to improve payment rates and average payment per test. We are committed to establishing durable paths for profitable growth and creating the capacity to pursue innovation and investment in our future. These tenets will inform our efforts to position us for future success."

Second Quarter 2023 Financial Results

  • Generated revenue of $120.5 million in the second quarter of 2023 versus $136.6 million in the second quarter of 2022, reflecting the impact of exited businesses and geographies announced in 2022. On a pro forma basis, or after removing approximately $17.5 million of revenue from second quarter 2022 relating to exited businesses and geographies, the second quarter 2023 revenue grew approximately 1% year-over-year on lower than expected average payments from hereditary cancer tests and weaker fee-for-service revenue.
  • GAAP gross profit was $33.1 million in the quarter, compared with $26.3 million over the same period of 2022, or 25.8% year-over-year growth. Non-GAAP gross profit was $60.0 million in the quarter, compared with $54.7 million in the second quarter of 2022, representing a year-over-year growth rate of 9.7%.
  • GAAP gross margin was 27.4% in the quarter, as compared with 19.2% in the second quarter of 2022. Non-GAAP gross margin was 49.8% in the quarter, as compared with 40.1% in the second quarter of 2022. This represents continued improvement for the eighth consecutive quarter.
  • Cash, cash equivalents, restricted cash and marketable securities were $335.6 million as of June 30, 2023, compared to $557.1 million as of December 31, 2022.
  • Net decrease in cash, cash equivalents, restricted cash and net changes in investments in the quarter was $55.1 million. Cash burn in the quarter was $53.3 million. Total patient population as of June 30, 2023 is approximately 4.1 million with over 63% available for data sharing.

Total GAAP operating expenses, which excludes cost of revenue, for the second quarter of 2023 were $259.5 million, compared to $2.5 billion in the second quarter of 2022, which included significant goodwill and IPR&D impairment charges of $2.3 billion. GAAP operating expense as a percentage of revenue was 215%, compared to 1,864% in the second quarter of 2022. Non-GAAP operating expenses were $157.7 million for the second quarter of 2023, compared to $200.1 million for the second quarter of 2022. Non-GAAP operating expense as a percentage of revenue was 131%, compared to 146% in the second quarter of 2022.

Net loss for the second quarter of 2023 was $206.5 million, or a $0.78 net loss per share, compared to net loss of $2.5 billion, or net loss per share of $10.87, for the second quarter of 2022. The second quarter 2022 net loss included the $2.3 billion goodwill charge as mentioned above. Non-GAAP net loss for the second quarter of 2023 was $78.2 million, or a non-GAAP net loss of $0.30 per share, compared to a non-GAAP net loss of $158.5 million, or an $0.68 non-GAAP net loss per share, for the second quarter of 2022.

Financial Guidance

Management is adjusting 2023 revenue guidance to $480-$500 million compared to its previous guidance of over $500 million.

The company continues to expect its non-GAAP gross margin for 2023 to be between 48%-50%.

Ongoing cash burn, which includes cash, cash equivalents, marketable securities, and restricted cash and excludes certain items, is now expected to improve to the range of $220-$245 million in 2023 from the company's previous guidance range of $250-$275 million. In 2023, cash burn will be higher than ongoing cash burn as a result of the company's voluntary repayment of its $135 million term loan in the first quarter of 2023. 

Webcast and Conference Call Details

Management will host a conference call and webcast today at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time to discuss financial results and recent developments. To access the conference call, please register at the link below:

https://www.netroadshow.com/events/login?show=53f2c7d8&confId=53596

Upon registering, each participant will be provided with call details and access codes. 

The live webcast of the call and slide deck may be accessed here or by visiting the investors section of the company's website at ir.invitae.com. A replay of the webcast will be available shortly after the conclusion of the call and will be archived on the company's website.

About Invitae
Invitae (NYSE: NVTA) is a leading medical genetics company trusted by millions of patients and their providers to deliver timely genetic information using digital technology. We aim to provide accurate and actionable answers to strengthen medical decision-making for individuals and their families. Invitae's genetics experts apply a rigorous approach to data and research, serving as the foundation of their mission to bring comprehensive genetic information into mainstream medicine to improve healthcare for billions of people.

To learn more, visit invitae.com and follow for updates on Twitter, Instagram, Facebook and LinkedIn @Invitae.

