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November 08, 2023

Invitae Reports Third Quarter 2023 Financial Results

Reported revenue of $121.2 million, a year-over-year decrease of 9%; on a pro forma basis, taking into account exited businesses and geographies, revenue increased approximately 4%

Gross margin of 32.2% and non-GAAP gross margin of 52.4%; continued improvement in non-GAAP gross margin for nine consecutive quarters

Reaffirming 2023 financial guidance

SAN FRANCISCO, Nov. 8, 2023 /PRNewswire/ -- Invitae (NYSE: NVTA), a leading medical genetics company, today announced results for the third quarter ended September 30, 2023.

"The Company executed well on key operating and financial metrics in the third quarter, and remains on track to meet or beat annual guidance," said Ken Knight, president and chief executive officer of Invitae. "On the operational front, we added key executive talent and achieved a number of clinical milestones that should strengthen the health of our business, deliver continuing market expansion and further differentiate our testing portfolio from competitors."

Third Quarter 2023 Financial Results

  • Third quarter revenue decreased 9% to $121.2 million compared to $133.5 million in the same period in the prior year, primarily reflecting the impact of exited businesses and geographies completed in 2022. After adjusting for revenue of $17.2 million in the prior year period related to the discontinued businesses, third quarter revenue increased approximately 4% on a pro forma basis, with U.S. hereditary cancer testing volume achieving double-digit percentage growth compared to the prior year period.
  • Gross profit was $39.1 million in the quarter, compared with $16.6 million in the same period of 2022, or 135.6% year-over-year growth. Non-GAAP gross profit was $63.6 million in the quarter, compared with $61.2 million in the third quarter of 2022, representing a year-over-year growth rate of 3.8%.
  • Gross margin was 32.2% in the third quarter, compared with 12.4% a year ago. Non-GAAP gross margin was 52.4% compared with 45.9% in the third quarter of 2022. This represents Invitae's ninth consecutive quarter of non-GAAP gross margin improvement.
  • Operating expense for the third quarter of 2023 was $1.0 billion, compared with $306.5 million in the third quarter of 2022. Operating expense in the third quarter includes $877.3 million in restructuring, impairment and other costs primarily related to an impairment charge of the Company's long-lived assets, compared with $125.2 million in the prior year period. Non-GAAP operating expense was $122.1 million for the third quarter of 2023, compared with $150.0 million for the third quarter of 2022. Non-GAAP operating expense as a percentage of revenue was 101%, compared with 112% in the third quarter of 2022.
  • As of September 30, 2023, Invitae had $264.7 million of cash, cash equivalents, restricted cash and marketable securities 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 $72.2 million. Cash burn in the quarter was $64.1 million.
  • Total patients served as of September 30, 2023 was approximately 4.4 million with 64% available for data sharing.
  • Third quarter net loss per basic and diluted share of ($3.42) included impairment and losses on disposals of long-lived assets, net, employee severance and benefits and other restructuring costs of $877.3 million primarily related to fair market value assessment of the Company's intangible assets. Third quarter non-GAAP net loss per basic and diluted share of ($0.10) excludes this charge. Compared to a year ago, net loss per basic and diluted share and non-GAAP net loss per basic and diluted share were ($1.27) and ($0.42), respectively.

Operational improvement efforts and expense control have resulted in margin expansion and stronger financial performance. In addition, the Company is engaging with stakeholders to strengthen the balance sheet, and the Board of Directors has formed a special committee focused on improving the Company's capital structure. The Company is exploring a number of options, including, but not limited to, raising capital, asset sales, business and R&D refocusing efforts, capital expenditure and operating expense reductions and addressing its debt obligations.

Reaffirming Fiscal 2023 Outlook

For the full year, Invitae is reaffirming its fiscal 2023 outlook. The Company expects revenue in the range of $480-$500 million and non-GAAP gross margin in the range of 48-50%.

