Invitae Corporation (NYSE: NVTA), a leading medical genetics company, today announced financial and operating results for the second quarter ended June 30, 2020.
"While we experienced significant disruptions in the healthcare system due to the pandemic, we quickly established a solid recovery during the quarter. Our results highlight the strength of our operations and the benefits of our diversified menu, investments in telehealth capabilities and longstanding customer relationships, all of which position us to adapt and meet the changing needs of our customers," said Sean George, Ph.D., co-founder and chief executive officer of Invitae. "We exited the quarter with a strong footing and increasing momentum. We remain confident in our ability to continue to deliver on our mission to bring genetic information into mainstream medicine."
Second Quarter 2020 Financial Results
-- Accessioned more than 120,000 samples in the second quarter of 2020 compared to 111,000 samples in the second quarter of 2019. Billable volume exceeded 113,000 in the second quarter of 2020
-- Generated revenue of $46.2 million in the second quarter of 2020 compared to $53.5 million in revenue in the second quarter of 2019
-- Reported average cost per sample of $358 in the second quarter of 2020 compared to $252 average cost per sample in the second quarter of 2019. Non-GAAP average cost per sample was $318 in the second quarter of 2020
-- Achieved gross profit of $3.2 million in the second quarter of 2020 compared to $25.5 million of gross profit in the second quarter of 2019. Non-GAAP gross profit was $8.0 million in the second quarter of 2020
Total operating expense, excluding cost of revenue, for the second quarter of 2020 was $145.3 million. Non-GAAP operating expense was $105.7 million in the second quarter of 2020.
Net loss for the second quarter of 2020 was $166.4 million, or $1.29 net loss per share, compared to a net loss of $48.7 million in the second quarter of 2019, or $0.54 net loss per share. Non-GAAP net loss was $99.2 million, or $0.77 non-GAAP net loss per share, in the second quarter of 2020.
At June 30, 2020, cash, cash equivalents, restricted cash and marketable securities totaled $428.5 million. Net increase in cash, cash equivalents and restricted cash for the quarter was $78.0 million. Cash burn, including various acquisition-related expenses, was $89.2 million for the quarter and $63.8 million when excluding the $25.4 million cash paid to acquire YouScript and Genelex.
Early in the quarter, in response to impacts of the pandemic, the company took actions to significantly scale back operational expenditures. The result of these changes is expected to decrease the discretionary spend in cost of revenue and operating expense beginning in the third quarter.
"We continue to see a solid recovery in volume, improvement in our operating leverage and ability to improve revenue generation. As a result, we are well positioned with sufficient capital to execute our strategy in the coming years," continued Dr. George. "We have added or will be adding important capabilities to our platform through the acquisitions we announced this quarter and our ongoing product development efforts. With our mission clearly in focus, we can continue to navigate these unprecedented times."
Corporate and Scientific Highlights
-- Introduced expanded services and support for transition to telehealth across customer types
-- Launched new capabilities for Gia, the advanced clinical chatbot that became part of Invitae through the acquisition and rapid integration of Clear Genetics. New workflows added to Gia support obstetrician/gynecologists, oncologists, genetic counselors and other clinicians who order genetic testing
-- Increased support for the use of at-home testing using saliva kits, which do not require an in-person clinician visit
-- Provided professional education and support for clinicians transitioning to telehealth
-- Acquired YouScript and Genelex to bring best-in-class pharmacogenetic testing and robust, integrated clinical decision support to Invitae
-- Further expanded international footprint, including the introduction of consumer-initiated telehealth genetic testing services in Canada for carrier testing in early pregnancy and cancer and cardiovascular risk testing
-- Presented research that, combined with new recommendations from a large, multidisciplinary consensus conference published in the Journal of Clinical Oncology, underscores the utility of increased access to genetic testing for men with prostate cancer across all stages of life
-- Added 16 new biopharma partnerships, bringing the total number of partnership programs to more than 105, including nine new pharma partners in Invitae's Detect programs providing no-charge genetic testing for conditions in which testing is underutilized and can improve diagnosis and treatment
-- Entered into a definitive agreement under which Invitae will combine with ArcherDX, Inc.
-- Closed on a public offering with net proceeds of approximately $173.0 million and raised $44.5 million of net proceeds under the company's ATM
-- In July, added non-invasive prenatal screening (NIPS) based on whole genome sequencing (WGS) to the Invitae platform, providing patients with easier access to affordable genetic testing in early pregnancy to realize cost reductions, improve the company's ability to scale services and pave the way for additional services based on WGS technology
-- Partnered with a major health system to integrate clinical decision support software for use of pharmacogenetics in patient care
Webcast and Conference Call Details Management will host a conference call and webcast today at 4:30 p.m. Eastern / 1:30 p.m. Pacific to discuss financial results and recent developments. To register for the conference call and webcast, please use one of the methods below. Upon registering, each participant will be provided with call details and a registrant ID.