Safe Harbor Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the company's mission; the company's beliefs regarding the potential of its business, and its business priorities and initiatives and the potential benefits thereof; the company's future financial and operating results, and the drivers of future financial results; the company's focus, strategy, roadmap and product pipeline; and the company's financial guidance for 2023. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially and reported results should not be considered as an indication of future performance. These risks and uncertainties include, but are not limited to: the availability of and need for capital; the ability to service the company's debt obligations; the ability of the company to successfully execute its strategic business realignment and achieve the intended benefits thereof on the expected timeframe or at all; unforeseen or greater than expected costs associated with the strategic business realignment; the risk that the disruption that may result from the realignment may harm the company's business, market share or its relationship with customers or potential customers; the impact of inflation and the current economic environment on the company's business; the company's ability to grow its business in a cost-efficient manner; the company's history of losses; the company's ability to maintain important customer relationships; the company's ability to compete; the company's need to scale its infrastructure in advance of demand for its tests and to increase demand for its tests; the risk that the company may not obtain or maintain sufficient levels of reimbursement for its tests; the applicability of clinical results to actual outcomes; risks associated with litigation; the company's ability to use rapidly changing genetic data to interpret test results accurately and consistently; laws and regulations applicable to the company's business; and the other risks set forth in the reports filed by the company with the SEC, including its Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. These forward-looking statements speak only as of the date hereof, and Invitae Corporation disclaims any obligation to update these forward-looking statements.

Non-GAAP Financial Measures
To supplement the company's consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP), the company is providing several non-GAAP measures. These non-GAAP financial measures exclude certain items that are required by GAAP. In addition, these non-GAAP measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures presented by other companies. Management believes these non-GAAP financial measures are useful to investors in evaluating the company's ongoing operating results and trends. Management uses such non-GAAP information to manage the company's business and monitor its performance.

Other companies, including companies in the same industry, may not use the same non-GAAP measures or may calculate these metrics in a different manner than management or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of these non-GAAP measures as comparative measures. Because of these limitations, the company's non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the non-GAAP reconciliations provided in the tables below and on the company's website.

In addition, this press release includes the company's non-GAAP gross margin and cash burn guidance, non-GAAP measures used to describe the company's expected performance. The company has not presented a reconciliation of these non-GAAP measures to the most comparable GAAP financial measures, because the reconciliations could not be prepared without unreasonable effort. The information necessary to prepare the reconciliations are not available on a forward-looking basis and cannot be accurately predicted. The unavailable information could have a significant impact on the calculation of the comparable GAAP financial measures.

Invitae Contacts:

Investor Relations
Hoki Luk  
ir@invitae.com

Public Relations
Amy Hadsock
pr@invitae.com 

 

INVITAE CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)



June 30,
2023


December 31,
2022

Assets




Current assets:




Cash and cash equivalents

$        222,758


$        257,489

Marketable securities

102,379


289,611

Accounts receivable

85,610


96,148

Inventory

20,814


30,386

Prepaid expenses and other current assets

19,664


19,496

Total current assets

451,225


693,130

Property and equipment, net

92,091


108,723

Operating lease assets

74,718


106,563

Restricted cash

10,508


10,030

Intangible assets, net

873,924


1,012,549

Other assets

20,573


23,121

Total assets

$     1,523,039


$     1,954,116

Liabilities and stockholders' (deficit) equity




Current liabilities:




Accounts payable

$          23,067


$          13,984

Accrued liabilities

107,951


74,388

Operating lease obligations

16,436


14,600

Finance lease obligations

4,514


5,121

Total current liabilities

151,968


108,093

Operating lease obligations, net of current portion

139,630


134,386

Finance lease obligations, net of current portion

1,604


3,780

Debt


122,333

Convertible senior notes, net

1,170,611


1,470,783

Convertible senior secured notes (at fair value)

249,571


Deferred tax liability

6,200


8,130

Other long-term liabilities

4,241


4,775

Total liabilities

1,723,825


1,852,280





Stockholders' (deficit) equity:




Common stock

27


25

Accumulated other comprehensive income (loss)

8,910


(80)

Additional paid-in capital

5,018,112


4,931,032

Accumulated deficit

(5,227,835)


(4,829,141)

Total stockholders' (deficit) equity

(200,786)