Ongoing cash burn includes cash, cash equivalents, marketable securities and restricted cash and excludes certain items. The Company continues to expect ongoing cash burn to be in the range of $220-$245 million in 2023. 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=62d0dec5&confId=56925 

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 future financial and operating results; the company's focus, strategy, and roadmap; the company's financial guidance for 2023; the company's belief that the addition of executives and achievement of clinical milestones will strengthen the health of the company's business, deliver continuing market expansion and differentiate the company's testing portfolio from competitors; the objectives of the special committee; and the company's beliefs regarding engagement with stakeholders and plans to explore various options. 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; risks related to the various options the company is exploring, including the fact that certain options may not be available to the company; 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 June 30, 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)



September 30,
2023


December 31,
2022

Assets




Current assets:




Cash and cash equivalents

$        158,007


$        257,489

Marketable securities

96,566


289,611

Accounts receivable

82,507


96,148

Inventory

21,627


30,386

Prepaid expenses and other current assets

19,692


19,496

Total current assets

378,399


693,130

Property and equipment, net

65,446


108,723

Operating lease assets

61,639


106,563

Restricted cash

10,100


10,030

Intangible assets, net


1,012,549

Other assets

19,531


23,121

Total assets

$        535,115


$     1,954,116

Liabilities and stockholders' (deficit) equity




Current liabilities:




Accounts payable

$    25,185


$    13,984

Accrued liabilities

84,729


74,388

Operating lease obligations

17,650


14,600

Finance lease obligations

3,948


5,121

Convertible senior notes, net current portion

26,907


Total current liabilities

158,419


108,093

Operating lease obligations, net of current portion

134,945


134,386

Finance lease obligations, net of current portion

855


3,780

Debt


122,333

Convertible senior notes, net

1,127,830


1,470,783

Convertible senior secured notes (at fair value)

196,244


Deferred tax liability


8,130

Other long-term liabilities

226


4,775

Total liabilities

1,618,519


1,852,280





Stockholders' (deficit) equity:




Common stock

29


25

Accumulated other comprehensive income (loss)

25,378


(80)

Additional paid-in capital

5,061,131


4,931,032

Accumulated deficit

(6,169,942)


(4,829,141)

Total stockholders' (deficit) equity

(1,083,404)


101,836

Total liabilities and stockholders' (deficit) equity

$        535,115


$     1,954,116

 

INVITAE CORPORATION

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




Three Months Ended
September 30,


Nine Months Ended
September 30,



2023


2022


2023


2022

Revenue:









Test revenue


$         117,561


$         128,839


$         346,127


$         381,518

Other revenue


3,680


4,697


13,002


12,331

Total revenue


121,241


133,536


359,129


393,849

Operating expenses:









Cost of revenue


82,186


116,956


258,102


324,412

Research and development


58,336


87,177


184,138


330,559

Selling and marketing


37,999


49,193


127,241


172,086

General and administrative


45,619


44,939


160,826


147,221

Goodwill and IPR&D impairment





2,313,047

Restructuring, impairment and other costs


877,289


125,222


1,010,843


130,039

Total operating expenses


1,101,429


423,487


1,741,150


3,417,364

Loss from operations


(980,188)


(289,951)


(1,382,021)


(3,023,515)

Other income (expense), net:









Gain (loss) on extinguishment of debt, net


229



(10,593)


Debt issuance costs


(845)



(20,704)


Change in fair value of convertible senior
secured notes


33,463



72,386


Change in fair value of acquisition-related
liabilities


70


(527)


337


15,666

Other income, net


4,843


2,399


15,105


3,971

Total other income, net


37,760


1,872


56,531


19,637

Interest expense


(5,850)


(14,145)


(23,366)


(42,149)

Net loss before taxes


(948,278)


(302,224)


(1,348,856)


(3,046,027)

Income tax benefit


6,171


1,068


8,055


39,551

Net loss


$     (942,107)


$     (301,156)


$  (1,340,801)


$    (3,006,476)

Net loss per share, basic and diluted


$          (3.42)


$          (1.27)


$          (5.09)


$          (12.91)

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


275,604


237,974


263,210


232,889

 

INVITAE CORPORATION

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



Nine Months Ended September 30,


2023


2022

Cash flows from operating activities:




Net loss

$         (1,340,801)


$         (3,006,476)

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

1,012,360


60,317

Depreciation and amortization

100,403


104,726

Stock-based compensation

85,554


164,314

Amortization of debt discount and issuance costs

5,483


11,676

Loss on extinguishment of debt, net

10,593


Debt issuance costs

20,704


Change in fair value of convertible senior secured notes

(72,386)


Remeasurements of liabilities associated with business combinations

(337)


(15,666)

Benefit from income taxes

(8,055)


(39,551)

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

1,789


4,980

Amortization of premiums and discounts on investment securities

(6,259)


