Natera Surges on Record Q1 Revenue, Achieves Cash Flow Breakeven

Natera Inc.'s stock surged 20.4% to a three-year high after reporting record Q1 revenue of $367.7 million, exceeding analyst estimates. The company achieved cash flow breakeven ahead of schedule and raised its full-year revenue guidance to $1.42-1.45 billion.

Bijay Laxmi
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Natera Surges on Record Q1 Revenue, Achieves Cash Flow Breakeven

Natera Surges on Record Q1 Revenue, Achieves Cash Flow Breakeven

Natera Inc. (NASDAQ: NTRA) stock soared to a three-year high on Friday after the genetic testing company reported record first-quarter revenue and achieved cash flow breakeven ahead of schedule. Shares surged as much as 20.4% to $108.32 in pre-market trading following the release of the Q1 2024 earnings report.

Why this matters: The growth of genetic testing companies like Natera has significant implications for the future of personalized medicine and healthcare. As these companies continue to innovate and expand, they have the potential to improve patient outcomes and drive down healthcare costs.

The company posted revenue of $367.7 million, a 52% increase compared to Q1 2023 and an 18% sequential rise from Q4 2023. This exceeded analyst estimates of $316.31 million. Natera also reported a gross margin of 57%, a significant improvement from 39% in the same quarter last year.

"We had an excellent quarter across the board and I'm very pleased to share that we met a major milestone in the lifecycle of the company, reaching cash flow breakeven in Q1 significantly ahead of schedule," said Steve Chapman, Natera's CEO. The company has raised its full-year revenue guidance to a range of $1.42 billion to $1.45 billion and increased its gross margin forecast to 53-55%.

Natera reported strong performance across its business segments. The women's health division saw an 85,000 unit increase in testing volume compared to Q4 2023. In oncology, the company processed 115,000 tests, growing sequentially by 17,000 units. Organ health also made progress, bolstered by updated clinical guidelines supporting the use of genetic testing for chronic kidney disease patients.

Analysts reacted positively to Natera's earnings beat and improved outlook. Several firms, including Piper Sandler, TD Cowen, and Craig Hallum, raised their price targets on the stock. Piper Sandler's analyst lifted the price objective from $70 to $110, citing Natera's "robust beat-and-raise" results.

Natera, which sells genetic tests for cancer detection, women's health, and organ health, has seen its stock rise over 120% in the past year. The company's cutting-edge cell-free DNA technology has established it as a major player in the rapidly growinggenetic testing market. With a market cap of $12.71 billion, Natera appears well-positioned to capitalize on the increasing demand for personalized medicine and expand its presence globally.

The record Q1 results demonstrate Natera's strong momentum and the growing adoption of its innovative genetic testing solutions. As the company achieves profitability ahead of expectations and raises its financial guidance, it is poised for continued growth in the dynamic healthcare industry. "All of this momentum puts us in a great position to significantly raise every aspect of the guide for the rest of the year,"said CEO Steve Chapman on the earnings call.