101,836

Total liabilities and stockholders' (deficit) equity

$      1,523,039


$      1,954,116

 

INVITAE CORPORATION
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)




Three Months Ended
June 30,


Six Months Ended
June 30,



2023


2022


2023


2022

Revenue:









Test revenue


$               115,943


$           133,182


$           228,566


$           252,679

Other revenue


4,589


3,440


9,322


7,634

Total revenue


120,532


136,622


237,888


260,313

Operating expenses:









Cost of revenue


87,474


110,340


175,916


207,456

Research and development


63,824


115,146


125,802


243,382

Selling and marketing


44,732


62,749


89,242


122,893

General and administrative


69,966


50,854


115,207


102,282

Goodwill and IPR&D impairment



2,313,047



2,313,047

Restructuring and other costs


80,998


4,817


133,554


4,817

Total operating expenses


346,994


2,656,953


639,721


2,993,877

Loss from operations


(226,462)


(2,520,331)


(401,833)


(2,733,564)

Other income (expense), net:









Loss on extinguishment of debt, net




(10,822)


Debt issuance costs




(19,859)


Change in fair value of convertible
senior secured notes


20,619



38,923


Change in fair value of acquisition-
related liabilities


49


6,190


267


16,193

Other income, net


4,379


1,136


10,262


1,572

Total other income, net


25,047


7,326


18,771


17,765

Interest expense


(6,020)


(14,019)


(17,516)


(28,004)

Net loss before taxes


(207,435)


(2,527,024)


(400,578)


(2,743,803)

Income tax benefit


924


3,563


1,884


38,483

Net loss


$             (206,511)


$      (2,523,461)


$         (398,694)


$     (2,705,320)

Net loss per share, basic and diluted


$                   (0.78)


$            (10.87)


$              (1.55)


$            (11.75)

Shares used in computing net loss per
share, basic and diluted


263,836


232,117


256,910


230,304

 

INVITAE CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)



Six Months Ended June 30,


2023


2022

Cash flows from operating activities:




Net loss

$                (398,694)


$                 (2,705,320)

Adjustments to reconcile net loss to net cash used in operating activities:




Goodwill and IPR&D impairment


2,313,047

Impairments and losses on disposals of long-lived assets, net

131,195


4,817

Depreciation and amortization

68,662


64,247

Stock-based compensation

59,557


103,901

Amortization of debt discount and issuance costs

4,259


7,776

Loss on extinguishment of debt, net

10,822


Debt issuance costs

19,859


Change in fair value of convertible senior secured notes

(38,923)


Remeasurements of liabilities associated with business combinations

(267)


(16,193)

Benefit from income taxes

(1,884)


(38,483)

Post-combination expense for acceleration of unvested equity and
deferred stock compensation

1,660


3,320

Amortization of premiums and discounts on investment securities

(4,966)


1,178

Non-cash lease expense

6,681


3,192

Other

824


(1,321)

Changes in operating assets and liabilities, net of businesses acquired:




Accounts receivable

10,538


(16,359)

Inventory

9,572


(15,557)

Prepaid expenses and other current assets

(168)


(2,134)

Other assets

587


(2,104)

Accounts payable

9,092


6,575

Accrued expenses and other long-term liabilities

22,291


7,186

Net cash used in operating activities

(89,303)


(282,232)

Cash flows from investing activities:




Purchases of marketable securities

(228,092)


(605,454)

Proceeds from maturities of marketable securities

420,440


301,933

Purchases of property and equipment

(2,741)


(36,970)

Proceeds from sale of property and equipment

332


Other

3


Net cash provided by (used in) investing activities

189,942


(340,491)

Cash flows from financing activities:




Proceeds from issuance of common stock, net

2,170


6,234

Proceeds from issuance of Series B convertible senior secured notes due
2028

30,000


Payments for debt issuance costs and prepayment fees

(28,014)


Repayment of debt

(135,000)


Finance lease principal payments

(2,576)


(2,677)

Settlement of acquisition obligations

(1,472)


(707)

Net cash (used in) provided by financing activities

(134,892)


2,850

Net decrease in cash, cash equivalents and restricted cash

(34,253)


(619,873)

Cash, cash equivalents and restricted cash at beginning of period

267,519


933,525

Cash, cash equivalents and restricted cash at end of period

$                  233,266


$                      313,652

 

