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Invitae Corp (NVTA)·Q1 2023 Earnings Summary

Executive Summary

  • Q1 revenue was $117.4M, down 5% y/y on a reported basis due to exited businesses/geographies, but ~10% y/y pro forma growth excluding ~$17M from exited operations; GAAP gross margin expanded to 24.6% and non-GAAP gross margin to 47.9% .
  • GAAP net loss per share was $(0.77); non-GAAP net loss per share was $(0.37). Management reiterated 2023 guidance: revenue >$500M, non-GAAP gross margin 48–50%, and ongoing cash burn of $250–275M .
  • Liquidity: cash, cash equivalents, restricted cash and marketable securities were $388.7M at 3/31/23; reported cash burn was $193.9M in Q1, including a $135M term loan repayment (ongoing cash burn would have been $50.8M) .
  • Strategic update: CEO highlighted clinical progress in the PCM MRD assay and continued efforts in revenue cycle management and working capital, underscoring focus on higher-quality revenue and operating discipline .

What Went Well and What Went Wrong

  • What Went Well

    • Non-GAAP gross margin expanded to 47.9% (vs. 36.6% a year ago), with GAAP gross margin improving to 24.6% (vs. 21.5% a year ago) .
    • Pro forma top-line growth (~10% y/y) despite reported decline, reflecting portfolio realignment away from exited businesses/geographies .
    • Management reiterated FY23 targets and pointed to improving cash burn trends excluding one-time financing outflows; ongoing cash burn would have been $50.8M in Q1 .
    • CEO: “posted approximately 10% year-over-year growth in revenue on a pro forma basis, along with improved gross margins and reduced cash burn and we are reiterating our 2023 financial goals…pleased with the recent clinical developments in our PCM assay for minimal residual disease” .

  • What Went Wrong

    • Reported revenue declined 5% y/y to $117.4M given prior exits; revenue per patient fell sequentially to $463 (vs. $511 in Q4) though still above $416 y/y .
    • GAAP operating expenses remained elevated at $204.3M (174% of revenue), including restructuring and other costs of $52.6M .
    • Liquidity draw: cash, cash equivalents, restricted cash, and marketable securities declined to $388.7M (from $557.1M at year-end) amid $193.9M reported cash burn (including $135M debt repayment) .

Financial Results

Income Statement and EPS

MetricQ3 2022Q4 2022Q1 2023
Revenue ($USD Millions)$133.536 $122.454 $117.356
GAAP EPS (Net loss per share)$(1.27) $(0.41) $(0.77)
Non-GAAP EPS (Net loss per share)$(0.42) $(0.34) $(0.37)

Margins and Operating Expense

MetricQ3 2022Q4 2022Q1 2023
GAAP Gross Margin %12.4% 24.2% 24.6%
Non-GAAP Gross Margin %45.9% 47.8% 47.9%
GAAP Opex as % of Revenue230% 102% 174%
Non-GAAP Opex as % of Revenue112% 111% 113%

Segment/Revenue Mix

MetricQ3 2022Q4 2022Q1 2023
Test Revenue ($USD Millions)$128.839 $119.042 $112.623
Other Revenue ($USD Millions)$4.697 $3.412 $4.733

KPIs and Cash

MetricQ3 2022Q4 2022Q1 2023
Revenue per Patient ($)$505 $511 $463
Total Patient Population (Millions)>3.3 >3.6 ~3.9
Cash + Equivalents + Marketable Securities ($USD Millions)$596.0 $557.1 $388.7
Reported Cash Burn ($USD Millions)$151.5 $41.8 $193.9
Ongoing Cash Burn ($USD Millions)$108.3 $77.0 $50.8

Note on non-GAAP metrics: Adjustments include amortization of acquired intangibles, acquisition-related stock-based compensation, restructuring and other items per reconciliations .