Online registration: http://www.directeventreg.com/registration/event/5882896
Phone registration: (888) 869-1189 or (706) 643-5902
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 and conference call will be available shortly after the conclusion of the call and will be archived on the company's website.
About Invitae Invitae Corporation (NYSE: NVTA) is a leading medical genetics company whose mission is to bring comprehensive genetic information into mainstream medicine to improve healthcare for billions of people. Invitae's goal is to aggregate the world's genetic tests into a single service with higher quality, faster turnaround time, and lower prices. For more information, visit the company's website at invitae.com.
Safe Harbor Statement 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 belief that it is well-positioned to adapt and meet the changing needs of its customers; the company's belief regarding the momentum of its business and ability to continue to deliver on its mission to bring genetic information into mainstream medicine; the impact of the COVID-19 pandemic on the company's business, and the measures it has taken or may take in the future with respect thereto; the impact of the company's acquisitions, including its proposed merger with ArcherDX, as well as its partnerships and product offerings; and the company's beliefs regarding the growth of its business, its position and impact on the genetic testing industry, its success in executing on its mission and strategy, and the benefits of genetic testing. 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 impact of the COVID-19 pandemic on the company, and the effectiveness of the efforts it has taken or may take in the future in response thereto; the company's ability to continue to grow its business, including internationally; the company's history of losses; the company's ability to compete; the company's failure to manage growth effectively; 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 ability of Invitae and ArcherDX to obtain the approval of Invitae's and ArcherDX's stockholders, and to satisfy the other conditions to the closing of the acquisition and related financing transactions on a timely basis or at all; the occurrence of events that may give rise to a right of one or both of Invitae and ArcherDX to terminate the merger agreement; the company's failure to successfully integrate or fully realize the anticipated benefits of acquired businesses; the company's ability to use rapidly changing genetic data to interpret test results accurately and consistently; security breaches, loss of data and other disruptions; laws and regulations applicable to the company's business; and the other risks set forth in the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. 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 Invitae'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, including non-GAAP gross profit, non-GAAP cost of revenue, non-GAAP operating expense, including non-GAAP research and development, non-GAAP selling and marketing, non-GAAP general and administrative and non-GAAP other income (expense), net, as well as non-GAAP net loss and non-GAAP net loss per share and non-GAAP cash burn. These non-GAAP financial 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 is excluding from some or all of its non-GAAP operating results (1) amortization of acquired intangible assets, (2) acquisition-related stock-based compensation related to inducement grants, (3) post-combination expense related to the acceleration of equity grants or bonus payments in connection with the company's business combinations, (4) adjustments to the fair value of our acquisition-related liabilities and (5) acquisition-related income tax benefits. These non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact on the reported financial results. Management accounts for this limitation by analyzing results on a GAAP basis as well as a non-GAAP basis and also by providing GAAP measures in the company's public disclosures.
Cash burn excludes (1) changes in marketable securities, (2) cash received from equity financings and (3) cash received from exercises of warrants. Management believes cash burn is a liquidity measure that provides useful information to management and investors about the amount of cash consumed by the operations of the business. A limitation of using this non-GAAP measure is that cash burn does not represent the total change in cash, cash equivalents, and restricted cash for the period because it excludes cash provided by or used for other operating, investing or financing activities. Management accounts for this limitation by providing information about the company's operating, investing and financing activities in the statements of cash flows in the consolidated financial statements in the company's most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K and by presenting net cash provided by (used in) operating, investing and financing activities as well as the net increase or decrease in cash, cash equivalents and restricted cash in its reconciliation of cash burn.
In addition, 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.
