Natera : Q1 2024 Earnings Presentation

Natera, Inc.

Investor presentation

Q1 2024 Earnings Call

May 9, 2024

Safe harbor statement

This presentation contains forward-looking statements under the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this presentation, including statements regarding our market opportunity, our anticipated products and launch schedules, our reimbursement coverage and our product costs, our commercial and strategic partnerships and potential acquisitions, our user experience, our clinical trials and studies, and our strategies, goals and general business and market conditions are forward-looking statements.

These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially, including: we face numerous uncertainties and challenges in achieving our financial projections and goals; we may be unable to further increase the use and adoption of our products through our direct sales efforts or through our laboratory partners; we have incurred losses since our inception and we anticipate that we will continue to incur losses for the foreseeable future; our quarterly results may fluctuate from period to period; our estimates of market opportunity and forecasts of market growth may prove to be inaccurate; we may be unable to compete successfully with existing or future products or services offered by our competitors; we may engage in acquisitions, dispositions or other strategic transactions that may not achieve our anticipated benefits and could otherwise disrupt our business, cause dilution to our stockholders or reduce our financial resources; we may not be successful in commercializing our cloud-based distribution model; our products may not perform as expected; the results of our clinical studies, including our SNP-based Microdeletion and Aneuploidy Registry, or SMART, Study, may not be compelling to professional societies or payors as supporting the use of our tests, particularly for microdeletions screening, or may not be able to be replicated in later studies required for regulatory approvals or clearances; if either of our primary CLIA-certified laboratories becomes inoperable, we will be unable to perform our tests and our business will be harmed; we rely on a limited number of suppliers or, in some cases, single suppliers, for some of our laboratory instruments and materials and may not be able to find replacements or immediately transition to alternative suppliers; if we are unable to successfully scale our operations, our business could suffer; the marketing, sale, and use of Panorama and our other products could result in substantial damages arising from product liability or professional liability claims that exceed our resources; we may be unable to expand, obtain or maintain third-party payer coverage and reimbursement for our tests, and we may be required to refund reimbursements already received; third-party payers may withdraw coverage or provide lower levels of reimbursement due to changing policies, billing complexities or other factors; we could incur substantial costs and delays associated with trying to obtain premarket clearance or approval and incur costs associated with complying with post-market controls, if and when the FDA begins actively regulating our tests pursuant to recently enacted FDA regulations; litigation or other proceedings, resulting from either third party claims of intellectual property infringement or third party infringement of our technology, is costly, time- consuming and could limit our ability to commercialize our products or services; any inability to effectively protect our proprietary technology could harm our competitive position or our brand; and we cannot guarantee that we will be able to service and comply with our outstanding debt obligations or achieve our expectations regarding the conversion of our outstanding convertible notes. We discuss these and other risks and uncertainties in greater detail in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our periodic reports on Forms 10-K and 10-Q and in other filings we make with the SEC from time to time. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this presentation may not occur and our actual results could differ materially and adversely from those anticipated or implied. As a result, you should not place undue reliance on our forward-looking statements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this presentation to conform these statements to actual results or to changes in our expectations. We file reports, proxy statements, and other information with the SEC. Such reports, proxy statements, and other information concerning us is available at http://www.sec.gov. Requests for copies of such documents should be directed to our Investor Relations department at Natera, Inc., 13011 McCallen Pass, Building A Suite 100, Austin, TX 78753. Our telephone number is [phone].

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Record performance in Q1 2024

• Achieved cash flow1 breakeven quarter earlier than expected.
• Revenue of $367.7M in Q1 2024 vs $241.8M in Q1 2023; year-over-year growth of 52%.
• 736K total tests processed in Q1 2024 vs 627K in Q4 2023; sequential growth of 17%.
• Performed ~115K oncology tests in Q1 2024; year-over-year growth of 62% and up 17K units versus Q4 2023.
• Gross margin2 of 57% in Q1 2024 vs 39% in Q1 2023.
• Raising 2024 guidance: revenue of $1.42B to $1.45B, gross margin of 53%-55%, cash flow breakeven for 2024.
• Launched fetal RhD NIPT test.
• Announced positive updated KDIGO guidelines.
• Published ProActive, the largest prospective dd-cfDNA study in kidney transplant.
• Released positive analysis from IMvigor011 trial in bladder cancer.
• Published new data in breast cancer & uterine cancer.

