Executive Summary

NVTA delivered Q3 revenue of $121.2M, down 9% YoY on a reported basis but up ~4% YoY on a pro forma basis as exited businesses and geographies roll off; non-GAAP gross margin expanded to 52.4% from 49.8% in Q2 and 45.9% in Q3’22, marking a ninth straight quarter of improvement .
GAAP net loss per share was ($3.42), driven by an $877.3M impairment and restructuring charge; on a non-GAAP basis, EPS was ($0.10), improving from ($0.30) in Q2 and ($0.42) in Q3’22; management reaffirmed FY23 revenue ($480–$500M), non-GAAP GM (48–50%), and ongoing cash burn ($220–$245M) guidance .
Management highlighted operational execution: improved collections, lower unit costs, and regulatory wins (FDA authorization of hereditary cancer panel; CLIA approval for enhanced PCM assay) that support product differentiation and efficiency; oncology faced reimbursement headwinds but saw 3.3% sequential revenue growth and 11% hereditary cancer volume growth in the U.S. .
The Board formed a special committee to address the balance sheet and capital structure (options include capital raise, asset sales, operating/capex cuts, and debt solutions), a key near-term stock narrative alongside ongoing margin expansion and payment-rate traction .

What Went Well and What Went Wrong

What Went Well

Continued margin trajectory: non-GAAP gross margin rose to 52.4% (from 49.8% in Q2 and 45.9% in Q3’22), driven by higher-quality revenue and lower unit costs; management emphasized nine consecutive quarters of non-GAAP GM improvement .
Pro forma revenue growth: Revenue increased ~4% YoY ex-exited businesses/geos; rare disease (+44% YoY) and women’s health (+21% YoY) led growth, offsetting oncology reimbursement pressure; oncology grew 3.3% sequentially .
Regulatory and product milestones: FDA authorization for the hereditary cancer panel and CLIA approval of enhanced PCM assay (improved performance, lower costs); management cited these as differentiators and capacity enhancers .

What Went Wrong

Revenue headwinds: Reported revenue declined 9% YoY due to exited businesses/geographies; oncology saw a ~7.5% YoY pro forma decline on lower fee-for-service volumes and commercial insurance payment headwinds .
Large GAAP charges: $877.3M restructuring/impairment drove GAAP operating expense to ~$1.0B and GAAP EPS to ($3.42), overshadowing non-GAAP profitability improvements .
Liquidity down Q/Q: Cash, cash equivalents, restricted cash and marketable securities fell to $264.7M (from $335.6M at 6/30/23), with Q3 cash burn of $64.1M; ongoing cash burn remains a focus despite improvement vs 2022 levels .

Financial Results

Metric	Q3 2022	Q2 2023	Q3 2023
Revenue ($M)	$133.5	$120.5	$121.2
GAAP Gross Margin %	12.4%	27.4%	32.2%
Non-GAAP Gross Margin %	45.9%	49.8%	52.4%
GAAP EPS (basic/diluted)	($1.27)	($0.78)	($3.42)
Non-GAAP EPS	($0.42)	($0.30)	($0.10)
Non-GAAP Operating Expense ($M)	$150.0	$157.7	$122.1

Segment revenue (Pro Forma basis; US$ millions)

Segment	Q3 2022 PF	Q2 2023 PF	Q3 2023 PF
Oncology	~$67	$60	$62
Women’s Health	~$22	$27	$27
Rare Dx	~$16	$22	$23
Data/Patient Network	~$11	$12	$9
Total (Pro Forma)	~$116	~ $116	$121

Selected KPIs and Balance Sheet

KPI / Balance Sheet	Q3 2022	Q2 2023	Q3 2023
Total patients served (cumulative)	—	~4.1M; 63% data sharing	~4.4M; 64% data sharing
Cash, cash equivalents, restricted cash + marketable securities ($M)	$557.1 (12/31/22)	$335.6	$264.7
Quarterly Cash Burn ($M)	—	$(53.3)	$(64.1)

Notes: Pro forma revenue excludes exited businesses and geographies per company realignment; totals may not sum due to rounding .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance (Q3 Update)	Change
Revenue	FY 2023	“Over $500M” (Q1’23)	$480–$500M (reaffirmed in Q3; first set in Q2)	Lowered in Q2; maintained in Q3
Non-GAAP Gross Margin	FY 2023	48–50% (Q1’23)	48–50% (reaffirmed)	Maintained
Ongoing Cash Burn	FY 2023	$250–$275M (Q1’23)	$220–$245M (improved in Q2; reaffirmed Q3)	Raised (improved) then maintained