Reconciliation of GAAP to Non-GAAP Cost of Revenue
(in thousands)
(unaudited)




Three Months Ended
June 30,


Six Months Ended
June 30,



2023


2022


2023


2022

Cost of revenue


$          87,474


$        110,340


$      175,916


$       207,456

Amortization of acquired intangible assets


(26,090)


(27,907)


(53,040)


(45,907)

Acquisition-related stock-based compensation


(22)


(147)


(102)


(279)

Acquisition-related post-combination expense



(387)



(891)

Restructuring-related retention bonuses


(50)



(138)


Inventory and prepaid write-offs


(825)



(974)


Non-GAAP cost of revenue


$          60,487


$          81,899


$       121,662


$       160,379

 

Reconciliation of GAAP to Non-GAAP Gross Profit
(in thousands)
(unaudited)




Three Months Ended
June 30,


Six Months Ended
June 30,



2023


2022


2023


2022

Revenue


$       120,532


$       136,622


$       237,888


$       260,313

Cost of revenue


87,474


110,340


175,916


207,456

Gross profit


33,058


26,282


61,972


52,857

Amortization of acquired intangible assets


26,090


27,907


53,040


45,907

Acquisition-related stock-based compensation


22


147


102


279

Acquisition-related post-combination expense



387



891

Restructuring-related retention bonuses


50



138


Inventory and prepaid write-offs


825



974


Non-GAAP gross profit


$         60,045


$         54,723


$       116,226


$         99,934

 

Reconciliation of GAAP to Non-GAAP Research and Development Expense
(in thousands)
(unaudited)




Three Months Ended
June 30,


Six Months Ended
June 30,



2023


2022


2023


2022

Research and development


$       63,824


$     115,146


$     125,802


$      243,382

Amortization of acquired intangible assets



(502)


(90)


(1,032)

Acquisition-related stock-based compensation


(15,190)


(23,255)


(28,527)


(47,024)

Acquisition-related post-combination expense


(842)


(2,643)


(1,684)


(5,224)

Restructuring-related retention bonuses


(613)



(1,383)


Restructuring-related accelerated depreciation


(32)



(216)


Non-GAAP research and development


$       47,147


$      88,746


$       93,902


$      190,102

 

Reconciliation of GAAP to Non-GAAP Selling and Marketing Expense
(in thousands)
(unaudited)




Three Months Ended
June 30,


Six Months Ended
June 30,



2023


2022


2023


2022

Selling and marketing


$      44,732


$       62,749


$      89,242


$     122,893

Amortization of acquired intangible assets


(1,569)


(1,622)


(3,138)


(3,246)

Acquisition-related stock-based compensation


(201)


(985)


(750)


(1,568)

Restructuring-related retention bonuses


(230)



(460)


Non-GAAP selling and marketing


$      42,732


$         60,142


$      84,894


$       118,079

 

Reconciliation of GAAP to Non-GAAP General and Administrative Expense
(in thousands)
(unaudited)




Three Months Ended
June 30,


Six Months Ended
June 30,



2023


2022


2023


2022

General and administrative


$       69,966


$       50,854


$  115,207


$      102,282

Change in fair value of contingent
consideration



2,004



1,850

Acquisition-related stock-based compensation


(1,243)


(1,646)


(2,343)


(3,218)

Restructuring-related retention bonuses


(874)



(1,253)


Non-GAAP general and administrative


$       67,849


$       51,212


$   111,611


$      100,914

 

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses
(in thousands)
(unaudited)




Three Months Ended
June 30,


Six Months Ended
June 30,



2023


2022


2023


2022

Research and development


$      63,824


$     115,146


$       125,802


$       243,382

Selling and marketing


44,732


62,749


89,242


122,893

General and administrative


69,966


50,854


115,207


102,282

Goodwill and IPR&D impairment



2,313,047



2,313,047

Restructuring and other costs


80,998


4,817


133,554


4,817

Operating expenses


259,520


2,546,613


463,805


2,786,421

Goodwill and IPR&D impairment



(2,313,047)



(2,313,047)

Restructuring and other costs


(80,998)


(4,817)


(133,554)


(4,817)

Change in fair value of contingent
consideration



2,004



1,850

Amortization of acquired intangible assets


(1,569)