INVITAE CORPORATION Consolidated Balance Sheets (in thousands) (unaudited) June 30, December 31, 2020 2019 Assets Current assets: Cash and cash equivalents $ 168,203 $ 151,389 Marketable securities 253,933 240,436 Accounts receivable 27,905 32,541 Prepaid expenses and other current assets 21,081 18,032 Total current assets 471,122 442,398 Property and equipment, net 43,381 37,747 Operating lease assets 38,239 36,640 Restricted cash 6,343 6,183 Intangible assets, net 192,644 125,175 Goodwill 211,225 126,777 Other assets 6,921 6,681 Total assets $ 969,875 $ 781,601 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 20,091 $ 10,321 Accrued liabilities 99,490 64,814 Operating lease obligations 6,339 4,870 Finance lease obligations 977 1,855 Total current liabilities 126,897 81,860 Operating lease obligations, net of current portion 42,134 42,191 Finance lease obligations, net of current portion 879 1,155 Convertible senior notes, net 276,092 268,755 Deferred tax liability 10,250 -- Other long-term liabilities 49,428 8,000 Total liabilities 505,680 401,961 Stockholders' equity: Common stock 13 10 Accumulated other comprehensive income (loss) 572 (9) Additional paid-in capital 1,487,217 1,138,316 Accumulated deficit (1,023,607) (758,677) Total stockholders' equity 464,195 379,640 Total liabilities and stockholders' equity $ 969,875 $ 781,601
INVITAE CORPORATION Consolidated Statements of Operations (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Revenue: Test revenue $ 45,099 $ 52,302 $ 108,177 $ 91,921 Other revenue 1,092 1,173 2,262 2,107 Total revenue 46,191 53,475 110,439 94,028 Cost of revenue 42,952 28,006 83,374 49,260 Research and development 74,963 25,302 130,631 43,296 Selling and marketing 39,520 30,779 81,640 54,972 General and administrative 30,838 21,274 54,660 34,593 Loss from operations (142,082) (51,886) (239,866) (88,093) Other income (expense), net (21,436) 1,381 (16,728) 2,019 Interest expense (5,485) (2,121) (10,936) (4,229) Net loss before taxes (169,003) (52,626) (267,530) (90,303) Income tax benefit (2,600) (3,950) (2,600) (3,950) Net loss $ (166,403) $ (48,676) $ (264,930) $ (86,353) Net loss per share, basic and diluted $ (1.29) $ (0.54) $ (2.35) $ (1.01) Shares used in computing net loss per share, basic 129,023 90,863 112,765 85,148 and diluted
INVITAE CORPORATION Consolidated Statements of Cash Flows (in thousands) (unaudited) Six Months Ended June 30, 2020 2019 Cash flows from operating activities: Net loss $ (264,930) $ (86,353) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 14,500 6,725 Stock-based compensation 81,124 19,540 Amortization of debt discount and issuance costs 7,337 -- Amortization of premium on marketable securities -- -- Impairment losses -- -- Loss on disposal of assets -- -- Loss on sales of available-for-sale securities -- -- Remeasurements of liabilities associated with business combinations 26,749 (286) Benefit from income taxes (2,600) (3,950) Debt extinguishment costs -- -- Other (536) 1,182 Changes in operating assets and liabilities, net of businesses acquired: Accounts receivable 4,939 3,153 Prepaid expenses and other current assets (3,049) (3,825) Other assets 942 2,410 Accounts payable 9,185 (3,954) Accrued expenses and other liabilities 3,585 4,267 Net cash used in operating activities (122,754) (61,091) Cash flows from investing activities: Purchases of marketable securities (115,350) (20,781) Proceeds from sales of marketable securities 12,532 -- Proceeds from maturities of marketable securities 89,965 34,000 Acquisition of businesses, net of cash acquired (57,576) 3,193 Purchases of property and equipment (10,854) (8,824) Other (1,334) -- Net cash provided by (used in) investing activities (82,617) 7,588 Cash flows from financing activities: Proceeds from public offerings of common stock, net 217,489 184,490 Proceeds from issuance of common stock, net 6,760 5,123 Finance lease principal payments (1,154) (1,031) Other (750) -- Net cash provided by financing activities 222,345 188,582 Net increase in cash, cash equivalents and restricted cash 16,974 135,079 Cash, cash equivalents and restricted cash at beginning of period 157,572 118,164 Cash, cash equivalents and restricted cash at end of period $ 174,546 $ 253,243
INVITAE CORPORATION Reconciliation of GAAP to Non-GAAP Cost of Revenue (in thousands) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Cost of revenue $ 42,952 $ 28,006 $ 83,374 $ 49,260 Amortization of acquired intangible assets (4,757) (689) (7,430) (985) Non-GAAP cost of revenue $ 38,195 $ 27,317 $ 75,944 $ 48,275