Estimates vs. Actuals

MetricQ1 2023 ActualQ1 2023 Consensus (S&P Global)
Revenue ($USD Millions)$117.356 Unavailable (consensus data not accessible via S&P Global for NVTA at time of analysis)
GAAP EPS$(0.77) Unavailable (consensus data not accessible via S&P Global for NVTA at time of analysis)

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2022)Current Guidance (Q1 2023)Change
RevenueFY 2023>$500M >$500M Maintained
Non-GAAP Gross Margin %FY 202348–50% 48–50% Maintained
Ongoing Cash Burn ($)FY 2023$250–275M $250–275M Maintained
Reported Cash BurnFY 2023—Higher than ongoing due to $135M Q1 term loan repayment New qualitative disclosure

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2022 and Q4 2022)Current Period (Q1 2023)Trend
Strategic realignment & cost disciplineExecuting realignment with improving non-GAAP margins, opex, and cash burn (Q3) ; major initiatives largely completed (Q4) Continued improvement in gross margin and ongoing cash burn; reiterating 2023 goals Improving
Gross margin trajectoryNon-GAAP GM 45.9% in Q3; 36.5% in Q4’21 vs 47.8% in Q4’22 Non-GAAP GM 47.9% in Q1’23 Improving/stable
Cash burn and liquidityQ3 cash burn $151.5M; lowered 2022 burn guidance ; Q4 cash burn $41.8M; 2023 burn guide $250–275M Reported burn $193.9M due to $135M term loan repayment; ongoing burn $50.8M Ongoing improving; reported elevated by one-time
Debt and balance sheetAddressed ~96% of 2024 converts; repaid term loan; runway through end 2024 (Q4) Cash+securities $388.7M at 3/31 Debt profile improved; lower cash
Product innovation (PCM MRD)Focus in 2H22 on operational excellence; no MRD highlight “Pleased with…clinical developments in our PCM assay for MRD” Emerging growth vector
Revenue quality/RCMRevenue per patient improved to $505 (Q3) and $511 (Q4) Revenue cycle management and working capital improvements emphasized; revenue per patient $463 Mixed; RCM focus ongoing

Management Commentary

  • “In the first quarter, our team continued to execute across the organization as we posted approximately 10% year-over-year growth in revenue on a pro forma basis, along with improved gross margins and reduced cash burn and we are reiterating our 2023 financial goals.” — Ken Knight, President & CEO
  • “We are pleased with the recent clinical developments in our PCM assay for minimal residual disease…we are working opportunistically to improve our performance through revenue cycle management and working capital improvements.” — Ken Knight
  • “Management continues to expect 2023 revenue to be over $500 million…non-GAAP gross margin for 2023 to be between 48-50%…Ongoing cash burn is expected to be…$250–275 million.”

Q&A Highlights

  • The company held a webcast and conference call on May 9, 2023; however, a transcript was not accessible via our document system for inclusion. Webcast details are provided in the Q1 press release .

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 2023 revenue and EPS was not available in our dataset at the time of analysis; we therefore cannot assess beat/miss versus consensus for this quarter. Management reiterated FY23 revenue >$500M and non-GAAP GM 48–50%, with ongoing cash burn $250–275M .

Key Takeaways for Investors

  • Despite reported revenue contraction from portfolio exits, pro forma growth (~10% y/y) and sustained non-GAAP gross margin near 48% signal underlying mix/discipline gains .
  • Ongoing cash burn improved to $50.8M in Q1; reported burn was elevated by a $135M term loan repayment, consistent with balance sheet repositioning .
  • Guidance maintained (revenue >$500M; non-GAAP GM 48–50%; ongoing burn $250–275M), providing visibility amid continued operational realignment .
  • Liquidity narrowed to $388.7M in cash and marketable securities at quarter-end; monitoring working capital progress (including AR reductions) remains important .
  • Commercial execution focus continues: revenue cycle management and working capital improvements, with revenue per patient normalizing sequentially after prior quarter uplift .
  • Emerging oncology opportunity: clinical developments in the PCM MRD assay expand the long-term precision oncology roadmap .
  • Watch list: pace of non-GAAP gross margin expansion, trajectory of revenue per patient, and cash burn run-rate relative to FY23 guide as key stock catalysts .