603

Non-cash lease expense

9,309


6,832

Other

2,211


(1,314)

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




Accounts receivable

13,641


(22,903)

Inventory

8,759


3,614

Prepaid expenses and other current assets

(196)


9,012

Other assets

(139)


2,740

Accounts payable

8,135


(6,345)

Accrued expenses and other long-term liabilities

(6,966)


(540)

Net cash used in operating activities

(156,198)


(410,934)

Cash flows from investing activities:




Purchases of marketable securities

(231,044)


(789,622)

Proceeds from maturities of marketable securities

430,440


541,313

Purchases of property and equipment

(4,669)


(48,385)

Proceeds from sale of property and equipment

332


Net cash provided by (used in) investing activities

195,059


(296,694)

Cash flows from financing activities:




(Loss) proceeds from public offerings of common stock, net of issuance costs

(55)


9,658

Proceeds from issuance of common stock, net

2,170


6,267

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

30,001


Payments for debt issuance costs and prepayment fees

(25,974)


Repayment of debt

(135,000)


Finance lease principal payments

(3,886)


(4,184)

Settlement of acquisition obligations

(5,529)


(10,582)

Net cash (used in) provided by financing activities

(138,273)


1,159

Net decrease in cash, cash equivalents and restricted cash

(99,412)


(706,469)

Cash, cash equivalents and restricted cash at beginning of period

267,519


933,525

Cash, cash equivalents and restricted cash at end of period

$                168,107


$                227,056

 

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




Three Months Ended
September 30,


Nine Months Ended
September 30,



2023


2022


2023


2022

Cost of revenue


$        82,186


$       116,956


$      258,102


$      324,412

Amortization of acquired intangible assets


(24,082)


(27,711)


(77,122)


(73,618)

Acquisition-related stock-based compensation


(44)


(146)


(146)


(425)

Acquisition-related post-combination expense



(162)



(1,053)

Restructuring-related retention bonuses


(7)


(170)


(145)


(170)

Inventory and prepaid write-offs


(388)


(16,467)


(1,362)


(16,467)

Non-GAAP cost of revenue


$        57,665


$        72,300


$      179,327


$      232,679

 

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




Three Months Ended
September 30,


Nine Months Ended
September 30,



2023


2022


2023


2022

Revenue


$      121,241


$      133,536


$      359,129


$      393,849

Cost of revenue


82,186


116,956


258,102


324,412

Gross profit


39,055


16,580


101,027


69,437

Amortization of acquired intangible assets


24,082


27,711


77,122


73,618

Acquisition-related stock-based compensation


44


146


146


425

Acquisition-related post-combination expense



162



1,053

Restructuring-related retention bonuses


7


170


145


170

Inventory and prepaid write-offs


388


16,467


1,362


16,467

Non-GAAP gross profit


$        63,576


$        61,236


$      179,802


$      161,170

 

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




Three Months Ended
September 30,


Nine Months Ended
September 30,



2023


2022


2023


2022

Research and development


$        58,336


$        87,177


$      184,138


$      330,559

Amortization of acquired intangible assets



(306)


(90)


(1,338)

Acquisition-related stock-based compensation


(14,921)


(18,695)


(43,448)


(65,719)

Acquisition-related post-combination expense


(141)


(1,962)


(1,825)


(7,186)

Restructuring-related retention bonuses


(669)


(646)


(2,052)


(646)

Restructuring-related accelerated depreciation


(125)


(3,311)


(341)


(3,311)

Non-GAAP research and development


$        42,480


$        62,257


$      136,382


$      252,359

 

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




Three Months Ended
September 30,


Nine Months Ended
September 30,



2023


2022


2023


2022

Selling and marketing


$        37,999


$        49,193


$      127,241


$      172,086

Amortization of acquired intangible assets


(1,569)


(1,610)


(4,707)


(4,856)

Acquisition-related stock-based compensation



(806)


(750)


(2,374)

Restructuring-related retention bonuses


(105)


(115)


(565)


(115)

Non-GAAP selling and marketing


$        36,325


$        46,662


$      121,219


$      164,741

 

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




Three Months Ended
September 30,


Nine Months Ended
September 30,



2023


2022


2023


2022

General and administrative


$        45,619


$        44,939


$      160,826


$      147,221

Change in fair value of contingent consideration





1,850

Acquisition-related stock-based compensation


(1,181)