1. Non-GAAP cash inflows for the quarter ended March 31, 2024, is derived from the GAAP Statement of Cash Flows as follows: net cash provided by operating activities of $27.0 million, net cash provided by financing activities of $6.5 million, offset by net cash used in investing activities for purchases of property and equipment and acquisition of an asset of $30.8 million.

2. Gross margin is calculated as gross profit divided by GAAP total revenues. Gross profit is calculated as GAAP total revenues less GAAP cost of revenues.

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Strong sequential volume growth in Q1 2024

•	Excellent organic	Total tests processed			736K
	women's health growth
•	Strong early retention				17%
	of Invitae accounts
•	Accelerating Prospera
	growth		626K	627K
•	Record Signatera	12%
	growth
		560K
		4Q22	1Q23	4Q23	1Q24

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Oncology volumes up ~17K units over Q4 2023, demonstrating record growth

Total oncology tests processed

115K

+17K

98K

89K

84K

71K

64K

Signatera clinical tests processed

106K

+15K

91K

81K

72K

61K

52K

4Q22

1Q23

2Q23

3Q23

4Q23

1Q24

4Q22

1Q23

2Q23

3Q23

4Q23

1Q24

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Accelerating revenues in Q1 2024

•	~52% revenue growth
	over Q1 2023
•	~18% revenue growth
	over Q4 2023
• ~$34M in Q1 2024
	revenue true ups
	driven by rapid ASP

Total revenues: quarterly progression	$368M
($ in millions)
	52%
	$242M

growth

$94M

$67M 40%

$194M

28%

$152M

62%

25%

1Q19

1Q20

1Q21

1Q22

1Q23

1Q24

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ASPs and COGS execution ahead of plan

• Significant sequential step up in ASPs
• Cash collection exceeding expectations, driving true-ups
• Continued momentum in COGS projects

Gross margins quarterly trend	~4% true	57%
up benefit

~2% true

up benefit 51%

45% 45%

39%

1Q23

2Q23

3Q23

4Q23

1Q24

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Cash flow breakeven quarter goal achieved

• Executing the strategy:

cash flow improvement

driven by continued

revenue growth, improving

gross margins, and stable

operating expenses

Trend for quarterly cash burn / cash flow				$32
($ in millions)
	1Q22	2Q22	3Q22	4Q22	1Q23	2Q23	3Q23	4Q23	1Q24

•	Momentum across volumes,
	ASPs, and COGS allows for
	targeted growth
	investments
•	Fundamental step towards
	significant future cash
	flow generation

($88) ($86)1

($110) ($113)

($162)1

($38)

($61)

($78)

1. Non-GAAPcash burn included $13.4 million change in unrealized loss and amortization or accretion on investments from the GAAP Statement of Cash Flows during the first quarter 2022. Cash burn included $3.8 million change in unrealized gain and amortization or accretion on investments from the GAAP Statement of Cash Flows during the first quarter 2023.
2. Non-GAAPcash inflows for the quarter ended March 31, 2024, is derived from the GAAP Statement of Cash Flows as follows: net cash provided by operating activities of $27.0 million, net cash provided by financing activities of $6.5 million, offset

by net cash used in investing activities for purchases of property and equipment and acquisition of an asset of $30.8 million.

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Milestone of 200+ peer-reviewed publications

200+

peer-reviewed papers

since 2012

75+

in oncology/MRD

85+

in women's health

40+

in organ health

Cumulative peer-reviewed published papers

200 Women's Health

Organ Health

Oncology

150

100

50

0
2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023	2024

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New fetal RhD test supports physicians & patients during RhIg shortage

"…the use of NIPT to prioritize use of RhIg and conserve RhIg supply is a reasonable consideration..."

--The American College of

Obstetricians and Gynecologists

(ACOG) in a Practice Advisory

updated on April 24, 2024

Backed by large, clinical validation study

>650	100%	>99%
patients	sensitivity	specificity

Further differentiates Natera

Leverages Natera's core technology

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