Invitae Corporation

Q3 revenue was $121.2 million, down 9% reported, but approximately 4% higher year over year on a pro forma basis excluding exited products and geographies. Non-GAAP gross margin was 52.4%, versus 45.9% in Q3 2022 and 49.8% in Q2 2023; non-GAAP operating expenses were $122 million, or 101% of revenue, versus $150 million a year ago. Ongoing cash burn was approximately $64 million, an improvement of 41% versus the same period last year; cash, cash equivalents, restricted cash, and marketable securities ended at $265 million. Revenue by segment included oncology at $62 million, women’s health at $27 million, rare disease at $23 million, and data/patient network at about $9 million. Full-year 2023 guidance was reaffirmed for revenue of $480 million to $500 million, non-GAAP gross margin of 48% to 50%, and ongoing cash burn of $220 million to $245 million.

Ken Knight framed the quarter as another step in Invitae’s turnaround, emphasizing better-quality revenue, lower unit costs, and better cash discipline. He said the business is on track for full-year cost reduction commitments and that management is focused on extending the company’s runway while working with stakeholders on capital structure options. He also highlighted the FDA authorization for the hereditary cancer panel and approval of the enhanced PCM assay as validation of the company’s technology and regulatory readiness.

Ana Schrank said revenue was $121 million, with the reported decline driven mainly by exited offerings and geographies, while the core business grew about 4% year over year and was roughly flat sequentially. She pointed to non-GAAP gross margin of 52.4%, up from 45.9% last year, and ongoing cash burn of about $64 million, noting that the increase sequentially included about $5 million of semiannual interest expense, about $4 million tied to a contract renegotiation, and $4 million of acquisition-related payments, partly offset by around $3 million from improved DSO. She said Invitae ended Q3 with $265 million of liquidity and reaffirmed 2023 guidance for revenue, gross margin, and ongoing cash burn.

Analysts focused on the commercial payer reimbursement delay in oncology, how much of the issue would resolve by year-end, and what was embedded in guidance; management said the collections improvement is durable but the full-year benefit will mostly show up in 2024. Questions also probed the capital structure review and potential timeline, but Ken Knight said it was too early to give specifics and described the board’s special committee as a sign of urgency. Other questions covered gross margin durability, community-setting penetration in hereditary cancer, PCM reimbursement and commercialization timing, and the data/patient network business; management said volume and mix improvements are supporting margins and that PCM reimbursement work should start yielding submissions in early 2024.