(3,438)


(3,524)


(6,656)

Restructuring-related retention bonuses


(1,149)


(300)


(2,402)


(300)

Restructuring-related accelerated depreciation



(111)



(111)

Non-GAAP general and administrative


$        43,289


$        41,090


$      154,900


$      142,004

 

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




Three Months Ended
September 30,


Nine Months Ended
September 30,



2023


2022


2023


2022

Research and development


$        58,336


$        87,177


$       184,138


$       330,559

Selling and marketing


37,999


49,193


127,241


172,086

General and administrative


45,619


44,939


160,826


147,221

Goodwill and IPR&D impairment





2,313,047

Restructuring, impairment and other costs


877,289


125,222


1,010,843


130,039

Operating expenses


1,019,243


306,531


1,483,048


3,092,952

Goodwill and IPR&D impairment





(2,313,047)

Restructuring, impairment and other costs


(877,289)


(125,222)


(1,010,843)


(130,039)

Change in fair value of contingent consideration





1,850

Amortization of acquired intangible assets


(1,569)


(1,916)


(4,797)


(6,194)

Acquisition-related stock-based compensation


(16,102)


(22,939)


(47,722)


(74,749)

Acquisition-related post-combination expense


(141)


(1,962)


(1,825)


(7,186)

Restructuring-related retention bonuses


(1,923)


(1,061)


(5,019)


(1,061)

Restructuring-related accelerated depreciation


(125)


(3,422)


(341)


(3,422)

Non-GAAP operating expenses


$      122,094


$      150,009


$       412,501


$       559,104

 

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




Three Months Ended
September 30,


Nine Months Ended
September 30,



2023


2022


2023


2022

Other income, net


$        37,760


$          1,872


$        56,531


$        19,637

Change in fair value of acquisition-related liabilities


(70)


527


(337)


(15,666)

Non-GAAP other income, net


$        37,690


$          2,399


$        56,194


$          3,971

 

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
September 30,


Nine Months Ended
September 30,



2023


2022


2023


2022

Net loss


$     (942,107)


$     (301,156)


$  (1,340,801)


$  (3,006,476)

Goodwill and IPR&D impairment





2,313,047

Restructuring, impairment and other costs


877,289


125,222


1,010,843


130,039

Change in fair value of contingent consideration





(1,850)

Change in fair value of acquisition-related assets
and liabilities


(70)


527


(337)


(15,666)

Amortization of acquired intangible assets


25,651


29,627


81,919


79,812

Acquisition-related stock-based compensation


16,146


23,085


47,868


75,174

Acquisition-related post-combination expense


141


2,124


1,825


8,239

Restructuring-related retention bonuses


1,930


1,231


5,164


1,231

Restructuring-related accelerated depreciation


125


3,422


341


3,422

Inventory and prepaid write-offs


388


16,467


1,362


16,467

Acquisition-related income tax benefit


(6,180)


(1,390)


(6,810)


(40,195)

Non-GAAP net loss


$       (26,687)


$     (100,841)


$     (198,626)


$     (436,756)










Net loss per share, basic and diluted


$          (3.42)


$          (1.27)


$          (5.09)


$         (12.91)

Non-GAAP net loss per share, basic and diluted


$          (0.10)


$          (0.42)


$          (0.75)


$          (1.88)

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


275,604


237,974


263,210


232,889

 

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



Three Months Ended

Nine Months
Ended


March 31,
2023


June 30, 2023


September 30,
2023


September 30,
2023

Net cash used in operating activities

$      (34,398)


$      (54,905)


$         (66,895)


$       (156,198)

Net cash provided by investing activities

73,878


116,064


5,117


195,059

Net cash (used in) provided by financing activities

(135,768)


876


(3,381)


(138,273)

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

(96,288)


62,035


(65,159)


(99,412)

Adjustments:








Net changes in investments

(75,202)


(117,146)


(7,048)


(199,396)

Loss from public offerings of common stock, net
of issuance costs



55


55

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

(22,435)


1,763


8,016


(12,656)

Cash burn

$    (193,925)


$      (53,348)


$         (64,136)


$       (311,409)









• 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.

• Cash burn for the three months ended September 30, 2023 includes $4.1 million of acquisition-related
payments.

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/invitae-reports-third-quarter-2023-financial-results-301982255.html

SOURCE Invitae Corporation

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