Management also noted cash burn will be higher than ongoing cash burn in 2023 due to the voluntary repayment of a $135M term loan in Q1’23 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1’23 and Q2’23)	Current Period (Q3’23)	Trend
Margin trajectory	Non-GAAP GM guided to 48–50%; continued improvement noted in Q1 and Q2	Non-GAAP GM 52.4%, ninth straight improvement; sequential +250 bps	Improving
Revenue quality & collections	Focus on billing workflow and collections emphasized	Progress on payment collection; quality revenue and lower unit costs cited	Improving
Oncology performance	Q2 impacted by lower-than-expected insurance payments and weaker fee-for-service	YoY pro forma decline (~7.5%) but +3.3% QoQ; 11% U.S. hereditary cancer volume growth	Stabilizing sequentially; payer headwinds persist
Regulatory/product	No major new authorizations referenced in Q1/Q2 press releases	FDA authorization (hereditary cancer panel); CLIA approval of enhanced PCM assay chemistry	Positive catalysts
Cash burn & liquidity	Guidance improved in Q2 to $220–$245M ongoing burn	Reaffirmed; Q3 cash burn $(64.1)M; cash+securities $264.7M	Improving vs 2022 but liquidity declining q/q
Capital structure	Not a focus in Q1/Q2 releases	Board special committee formed to strengthen balance sheet; exploring capital raise, asset sales, cost cuts, debt solutions	New focus; key overhang

Management Commentary

“Q3 was another productive quarter for us, where we met or exceeded consensus estimates and key performance metrics… We have improved our non-GAAP gross margins for nine consecutive quarters and hit 52.4% this quarter… Operational improvement efforts and expense control have resulted in a reduction in ongoing cash burn of approximately 60% in the first nine months of 2023 versus the same period last year.” — Ken Knight, CEO .
“We achieved two regulatory wins with the FDA authorization of our hereditary cancer panel and the CLIA approval on our submission for the enhanced PCM assay.” — Ken Knight .
“The Board of Directors has formed a special committee focused on improving the Company’s capital structure… exploring options including raising capital, asset sales… and addressing its debt obligations.” — Press release .

Q&A Highlights

Reimbursement and mix: Management noted mixed dynamics into Q4 with product mix influencing gross margin, and reiterated determination to drive margins beyond 48–50% through better pricing and collections .
Oncology pipeline: Oncology’s YoY pro forma decline tied to lower fee-for-service and commercial insurance headwinds; sequential improvement and volume strength indicate rebuilding, with enhanced PCM expected to aid future performance .
Liquidity and capital structure: Management reaffirmed FY23 guidance and pointed to ongoing engagement with stakeholders and the Board special committee’s mandate to strengthen the balance sheet .

Estimates Context

S&P Global consensus estimates were unavailable via our data connector for NVTA at this time.
Third-party sources indicate Q3’23 EPS of ($0.10) vs a consensus estimate of approximately ($0.31), implying a ~+$0.21 beat; revenue consensus was not reliably available from S&P Global in this workflow .
Values retrieved from S&P Global were unavailable for this ticker in our tool at time of analysis.

Key Takeaways for Investors

Margin story intact: Non-GAAP GM reached 52.4% with nine straight quarterly improvements; continued benefits from revenue quality, collections, and unit-cost reductions should support further expansion .
Mixed growth but improving mix: Pro forma revenue grew ~4% YoY, with rare disease and women’s health strong; oncology sequentially improved despite payer headwinds; watch payer trends and fee-for-service rebuild into 2024 .
Regulatory catalysts: FDA authorization (hereditary cancer panel) and CLIA-approved enhanced PCM assay improve differentiation and operating leverage (capacity, costs), potentially aiding collections and margins near term .
Capital structure overhang: The special committee is evaluating options; outcomes (deleveraging, dilution, asset sales) are key stock drivers alongside cash trajectory; near-term liquidity decreased to $264.7M with Q3 cash burn of $64.1M .
Guidance steady: FY23 revenue ($480–$500M), non-GAAP GM (48–50%), and ongoing cash burn ($220–$245M) reaffirmed, suggesting confidence in operational execution despite macro/payer headwinds .
Non-GAAP vs GAAP optics: Large impairment drove GAAP loss; non-GAAP EPS improved to ($0.10), highlighting underlying progress; investors should track the pace and durability of cash burn improvement and collections .

Appendix: Additional Relevant Q3 Period Press Releases

Nov 1, 2023: “Invitae to Announce Third Quarter 2023 Financial Results on Wednesday, November 8, 2023” (call details) .
Nov 8, 2023: “Invitae Reports Third Quarter 2023 Financial Results” (press release with full metrics and guidance) .

Sources: Q3’23 8‑K press release and financial statements ; Q2’23 and Q1’23 8‑K press releases for trends and guidance changes ; Q3’23 earnings call transcript excerpts and themes ; Q3’23 slide deck for segment pro forma revenue and product updates .

Invitae Corp (NVTA)·Q3 2023 Earnings Summary