Reconciliation of GAAP to Non-GAAP Gross Profit (in thousands) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Revenue $ 46,191 $ 53,475 $ 110,439 $ 94,028 Cost of revenue 42,952 28,006 83,374 49,260 Gross profit 3,239 25,469 27,065 44,768 Amortization of acquired intangible assets - cost 4,757 689 7,430 985 of revenue Non-GAAP gross profit $ 7,996 $ 26,158 $ 34,495 $ 45,753
Reconciliation of GAAP to Non-GAAP Research and Development Expense (in thousands) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Research and development $ 74,963 $ 25,302 $ 130,631 $ 43,296 Amortization of acquired intangible assets (117) 80 (233) (233) Acquisition-related stock-based compensation (33,383) (2,586) (52,182) (2,586) Non-GAAP research and development $ 41,463 $ 22,796 $ 78,216 $ 40,477
Reconciliation of GAAP to Non-GAAP Selling and Marketing Expense (in thousands) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Selling and marketing $ 39,520 $ 30,779 $ 81,640 $ 54,972 Amortization of acquired intangible assets (786) (675) (1,571) (1,349) Non-GAAP selling and marketing $ 38,734 $ 30,104 $ 80,069 $ 53,623
INVITAE CORPORATION Reconciliation of GAAP to Non-GAAP General and Administrative Expense (in thousands) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 General and administrative $ 30,838 $ 21,274 $ 54,660 $ 34,593 Amortization of acquired intangible assets -- (29) (10) (57) Acquisition-related post-combination expense (500) (3,212) (500) (3,212) Fair value adjustments to acquisition-related liabilities (4,832) -- (4,832) -- Non-GAAP general and administrative $ 25,506 $ 18,033 $ 49,318 $ 31,324
Reconciliation of Operating Expense to Non-GAAP Operating Expense (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Research and development $ 74,963 $ 25,302 $ 130,631 $ 43,296 Selling and marketing 39,520 30,779 81,640 54,972 General and administrative 30,838 21,274 54,660 34,593 Operating expense 145,321 77,355 266,931 132,861 Amortization of acquired intangible assets (903) (624) (1,814) (1,639) Acquisition-related stock-based compensation (33,383) (2,586) (52,182) (2,586) Acquisition-related post-combination expense (500) (3,212) (500) (3,212) Fair value adjustments to acquisition-related (4,832) -- (4,832) -- liabilities Non-GAAP operating expense $ 105,703 $ 70,933 $ 207,603 $ 125,424
Reconciliation of Other Income (Expense), Net to Non-GAAP Other Income (Expense), Net (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Other income (expense), net $ (21,436) $ 1,381 $ (16,728) $ 2,019 Fair value adjustments to acquisition-related 25,392 -- 21,729 -- liabilities Non-GAAP other income (expense), net $ 3,956 $ 1,381 $ 5,001 $ 2,019
Reconciliation of Net Loss to Non-GAAP Net Loss Per Share (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Net loss $ (166,403) $ (48,676) $ (264,930) $ (86,353) Amortization of acquired intangible assets 5,660 1,313 9,244 2,624 Acquisition-related stock-based compensation 33,383 2,586 52,182 2,586 Acquisition-related post-combination expense 500 3,212 500 3,212 Fair value adjustments to acquisition-related 30,224 -- 26,561 -- liabilities Acquisition-related income tax benefit (2,600) (3,950) (2,600) (3,950) Non-GAAP net loss $ (99,236) $ (45,515) $ (179,043) $ (81,881) Non-GAAP net loss per share, basic and diluted $ (0.77) $ (0.50) $ (1.59) $ (0.96) Shares used in computing net loss per share, 129,023 90,863 112,765 85,148 basic and diluted
INVITAE CORPORATION Reconciliation of Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash to Cash Burn (in thousands) (unaudited) Three Months Ended Three Months Ended Six Months Ended March 31, 2020 June 30, 2020 June 30, 2020 Net cash used in operating activities $ (62,361) $ (60,393) (122,754) Net cash provided by (used in) investing activities 801 (83,418) (82,617) Net cash provided by financing activities 551 221,794 222,345 Net increase (decrease) in cash, cash equivalents and (61,009) 77,983 16,974 restricted cash Adjustments: Purchases of investments -- 115,350 115,350 Sales of investments (12,532) -- (12,532) Maturities of investments (24,965) (65,000) (89,965) Proceeds from public offering of common stock, net -- (217,489) (217,489) of issuance costs Proceeds from exercises of warrants (27) (35) (62) Cash burn $ (98,533) $ (89,191) (187,724) - Cash burn for the three months ended March 31, 2020 includes $32.3 million of cash paid in connection with the acquisition of Diploid and cash burn for the three months ended June 30, 2020 includes $25.4 million of cash paid in connection with the acquisitions of Genelex and YouScript. The change in marketable securities for the six months ended June 30, 2020 includes unrealized gains of $0.6 million.
Contact:Laura D'Angeloir@invitae.com(628) 213-3369
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