(2,124)


(3,228)


(4,278)

Acquisition-related stock-based
compensation


(16,634)


(25,886)


(31,620)


(51,810)

Acquisition-related post-combination expense


(842)


(2,643)


(1,684)


(5,224)

Restructuring-related retention bonuses


(1,717)



(3,096)


Restructuring-related accelerated
depreciation


(32)



(216)


Non-GAAP operating expenses


$    157,728


$     200,100


$       290,407


$       409,095

 

Reconciliation of Other Income, Net to Non-GAAP Other Income, Net
(in thousands)
(unaudited)




Three Months Ended
June 30,


Six Months Ended
June 30,



2023


2022


2023


2022

Other income, net


$        25,047


$       7,326


$    18,771


$        17,765

Change in fair value of acquisition-related
liabilities


(49)


(6,190)


(267)


(16,193)

Non-GAAP other income, net


$        24,998


$       1,136


$    18,504


$          1,572

 

Reconciliation of Net Loss to Non-GAAP Net Loss and Non-GAAP Net Loss Per Share
(in thousands, except per share data)
(unaudited)




Three Months Ended
June 30,


Six Months Ended
June 30,



2023


2022


2023


2022

Net loss


$   (206,511)


$ (2,523,461)


$   (398,694)


$ (2,705,320)

Goodwill and IPR&D impairment



2,313,047



2,313,047

Restructuring and other costs


80,998


4,817


133,554


4,817

Change in fair value of contingent
consideration



(2,004)



(1,850)

Change in fair value of acquisition-related
assets and liabilities


(49)


(6,190)


(267)


(16,193)

Amortization of acquired intangible assets


27,659


30,031


56,268


50,185

Acquisition-related stock-based compensation


16,656


26,033


31,722


52,089

Acquisition-related post-combination expense


842


3,030


1,684


6,115

Restructuring-related retention bonuses


1,767



3,234


Restructuring-related accelerated depreciation


32



216


Inventory and prepaid write-offs


825



974


Acquisition-related income tax benefit


(460)


(3,805)


(630)


(38,805)

Non-GAAP net loss


$     (78,241)


$   (158,502)


$   (171,939)


$   (335,915)










Net loss per share, basic and diluted


$         (0.78)


$        (10.87)


$         (1.55)


$        (11.75)

Non-GAAP net loss per share, basic and diluted


$         (0.30)


$          (0.68)


$         (0.67)


$          (1.46)

Shares used in computing net loss per share,
basic and diluted


263,836


232,117


256,910


230,304

 

Reconciliation of Net Decrease (Increase) in Cash, Cash Equivalents and Restricted Cash to Cash Burn
(in thousands)
(unaudited)



Three Months Ended

Six Months Ended


March 31, 2023


June 30, 2023


June 30, 2023

Net cash used in operating activities

$          (34,398)


$          (54,905)


$          (89,303)

Net cash provided by investing activities

73,878


116,064


189,942

Net cash (used in) provided by financing activities

(135,768)


876


(134,892)

Net (decrease) increase in cash, cash equivalents and
restricted cash

(96,288)


62,035


(34,253)

Adjustments:






Net changes in investments

(75,202)


(117,146)


(192,348)

Proceeds from issuance of Series B convertible senior
secured notes due 2028, net of issuance costs

(22,435)


1,763


(20,672)

Cash burn

$          (193,925)


$          (53,348)


$          (247,273)







• Cash burn for the three months ended March 31, 2023 includes $135.0 million repayment of debt, $8.1 million of
prepayment fees, $3.7 million in restructuring-related cash payments, and $1.5 million of acquisition-related
payments.

 

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SOURCE Invitae Corporation

FAQ

What is Invitae's Q2 2023 revenue?

Invitae's Q2 2023 revenue is $120.5 million.

What is the reason for the decrease in revenue?

The decrease in revenue is due to exited businesses and geographies.

What is the GAAP gross margin?

The GAAP gross margin is 27.4%.

What is the non-GAAP gross margin?

The non-GAAP gross margin is 49.8%.

What is the ongoing cash burn annual guidance?

The ongoing cash burn annual guidance is $220-$245 million.

What is the adjusted 2023 revenue guidance?

The adjusted 2023 revenue guidance is $480-$500 million.

Invitae Corporation

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